Aviation Industry Updates: February 15, 2022

Spirit & Frontier CEOs Tackle Biggest Merger Questions

• The blockbuster deal would make the combined Spirit and Frontier the fifth-biggest airline by capacity in the United States, behind only the “Big 4” carriers — American, Delta, United and Southwest.

• In an interview with TPG, Spirit’s current CEO Ted Christie and Frontier CEO Barry Biffle declined to say whether the combined airline would add the Big Front Seat across its fleet, or whether it would be slowly phased out. Still, the two hinted that it’s been a customer favorite, and that the new airline will follow the customer data — as long as the economics work out.

• Big Front Seat aside, among the biggest questions about the merger is whether ticket prices on the carriers will increase. After all, the merger would mean that Allegiant is the only ULCC of any significant size left to take on the Frontier-Spirit conglomeration.

• Biffle insists that fares will not increase, and said that all of the financial projections and calculations the airline released to investors assume an average “all-in” price paid by consumers that stays the same as it is today.

• “The $500 million in annual EBITDA synergies, there’s not one penny from raising fares,” he said. “All of that is from selling more low fares to more people and more places.”

• “This is not about raising prices, it’s not about constraining capacity, this is about everybody winning,” Biffle added. “For consumers to win, for our employees to win, for our shareholders to win, and quite honestly, for the environment to win,” he said, referring to the fact that the combined airline would have the youngest fleet age of any major U.S. airline, of which nearly 80% would belong to the more efficient A320neo family.

• The two airlines will need to show their work, though, before the merger can proceed. The final deal is still subject to regulatory approval, and that’s not a given.

• The Biden administration has previously given indications of reluctance to approve mergers and coordination in the airline sector. In 2021, the Department of Justice filed an antitrust suit against American Airlines and JetBlue, alleging that their “Northeast Alliance” amounts to unfair, uncompetitive practices.

• American and JetBlue have argued that by coordinating in the Northeast, they can better compete against entrenched airlines Delta and United. It’s a similar tack to the one Frontier and Spirit appear poised to use.

• “All we can emphasize,” Christie said, “is the extreme positives of this transaction. The fact that it’s a different deal than [the DOJ] has seen before.”

• “It really behooves us to educate the administration and the DOJ on the positive parts of the deal, and when we take that all into consideration, we feel like we have a very good, compelling argument that this combination should proceed,” he added.

The Points Guy

Mesa CEO Blames Regulators For Pilot Shortage

KEY POINTS:

• Mesa Air Group CEO Jonathan Ornstein blasted U.S. requirements that pilots have 1,500 of flight experience before they can take the helm of a commercial aircraft and argued for lawmakers to reduce the number of hours on Thursday. The regional blames the national pilot shortage for why it is planning to operate 5-10 percent fewer flights this year than previously planned.

• “It seems crazy that a 300-hour [first officer] can land a Lufthansa A350 into JFK flying over Queens, and a U.S. pilot can’t do the same thing,” Ornstein said, referring to the number of hours European pilots must have to be certified. “No other country in the world has adopted this [rule], not a single one.”

• Ornstein called on lawmakers to rethink the 1,500-rule, put in place in the wake of the Colgan Air crash in 2009. “There is not a shred of evidence that says that a 1,500-hour pilot is safer than a 300-hour pilot with intense training,” he said. ” I think it’s important that some of the politicians start to act and take this up, because if they don’t, they’re putting the industry in jeopardy.” Smaller cities already are losing air service as regionals and mainline carriers are trimming their schedules in response to the pilot shortage, he said, adding that more smaller communities will lose connections to the national air transport system unless the law is changed.

• American Airlines and United Airlines, both of which Mesa flies for, have trimmed schedules and routes to mitigate the shortage. Both carriers expect the fallout to carry on through this year and possibly into 2023.

• “While attrition impacted us this last quarter, please do not underestimate the impact of Covid,” Ornstein said. “When you’re dealing with 23 percent, 24 percent, 25 percent absence rates — I mean I don’t care what the attrition is — if you have no attrition, you would not be able to cover that on a day-to-day basis.” Mesa’s sick rate fell back to historic norms in the third week of January.

• Mesa said its pilot-hiring pipeline is “full.” Unlike SkyWest, where captains are leaving for mainline carriers, Mesa is seeing more first officers quit. Training for first officers takes less time than for captains, giving Mesa confidence its pilot crunch will ease — but not go away entirely — next year. The company is hiring more instructors and booking more simulator time to train new hires.

• Mesa has another card to play that its fellow regionals do not: Its cargo operation for DHL. Mesa is the only regional to offer mainline-jet experience on its Boeing 737-400Fs, Ornstein noted. This provides a career path for not only Mesa’s current pilots but makes the company a more attractive proposition for applicants, he said.

Airline Weekly

No-Fly List Considered By TSA For Unruly Pax

KEY POINTS:

• The largest US airlines have been working with the Biden administration for months on creating a nationwide no-fly list that would ban from commercial carriers the worst of unruly passengers, as attacks on flight attendants, airport gate agents, and fellow travelers increase.

• Discussions among the carriers, their Airlines for America trade group, the Department of Homeland Security, and the Transportation Security Administration over the issue have intensified over the last six months or so, two people familiar with the issue said, asking not to be named because the talks are private. Airline unions also have been involved in some of the talks.

• The effort highlights the industry’s increasing push for more effective ways of quelling the jump in unruly passenger incidents since a pandemic-era requirement to wear masks on board planes was imposed. Of 5,981 such reports last year, 72 percent were related to masks, according to the Federal Aviation Administration. The agency launched investigations of 1,105 more serious incidents last year, more than three times the previous high since the agency began collecting such data in 1995. It has initiated enforcement action in 390 cases since the start of 2021. The current mask mandate is set to expire March 18.

• “It’s one thing to say you can’t fly on one airline,” said Jeffrey Price, an aviation security consultant and professor of aviation management at Metropolitan State University of Denver, who hasn’t been involved in the talks. “It’s another thing to say you can’t fly on any airline.”

• Delta has put nearly 1,900 people on its no-fly list for refusing to comply with mask requirements and has shared 900 of the names with the TSA to possibly pursue civil penalties. United Airlines has banned more than 800 from its flights for refusing to wear a mask. Southwest declined to disclose how many are on its internal list.

• “Obviously, there are enormous implications in terms of civil liberties, in terms of how you administer something like that,” Buttigieg said in an interview on CNN. “Even when it was over terrorism, it was not a simple thing to set up. So none of these things can be done lightly. But I think all of these things need to be looked at, at a moment like this.”

• Delta Chief Executive Officer Ed Bastian wrote to Attorney General Merrick Garland on Feb. 3 asking for federal officials to follow up on an earlier decision to prosecute people involved in the most egregious onboard incidents. Bastian called for “the much-needed step of putting any person convicted of an onboard disruption on a national, comprehensive, unruly passenger ‘no-fly’ list that would bar that person from traveling on any commercial air carrier.”

• The current no-fly list designed to prevent terrorists from gaining access to aircraft is run by a federal agency known as the Terrorist Screening Center, which was established after the Sept. 11, 2001, attacks. It’s run by a consortium of agencies such as the Federal Bureau of Investigation and the Department of Homeland Security and includes the names of known or suspected terrorists.

Boston Globe

Spirit & ATP Flight School Launch New Program

KEY POINTS:

• Spirit Airlines (NYSE: SAVE) today announced its partnership with the nation's largest flight school, Jacksonville-based ATP Flight School. The new Spirit Direct Program will expand the carrier's pipeline of highly skilled, professional pilots to include ATP's more than 2,000 qualified students and flight instructors. It also provides graduates with the fastest track to a successful career as a Spirit pilot amid the airline's continued growth.

• ATP's prestigious Airline Career Pilot Program and Spirit Direct Program will immerse students in a two-year training that develops line-ready, Spirit A320 family pilots. Students begin their journey with a seven-month training toward their multi-engine commercial pilot and flight instructor certificates along with their instrument rating. As students progress to ATP instructors, they continue to build flight experience working to advance to first officer with Spirit Airlines.

• "ATP is well-known for developing top-notch airline pilots, making them the perfect match as we continue to grow and give our Guests more destinations to discover," said Ryan Rodosta, Senior Director of Flight Operations and System Chief Pilot. "Spirit has one of the youngest and most fuel-efficient fleets in the industry, and we fly to world-class destinations across the U.S., Latin America and the Caribbean. Our fleet is growing fast and creating tremendous career-progression opportunities."

• "In just seven months, graduates of ATP's Airline Career Pilot Program earn their commercial pilot and flight instructor certificates, then through the Spirit Direct Program can advance straight to Spirit as Airbus first officers after 1,500 hours of flight time," said Michael Arnold, Director of Marketing, ATP Flight School. "We are incredibly proud to partner with Spirit in bringing ATP graduates the fastest track to become airline pilots and the opportunity to quickly establish a rewarding career."

Global News Wire

Weekly TSA Numbers

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