Aviation Industry Updates: December 7, 2021

Frontier Overtaking Spirit

• While the media was largely critical and sometimes dismissive of Spirit, investors benefitted from a business model that produced strong financial returns and set trends that other in the industry followed, to some extent at least.

• Vowing to be more customer friendly and transparent, Frontier also adopted the logo ‘“low fares done right’, a not-so-subtle dig at Spirit, who along with high return on invested capital generated a lot of customer complaints. As Spirit has worked to “smooth its edges,” Frontier has stuck to its low-cost principles and soon it will take the ULCC mantle.

• After guiding Spirit into a good worldwide benchmark for low costs, Bill Franke bought Frontier and later added Barry Biffle, Spirit’s marketing leader though its transition, as its CEO. Both Franke and Biffle know what worked at Spirit and what didn’t. They know the model provided high returns and strong resilience.

• But as Spirit needed to catch up with its customers, Frontier could start out with the customers from day one. They call this “low fares done right.” While what they do is really no different than Spirit today, they started this with their ULCC transition and thus have nothing to catch up from.

• Nothing highlights this difference in approach more that the two carriers’ fleet strategies. Spirit has de-emphasized growth with the larger Airbus A321NEO and recently placed an order for the much smaller A319NEO. When choosing to grow in mid-size rather than large cities, this fleet strategy aligns well. Frontier, on the other hand, has bet big on the A321 NEO as it continues to flex its low cost position in both big and small places. The dependence on smaller gauge aircraft will make it hard for Spirit to reach the cost levels that Frontier can with the much larger equipment.

• With lower costs and a more aggressive focus on cost control, Frontier is overtaking Spirit as the leading U.S. ULCC. This is not necessarily bad for Spirit, as they have changed their strategy somewhat and there is still plenty of room for low-cost capacity in the country.

Forbes

Omicron Spreads Uncertainty | Dampens Airline Recovery

KEY POINTS:

• The discovery of the omicron variant of the coronavirus in at least a third of U.S. states is raising questions about whether it will be safe to travel for the upcoming holidays, with Christmas now less than three weeks away.

• To try to curb the spread of the variant, many countries are imposing travel restrictions and bans, including the U.S, which has banned most non-U.S. citizens who have recently been in any of eight southern African countries from entering the United States.

• Starting Monday, the Biden administration is requiring all travelers coming into the U.S. to provide proof of a negative coronavirus test taken within a day of their departure, regardless of citizenship and vaccination status. And it is extending the mask-wearing mandate on board planes and inside airports into mid-March.

• Such restrictions are raising concerns that there may be another slowdown in air travel, hurting an industry that was just beginning to turn the corner toward recovery after having its busiest week since the pandemic began over the Thanksgiving holiday period.

• Dr. Robert Murphy, a professor of infectious diseases at Northwestern University's Feinberg School of Medicine and director of the school's Institute for Global Health, says, "We'll know more in a couple of weeks, [but] I think people should really get ready to hit the pause button" on their travel plans.

• "Well, you know, it's one more headache you didn't need and you hope to avoid," says Robert W. Mann, a former airline executive who now works as a consultant for the industry.

• "It's a continuation of the thing we've seen since the beginning, which was, you know, two steps forward, one step back or sometimes two steps back," Mann says. "But, you know, we'll make it through this. We understand how to deal with it a lot better than we did initially."

• United Airlines CEO Scott Kirby says he expects United to take a financial hit from the omicron coronavirus variant, adding that trans-Atlantic flights will be most affected.

• "The emergence of the Omicron variant panicked many governments into once again restricting or entirely removing the freedom to travel," said Willie Walsh, director general of the International Air Transport Association, in a statement. He noted that the presence of the new variant is already confirmed on all continents.

• "The ill-advised travel bans are as ineffective as closing the barn door after the horse has bolted," Walsh added.

NPR

U.S. Airlines Participate in Senate Hearing

KEY POINTS:

• U.S. airlines will take part in a Senate oversight hearing this month on the industry, an aviation trade group said on Friday, with lawmakers expected to quiz executives about how carriers used pandemic-related federal aid, staffing issues and other matters.

• The Senate Commerce Committee has invited the chief executives of seven major U.S. airlines to testify at the planned Dec. 15 hearing.

• A4A said the carriers look forward to continuing to work with Cantwell and Senator Roger Wicker, the committee's top Republican, "on the issues facing the U.S. airline industry."

• "I would encourage them to show up," Cantwell told Reuters on Wednesday of the CEOs. "I think it is bad faith not to show up. ... The public deserves to know some answers."

• Lawmakers want to know if voluntary employee buyouts offered by airlines, despite receiving payroll assistance, caused operational problems at some carriers that have resulted in the cancellation of hundreds of flights in recent months.

• The leaders of the U.S. House of Representatives Transportation Committee separately have asked A4A to answer questions about the government payroll aid that the carriers received.

Reuters

United Operates Passenger Flight Using 100% Sustainable Aviation Fuel

KEY POINTS:

• On Wednesday, the carrier operated the aviation industry's first-ever passenger flight using 100% non-petroleum-based SAF. The flight flew from Chicago O'Hare to Washington D.C. carrying over 100 travelers, including United CEO Scott Kirby. The fuel was supplied by World Energy, North America's only commercial biofuel producer.

• The flight operated with one of United's new Boeing 737 MAX 8 jets with 500 gallons of The SAF in one engine and 500 gallons of traditional jet fuel in the other. SAF is drop-in ready, meaning it can mix with conventional fuel or be used on its own, and is compatible with other aircraft fleets.

• According to United, airlines are only allowed to use a maximum of 50% of SAF onboard aircraft, but Wednesday's demonstration flight is intended to show there are no operational differences between SAF and conventional jet fuel.

• For future flights, the airline has purchased 1.5 billion gallons of SAF from Alder Fuels, which is enough to fly 57 million passengers. United also has the option to buy up to 900 million gallons of SAF from Fulcrum BioEnergy, which it has already invested $30 million into.

Business Insider

Weekly TSA Numbers

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