The Daily Parker

Politics, Weather, Photography, and the Dog

Cranky Flier finally enrolls in Global Entry

He had a little more hassle than I did. Only a little:

So back in July I decided to give it a shot. If you’re a US citizen/permanent resident, Dutch citizen, South Korean citizen, or Mexican national, you can join the program. (Canadians can join via the Nexus program.) I went online and filled out the extensive application. I mean, this thing looks at your history going back for several years. It requires previous residences, everywhere you’ve traveled, and more. Once you finish filling it out, you pay the $100 fee (regardless of whether you get accepted or not), and then you wait.

It took one week until I received an email saying my application status had changed. I logged on and it told me that I had been approved for an interview so I just needed to schedule one.

The big day came, and I prepared for a grilling. I was WAY over-prepared. I showed up at the Bradley Terminal at LAX and they told me to take a seat and wait. I saw a lot of people waiting there, so I was afraid it might take awhile, but I was wrong. Within 5 minutes, they had called me and another person to go back. The interview between me and the Customs/Border Patrol (CBP) officer went like this:

CBP: Have you been to Canada in the last 5 years?
Me: Yeah
CBP: Have you been to Mexico in the last 5 years?
Me: Nope
CBP: Ok, you’re all set.

I’m not exaggerating at all. It was that quick.

My interview in 2010 ran about 10 minutes, but it was no big deal. They stamped my passport right then and I've had easy entry to the US (and easy trips through airports) since.

It's worth signing up for.

I hope US American Airways does it better...

The Economist's Gulliver blog has had enough of UnitedContinental's computer problems:

Late last month, for example, America's Department of Transportation fined United $350,000 for taking too long to process its customers' refund requests. ... Here's the remarkable thing about this latest fine, which was connected to delays of some 9,000 refund requests: United blamed it on the merger. According to the Los Angeles Times, United told the regulators that when the two legacy airlines' reservation systems were merged it resulted (in the words of a DOT report) "in some unforeseeable anomalies that caused a temporary inability to process refunds in a timely manner."

That's unacceptable. Again, it's been nearly three years since the merger. "Unforeseeable anomalies" should have been corrected by now. And on what sort of scale is it appropriate to describe a three-year-old problem as "temporary?"

It seems like both United and Continental have some bureaucratic issues that have exacerbated their technology trouble. Gulliver goes on to say that UAL crews are still contractually bound to UAL planes, so two companies still haven't merged their front-line labor forces.

Assuming American and US Airways get past the DOJ's roadblock (which I expect they will), will they have as much difficulty merging their computer systems? I hope not.

Visiting the family for the holidays

I rarely buy plane tickets this far out, but something made me think buying holiday tickets right now might be a good idea. Things, for example, like this:

The Department of Justice’s somewhat surprising lawsuit to stop the merger of American Airlines with US Airways may not offer much help for passengers hoping that competition among the majors will keep a ceiling on airfares. Like any commodity, airfares are a function of supply and demand — and carriers have been removing supply from the market. Some 13 million departing seats have been vanished from the system in the past year, according to Aviation DataMiner.

It’s crowded up there, and it’s going to stay that way.

Which is to say, don’t expect much in the way of bargains over the next peak period, the Thanksgiving holiday. “Fares will be up slightly, but not a lot,” says George Hobica, president of Airfarewatchdog.com. His advice is to keep checking on prices until you see one you like. Conversely, if you have the travel bug, one of the cheaper times to fly is right about now: September is a slow period of the airlines.

Right now round-trip fares from Chicago to San Francisco for Christmas week start around $400. I can comfort myself thinking that's only $250 in 1995 dollars...

Update: Total fare, $452. That was the lowest available on American for any round-trip that got me into San Francisco for December 24 and 25.

Czech Airlines interesting partnership with KAL

The Economist Gulliver blog reported today that Korean Air has partnered with CSA, a strategy that may help both of them in Europe:

Prague offers something that larger airports cannot. Passengers are weary of the congestion and long distances between gates at the mega-hubs, as Which? highlighted. Switching planes is even more of an ordeal if you do not speak the local language. In Prague, connecting times are short and all signage is provided in Korean. Mr Moreels said the Czech capital is styling itself as a "specialised gateway or mini-hub" for Asian traffic, and he promised that Korean passengers would enjoy "special treatment" in the event of delays–a privilege the mega-hubs reserve for customers of their home carriers.

Geography is another advantage. Prague's location in the middle of Europe makes it an ideal springboard for travel to the rest of the continent, including eastern parts of Germany traditionally connected via Lufthansa's Frankfurt hub. CSA's network is not massive, but most of the spots frequented by Korean travellers are served. Interline deals and codeshares between CSA and Korean Air ensure convenient flight times. "We don't want to transfer everybody to everywhere," [CSA CEO Philippe] Moreels emphasised. "We just want to redistribute a big plane from Korea to the rest of Europe."

It's hard to find an appropriate analogy in the U.S. because our market isn't nearly as fragmented as Europe's. But if you can imagine KAL flying into St. Louis on a partnership with pre-merger TWA, that might be close.

States change their minds about USA/AMR merger

Last week the Justice Department and several states, including Texas and Florida, sued to stop the American—US Airways merger. Today a couple of them realized their error:

Political and business officials in Florida, Texas and North Carolina are asking the U.S. to reconsider its suit to block the proposed merger of American Airlines and U.S. Airways, saying the combined company would benefit their local economies.

Florida, Texas and North Carolina...are home to large hubs for both airlines.

American Airlines, which sought Chapter 11 protection in late 2011, is one of the largest private employers in Miami-Dade County. The carrier operates around 70 percent of the flights at the Miami airport, making it a dominant hub for flights to and from Latin America. Local officials have long promoted Miami as the “Gateway to the Americas.”

Yeah, I didn't understand that four of the six states who joined the Justice Department suits (these three plus Arizona) contain four of the five largest hubs of the two airlines—including the airlines' headquarters (American in Texas and US Airways in Arizona).

Even though I thought there would be a challenge to the merger, after I thought about how the challenge actually went down, it didn't make any sense. Obviously the people who depend on American and US Airways for their livelihoods agree.

Still cranky about the Justice Department

Two more opinions this morning about the Justice Department sued to block the American-US Airways merger. First, from Cranky Flier:

[I]f DOJ really wanted to settle for slots at National, it would have done so before filing such a strongly-worded, broad case. Now it has sort of pinned itself into a corner. If it settles, it sets precedent that can be used against it in the future. If it goes ahead with trial, it risks everything.

See, if it goes to trial, then the judge will review the case on its merits. And the end result will be binary. Either the DOJ’s complaint is validated (which still seems unlikely at this point, though we don’t know if DOJ has something more substantial hidden somewhere) or it’s shot down. And if it’s shot down, then the new American not only gets to merge, but it gets to keep all its slots at National and everywhere else. That’s quite a risk to take.

Clearly DOJ thinks that it can win this thing or it never would have taken a chance like this. But it’s a huge gamble. Now we just have to wait and see what happens.

The Economist's Gulliver Blog also weighs in about whether deregulation is to blame:

The consolidation of air service at central hub cities is bad news for cities that aren't hubs. But it's great news for the cities that are. It's good for airlines that are saving money by shutting down inefficient routes. If it's encouraging businesses and people to move to more densely populated areas, well, there are numerous economic and environmental benefits to having people live and work closer together. And the loss or decline of network carrier service to some small airports has fuelled the rise of ultra-low-cost carriers at some of those same airports. All of which is to say: the decline of small and medium-size airports is less of an unmitigated disaster and more of a mixed bag than Mr Longman and Ms Khan make it out to be. Returning to a more regulated airline industry would be a huge political lift with countless unintended consequences. It's worth thinking about how deregulation has changed the face of the airline industry. But the troubles of America's smaller airports—and the communities they serve—have roots far deeper than the demise of the Civil Aeronautics Board.

The merger will, of course, cause some more consolidation. The alternative is that we have two giant global airlines and two smaller ones that can't possibly survive much longer.

OK, this just got real

The judge in the American Airlines bankruptcy just expressed doubts the airline will survive:

A judge asked AMR Corp for guidance on whether he should approve its plan to exit bankruptcy, in light of an antitrust challenge to its planned merger with US Airways Group Inc.

The request suggested Judge Sean Lane would hold off on approving AMR's plan at a hearing in U.S. bankruptcy court in New York on Thursday.

Lane said he had "lingering doubts" as to whether it was appropriate to confirm the plan. He told AMR, its creditors and other parties in the bankruptcy to submit briefs on the issue.

Lane said he had strongly considered canceling Thursday's hearing but decided to give parties an open forum to discuss the antitrust challenge.

Absent the antitrust challenge, Thursday's hearing would have been the final step in AMR's exiting bankruptcy and implementing its merger.

This really sucks, not just for American's shareholders, but also for air travelers in the U.S. The Justice Department believes the merger will hurt air travelers, but Cranky has some good analysis why this isn't so. Plus, the Justice Department has had access to the competition data for years; that makes the timing of their case look suspect, in my mind.

And personally, my biggest beef with all this concerns the bank of frequent flier miles I've built up for many, many years now. If American can't merge with US Airways, all my miles might vanish. (US Airways has promised to honor them if the merger succeeds.) The judge and the Justice Department have made that much likelier this week.

My worst fear is that the bankruptcy proceedings could turn so rapidly there won't be time to cash in any of the miles, or even if I can cash them in, there won't be an airline around to honor the award tickets when I try to use them.

What, on earth, was the Justice Department thinking?

Maybe the lawsuit wasn't universally predicted

...but the Department of Justice suing to block the American-US Airways merger was sure stupid. Cranky Flyer gives them a Crazy Jackass award:

It really does appear that DOJ has gone off the rails. The best way to sum up the argument is that airlines should all be punished for trying to be successful enterprises. The complaint is filled with talk about how capacity has shrunk and fares have risen. They think this merger will result in more of the same. But what they’ve failed to recognize is that the airline industry of the past was a sickly mess. You had too many cooks in the kitchen and some of them had the cooking skills of a 12-year-old. So airlines pushed in too much capacity just to gain market share, then they had to discount fares and nobody made money. It was a mess.

Apparently the DOJ likes that plan. It’s sad to think this is how the government looks at private industry. If you want to decide that the airline industry is a public utility, then go all-in and fully regulate it. (Fares will rise, but I would respect the argument.) Otherwise, this nanny-state-style semi-regulation will keep the industry from ever becoming truly healthy.

The Economist takes a more sober view, but still doesn't think the suit makes sense:

The DoJ suit mentions the likely loss of US Airways’ low fares, known as Advantage Fares, which undercut those of American, Delta and United on one-stop trips and which have prompted US Airways’ competitors to reduce their prices. The DoJ has been scrutinising the merger since January, a month before it was announced publicly. Last week the European Commission nodded the deal through after a minor concession on slots at London’s Heathrow. But the DoJ said the merger would take consolidation too far, leaving four airlines controlling over 80% of the American market.

Doug Parker, the chief executive of US Airways, still hopes the deal can be completed before the end of the year. If it is not, American will struggle longer to emerge from Chapter 11 bankruptcy, as it would have to assemble and seek court approval for a new rescue plan. The existing one was relatively generous to creditors and shareholders, leaving the latter with a stake in the merged carrier. If the courts uphold the DoJ’s view, some observers think it will have the effect of intensifying the dominant position of United and Delta, leading to more losses and later pressure for more mergers—an unintended consequence of the DoJ’s stance.

The DoJ has come down firmly on the way to solve the consolidation problem that will result in the worst deal for consumers. Having three giant airlines doesn't end competition, but it does make it easier to circumvent existing competition rules. The DoJ should concentrate on the actual effects of the proposed arrangement, not on its hypothetical effects, especially when their hypotheses don't actually have a lot of evidence supporting them.

Saw that one coming

As expected, the Justice Department and several states' attorneys general have challenged the American-USAirways merger:

The Justice Department says the deal would result in the creation of the world’s largest airline and that a combination of the two companies would reduce competition for commercial air travel in local markets and would result in passengers paying higher airfares and receiving less service.

On Tuesday, Attorney General Eric Holder said the transaction between US Airways and American would result in “higher airfares, higher fees and fewer choices.”

The attorneys general were from Arizona, Florida, the District of Columbia, Pennsylvania, Tennessee, Texas and Virginia.

The challenge won't succeed, but the AGs had to make it anyway. (Note that Arizona is headquarters of USAirways and Texas is headquarters of American.) The problem is, if American doesn't merge with USAirways, then it's toast—and USAirways will get a hunk of its assets anyway.

I may not have conducted the same analysis as the AG, but I concluded long ago that for me personally the merger works out pretty well. I admit, that may not be true for people who live in smaller aviation markets.

It's official: flying is so safe, it's hard to measure

The National Transportation Safety Board has released its final 2012 statistics:

Part 121 commercial airline operations remained fatality-free, and general aviation accidents were virtually unchanged. In the general aviation segment, the number of total accidents was 1,470 in 2011 and 1,471 in 2012. Fatalities decreased slightly, from 448 to 432, and the accident rate per 100,000 flight hours declined from 6.84 to 6.78. On-demand Part 135 operations showed improvement, with decreases across all measures, the NTSB said.

Part 121 refers to the section of the Federal Aviation Regulations (FARs) involving scheduled commercial passenger service. What these statistics mean is, in 2012, you had a better chance of dying doing anything else than flying on a commercial airliner.