GREAT NEWS FROM CONTINENTAL

In an industry which is mostly in a state of crisis - financial, labor or security - there were at last really good news. Not surprisingly, they were coming from Continental. The airline announced yesterday that it has ordered dozens of new planes from Boeing, including eight 777s. Of course, compared to airlines like Emirates or Singapore it doesn’t look much, but compared to CO’s home front - the rest of U.S. airlines - it is a very big deal.

In fact, CO is the only U.S. airline that is really renewing its fleet. It has ordered 25 Boeing 787s, but those will probably be delivered sometime around 2012. In the meantime, CO will get more 777s to its long haul fleet, and almost 80 (!!!) new 737s. No other U.S. airline can even dream of such shopping spree, not even the ones that have some kind of orders for new planes.

The picture gets even darker when we look at the “big three”: American, United and Delta. They just have no fleet renewal taking place whatsoever. Not with the short haul fleet and not with the long haul fleet. With American Airlines the picture is pitch dark: DC-9s and B767 are all over the place. It’s a crisis waiting to happen, and it will happen 5 to 10 years from now.

Amid all that there is the constant buzz around airlines mergers. Let me say it clear and short: The DL-NW merger makes sense. The CO-UA doesn’t. After the news of CO’s recent purchase it looks like madness. The dinosaurs are going to be extinct. Only the ones that can adapt will survive. CO will be the main survivor unless someone in its management makes a critical mistake and engage it with an ailing airline, in that case they both drown together.

THE AIRLINES AND THE INTERNET - PART 1

We all live in the age of the Internet - this is hardly the news of the week. Sometimes it seems as if we haven’t known any other reality, a reality where you had to go actually to a book store in order to buy a book, or open an atlas in order to see the geographical borders of Germany. But no, the Internet has been around for just over ten years, yet in that short period it revolutionized many aspects of our life.

This blog is not about the Internet or the technology revolution; it is about commercial aviation. But like many other fields of life and the economy, the airline industry have gone through many changes in this age of information technology, and the question is: how successful are the airlines in managing themselves with respect to the Internet environment?

Come to think about it, there are very few products that can be suitable for on-line commerce more than airline tickets. Basically, an airline ticket is a piece of paper that can be sent to the customer via e-mail, or, in the worst case, inside a regular envelope in the mail. There are no special delivery expenses, and there is no danger of the product being damaged in the way. Secondly, even before the Internet, finding a specific airline ticket was being done by a computer system, except in front of the computer sat a travel agent, and the search was something only he or she could do, and not every person in its own home. Unlike shopping for other products, while shopping for airline ticket the customer don’t need to watch the item he wants to by or to feel it in his or her hands. All you need to know is the itinerary and the price, and if those two fits you - buy (or reserve).

I can keep on mentioning dozens of other points that illustrate why airline tickets are one of the most suitable products for on-line purchasing, but I think the case have been made. By now, 2008, you would have thought that the airline industry is way past the point of learning the advantages of e-commerce, and most airlines engage in selling their products according to the following principles:

* On-line ticket costs less than a regular ticket, due to less expenses;

* Search mechanisms for fares and itineraries are simple, fast and efficient, like other search systems in the web;

* purchase transactions are simple and transparent, like with other products bought on the net;

* There is a possibility of reserving tickets before buying them, just like in travel agencies.

Well, the reality is that those principles are not being met by most airlines. It goes without saying that there is no technology barrier that prevents the airlines from achieving better performance in e-commerce, so all we can do is wonder why.