Posts Tagged ‘Industry Service’

American and One World Alliance “Wins” Bankrupt Japan Airlines Prize

February 10, 2010

Monday’s announcement that American Airlines and One World Alliance had won the battle of Japan Airlines – keeping JAL from switching to the Sky Team – ended months of speculation about whether another major airline would shift allegiance and upset the Airline Strategic Alliance Balance of Power.  

A different result could have destroyed the Open Skies Agreement between the US and Japan.  For one thing, protracted anti-trust litigation fueled by American, British Airways and Qantas opposition – would almost certainly have held up any attempt by Japan Air Lines to switch to the Delta led alliance. 

What does the decision mean for US Corporate Travelers?    

In the short run, the status quo will be maintained.  

First off,  American Airlines and other One World Alliance frequent fliers can breath a sigh of relief.   A reallignment of allegiances in Tokyo would have dealt a major blow to interline traffic, ticketing, frequent flier mileage redemption opportunities and revenue flow for the entire alliance. 

Looking five years down the road, JALs decision to maintain financial independence may allow management a wider range of alliance options if it can reverse its financial fortunes.   And the Japanese government has at least temporarily prevented the American Carriers from pumping more than $1 Billion into the flailing, failing carrier. 

Delta, following its acquisition of Northwest last year, acquired a major Trans-Pacific presence with the Northwest mini-hub in Tokyo.  All Nippon Airways is poised to become the largest carrier in Japan.   ANA’s participation in the Star Alliance may spur healthy competition in the US-Japan markets for at least the next five years.  With three major alliances in the mix, there should be at least some pressure on pricing, which bodes well for consumers. 

Business Week’s Justin Bachman concluded, “…No matter how much airlines contend such alliances are for customer service, they truly are about carrier finances.”  

Bachman also observed that the rejection of overtures from Delta and the Sky Team Alliance was more likely a result of the inability of JAL’s new management to restructure during bankruptcy AND switch alliances at the same time.  Switching alliances is costly in many ways, including physical costs required to make a change as well as significant losses of customer loyalty.   

To read Mr. Bachman’s analysis in full, click here. 

One wonders where already shaky US Carriers planned to raise the kind of money they were offering in support of  JAL, but fortunately, the Japanese government has nixed the possibility.  US shareholders and passengers should be grateful!   Why fight to purchase an interest in a bankrupt airline with too much capacity, a moribund route structure, huge liabilities, and customer service ill suited to the international marketplace? 

Delta, still feeling the logistical challenge of integrating Northwest into its vast network, has a gaping hole which resulted from Continental’s defection  to the Star Alliance last year.  

Continental Abandoned Sky Team in 2009 

Unwilling to serve as the “Junior”  US Partner in the Sky Team Alliance, Continental’s  bolted to the Star Alliance carriers, even though it competes with its new partners on most International routes.  Continental has been quite forthcoming about the costs of switching alliances, and has been investing heaving in educating its frequent fliers about the benefits of booking Star Alliance flights.  Switching to Sky Team would have cost JAL a fortune, and would have further eroded market share. 

Japan Airlines’ new Chairman, Kasuo Inamori, faces a wide range of challenges from within his company, from his government, and from the marketplace.  Forced to maintain unprofitable routes by the government, JAL has been hemorrhaging cash.  Many International Flights have lost lucrative business class travelers, perhaps scared away by the impending bankruptcy.   

A Recent Flight Experience 

On a mid-January flight from San Francisco to Tokyo on JAL’s flagship flight 001, we found the business class cabin half empty.  Inflight service appeared to be geared exclusively toward Japanese passengers, reflecting a regionalism  inappropriate in a global economy.    

True, JAL had just finished installing new business class seats and a premium economy class US carriers haven’t matched.   But while Western menu choices were in short supply, we found business class service and catering to be sorely lacking.  Served all at once, (see below) our transpacific dinner (see below) looked and tasted like a coach meal rather than an international business class meal.  

We didn't think much of JAL's Inflight Service

Only time will tell whether JAL can become a truly vibrant global force.  Maybe the change of management will help; installing an outsider to lead the recovery certainly couldn’t hurt. 

In the meantime, unless there’s a significant cost savings, your Summit Team recommends that you consider another choice for your Pacific travel.

Advertisements

Southwest Joins In-Flight Internet Access Rollout Parade

February 5, 2010

Southwest Airlines has announced a rollout of Internet Access on its fleet of 737 Aircraft.  The low-cost Airline leader has steadfastly resisted installing any type of inflight entertainment, but now competition from legacy carriers is dictating the need for business friendly services on long distance flights. 

From its humble beginnings in Texas with average flight duration of less than an hour, Southwest has expanded to become a true coast-to-coast carrier, with trans-continental flights and five hour flights in markets such as Buffalo – Phoenix and Albany – Las Vegas.  Southwest has also recently entered heavy-duty business markets at New York LGA and Boston.  A four-aircraft test that has been going on for nearly a year has seemingly convinced Southwest’s management that passengers are willing to support wi-fi service. 

By this summer, Southwest will ramp up installations to approximately one plane every two days, which means it will take up to two years to fully equip the Southwest fleet.   

Air Tran, one of Southwest’s most aggressive low-cost competitors, already has wi-fi on its entire fleet, joining Virgin America as the first two carriers to offer internet service on all of its planes.  Legacy carriers American, Delta, United, and USAir are already offering various levels of internet service on its flights, with Delta being the carrier most likely to have its entire domestic fleet outfitted first. 

All of the carriers, as well as federal law, prohibit using the internet service for VoIP phone call services, such as Skype, although SMS and e-mail services are both viable.

With Southwest’s announcement that it’s committing to full scale rollout of Internet Access, it’s become clear that Email in the air has come into its own, and only the smallest regional carriers will not be on board.

Should Japan Air Lines be Extinct? Will the “Battle of the Alliances” Winner be the Ultimate Loser?

January 17, 2010

Japan Air Line’s recent financial distress is front page news around the world.  Four of us recently boarded a spanking new JAL Boeing Triple 7  in San Francisco.   JAL 001 – the carrier’s flagship flight – was bound for Tokyo, and we were connecting in Narita for Singapore.   Two of us were experienced worldwide “business” travelers, and two were highly experienced leisure travelers.  We all walked away with the same conclusion – this airline needs to adapt or die.

As the third leg of an around the world tour, I admit to looking forward to this flight eagerly.  While most Americans also admit some degree of uncertainty with how to react to Japanese culture, I was not prepared for the complete indifference of the JAL cabin crew towards non-Japanese passengers.

As a first impression, we were surprised that the Japan Air Lines lounge in San Francisco appeared to have been decorated sometime in the late 70’s.   The Wi-Fi system in the lounge didn’t work – we actually had to piggy-back off of a nearby airline’s lounge which offered a strong enough signal.  When business travelers are about to embark on a 14 hour flight,  they need a reliable connection.   Requests for assistance were met with half-hearted apologies.  Clearly, connectivity was not a priority.   The lunchtime departure was delayed slightly, but with 30 some-odd passengers in the lounge, there “snacks” on offer were minimal, and clearly geared to an Eastern audience.   And while two of us will try almost anything Asian, the seaweed wraps in cellophane were pronounced inedible by both of us.  Peanuts and an egg-salad sandwich quarter were the other alternatives.  So – we headed for the flight and settled in.

Great Expectations

We all gave the new JAL business class pod seat high marks for comfort and flexibility.  Even at 6’3″ – the seat was comfortable enough to sleep in.  While not completely flat, the angle of inclination did not make one feel as if we were sliding on to the floor – as is so often the case on US carrier business class seats. 

The spacious seating of the 2-3-2 business class configuration did not seem as cramped as US versions on the plane, and in fact the sleeker design somehow contributed to a cleaner design.  Perhaps the absence of gray leather and a lower profile seat  made a difference.   The advertised “next generation” seats delivered as promised.   But from there on – it was all down hill.

The first ominous sign came from a flight hostess who instructed us – each of us separately –  to turn off our mobile phones, even though the aircraft door was still open.   This breach of basic international protocol again prevented last minute connectivity, but for no apparent reason.  Certainly it’s been proven that mobile phones have nothing to do with safety while parked at the gate!  We chalked this one up to quirkiness.

(Incidentally, the phone police mercifully did not force themselves into the cramped (but immaculate) toilets prior to takeoff).

In another protocol lapse, there were no pre-flight drinks, or even water and juice, offered prior to take off.  It was something we could live without, but seemed strange to us.  But as petty as some of the following complaints might appear, there are relatively few avenues upon which airlines can differentiate themselves.

Safety is, of course, “Job One” as the old saying goes.   While I never felt unsafe for a second on JAL, of far more importance was the general inability and/or unwillingness of the crew to converse with passengers in English.  5 minute long public address announcements in Japanese were followed by heavily accented, hard to understand 30 second messages in English.  

A Clash of Cultures

I have Japanese clients and work more than most Americans to understand the Japanese culture.  But I have also flown extensively on Chinese, Korean, Spanish, German, and French National Carriers, and even when traveling between non-US city pairs, the flight announcements are always understandable.   Had there been an emergency, I wonder if less well traveled American travelers would have known what to do – it was clear that one would be on one’s own in the case of emergency.

Airline food is a major differentiator between airlines, and while I know never to expect too much – especially in coach – it seemed that the presentation needed a lot of work.  The western cuisine was unappetizing, but the Japanese cuisine was in short supply.  Apparently, the airline did not anticipate multiple “western” passengers opting for Japanese meals.  The crew’s gracious apology for running out was accepted, but it seemed odd to run out of the modest sukiyaki styled beef offering.   Overall, the Asian style appetizer selection was excellent, but the rest of the meal was quite disappointing.

The second offering on this 13 hour flight was a western style “curried” crepe.  For those of us who dislike curry, the Japanese offering was even less appetizing.  Both meals were of a level typical of coach meals on European transatlantic carriers.

I don’t want to be trivial, but for some reason, water bottles were handed out to Japanese speaking passengers, but not to Americans.  Only after three requests was bottled water brought.  

There was no “in flight” amenity kit – a first on my intercontinental travels. 

Blankets were flimsy, and of limited value, which was OK, because the cabin stayed warm throughout the flight.  (My thermometer, which I carry to check meeting room temperatures, read 73-74F through most of the flight.  I always think airlines crank up the heat to encourage sleep).

Finally, for some reason, the frequent “turbulence” periods seemed to extend 5 to 10 minutes longer than they do on other carriers – long after the flight seemed to smooth out.

Tight Connections and “Making Up Time”

Our flight left nearly an hour late, and typically, airlines will make some effort to “make up time.”   Not so with either leg of our JAL flights.   We flew at well under maximum speed (sometimes under 450 MPH) and were 70 minutes late landing at Narita (followed by an interminable 20 minute taxi to a gate on the other end of the airport.  Since we only had 75 minutes for our connection, we were distressed that the crew seemed unaware that we and other passengers were going to miss our connections.  

Extensive information about Japanese domestic transfers was provided –  followed by – nothing! – about International connections.   We raced off the plane expecting there to be a contact at the jet bridge – but – again, Nothing!  We knew we could not be the only connecting passengers, but there were no directions and no one to guide in the right direction.  

Having transited Tokyo Narita many times, we still expected some sort of staffing at the gate, but only after 5 minutes fast walk did we come to the contact point with all our names – and the names of 15 other passengers.   We were given a sticker, and rushed to security.

Now, to JAL’s credit, the plane was held for us.  We underwent an extensive security check, including every possible electronic item (not JAL security of course) – and then were told to HURRY!   RUN! to the connecting flight.   Where we made it to our seats, and then promptly sat there for 40 minutes before the doors were closed.  (No cell phones, of course!)  

JAL is not the only airline to do this kind of thing, of course, but the urgency of having to run through Narita, only to sit for more than 1/2 hour with – again- no pre-flight beverage… well, it was no way to treat a customer. Again, the late departure was met by a disturbing insouciance by the flight crew – we were advised we would land 90 minutes late – at 1:45 AM instead of 12:05 AM – as the flight lumbered along – according to the screen display at a leisurely 390 MPH.   I don’t think they can blame that kind of performance on congestion at Narita!

Passengers or Cargo?

The moral of the story is – you can’t treat customers like cargo on competitive routes and expect them to return.   I now know I’m not missing anything by flying American or Delta to Japan.

Flying transatlantic with JAL, I expected to be treated like an honored guest.   I felt like I was an inconvenience. Would I take JAL again?  Well, only if it meant saving a significant amount of money, or if there were no other options.   I sure wouldn’t have my hopes up for an extraordinary flight.  I realize these observations are based on a single trip and two flights, but carriers rarely get a second chance to make a first impression.

So, what does all this mean for JAL’s future?   Well, in my humble opinion, if  JAL management thinks it can fill planes with 100% Japanese guests and still turn a profit, they might make it.   We can probably assume the Japanese government won’t abandon their National Flag Carrier, but you never know these days.

The Winner as the Loser

But if on lucrative US – Asia and European – Asian routes they lose a 5 or 10% market share, the only way they can stay afloat is with government money.  JAL has to become a truly International Carrier – and not one that just takes Japanese businessmen and tourists to foreign destinations.   Something has to give!  

On the other hand, JAL might stay afloat with  the foolish capital investment of a US based carrier who thinks they can make up a wasteful and ridiculous investment in a failing carrier with “volume.”  

Whether the courtship for JAL is ultimately won by Sky Team or One World investors, the winner of the battle will likely be the loser of the war!