AIRLINE BIZ

1. Better than Valentine's Day is Feb. 15 -- when chocolate-covered, marshmallow hearts are half price. (And we're only 38 days away from half-priced chocolate-coverd, marshmallow Easter bunnies.)

2. Why doesn't American Airlines buy US Airways? Pilots at both airlines are already mad, so no additional harm done.

3. Is there anything sadder than parents who have such low esteem that they have to bask in the reflected glory of their children?

American Airlines and its pilots union, the Allied Pilots Association, agreed Thursday afternoon on how they're going to proceed with negotiations. But the "protocol" doesn't set a deadline for coming to a deal or being released to go on strike or impose a contract.

The compromise adopted Thursday afternoon says that the two sides will begin five weeks of talks on March 10, with the negotiations facilitated by the National Mediation Board.

Either side after the five weeks can petition the National Mediation Board to become formally involved by appointing a mediator that would guide future discussions.

APA negotiators had proposed a plan Wednesday that would spell out a timetable of assisted talks, NMB mediation and such that could have resulted in a release from mediation by late summer 2008, and then possibly a pilots' strike.

American had responded Thursday morning with a proposal for four months of assisted talks, followed by the option of submitting up to five issues each to winner-take-all binding arbitration or going to formal NMB mediation.

This may sound like an argument over whether to have a round table or a square one, but it's more than that. The union is pushing hard to force the contract talks to a conclusion, whether that's a negotiated deal or a strike.

Virgin America and Southwest Airlines love San Francisco. They both tell us so in their promotions.

On Thursday, Virgin America put out a press release saying it was "showing the love" by handing out special Valentine's Day presents to passersby on the streets of San Francisco.

When Southwest relaunched its San Francisco service last summer, it "showered the Bay Area today with LUV," according its press release back then.

Love is apparently big in San Francisco, and the two airlines are trying to tap into it. They also seem to love to the same cities from San Francisco.

Both airlines, which both began SFO service last August, fly to Las Vegas, San Diego and Los Angeles. Virgin America also flies non-stop to New York and Washington, D.C., out of SFO, and Southwest also flies to Chicago.

American Airlines has responded to the Allied Pilots Association's hurry-up timetable by counter-proposing a slower schedule that doesn't set a date to wrap things up.

Let me abbreviate the APA proposal from Wednesday: four weeks of assisted talks beginning March 3; then get the National Mediation Board involved. Then, 120 days after the NMB request to get involved, both sides ask NMB for proffer of binding arbitration. Then, (implied, but natural result) 30-day cooling-off period, followed by self help.

American's Thursday response, abbreviated: four months of assisted talks beginning March 10, followed either by baseball-style binding arbitration or formal invitation to the National Mediation Board to get involved. It proposes no deadline to wind up the negotiations.

Well, what did you expect? American has no reason to want to push the negotiations to a bad conclusion for it, and a strike would be a bad conclusion. If you never get to impasse and cooling-off, you never get to a legal strike.

(A thought occurred to me: only in airline negotiations can you call a proposal to end negotiations after nearly two years a "hurry-up" schedule.)

Thanks to Southlake travel agent Steve Cosgrove for passing on a note from US Airways about a curtailment in that carrier's frequent-flier program, Dividend Miles.

US Airways will begin awarding only the number of miles the traveler flies, with no minimum. That's for tickets bought after March 1 for travel after May 1.

With the change, you'll get those actual miles. And, assuming you had a connection in Las Vegas as you flew from Phoenix to Los Angeles, you'd get 491 miles one way, not 1,000 miles as at present, and a round trip would get you 982 miles, not 2,000.

Mr. Cosgrove wonders how long it will take for other airlines to match US Airways.

Good point. It didn't take long for most of the airlines to establish a policy to cancel all the miles in accounts where there had been no activity for 18 months, half the previous 36 months.

Oh yes -- US Airways is also going to start charging a $50 fee for Dividend Miles members who redeem awards on-line within 14 days of travel. It already charged a $75 fee for telephone redemption.

As the item right below this one notes, the Allied Pilots Association wants American Airlines to agree to a schedule and protocol for negotiations, with a timetable that could bring a strike by late summer.

Here's American's interim response, before it responds formally to the union:

We are pleased that the APA today responded to American's previous requests for a protocol agreement by proposing a negotiating protocol and timeline. We plan to review it carefully and provide our response shortly.

American shares APA's interest in a constructive and timely negotiations process and we agree with the NMB's recommendation that the parties narrow the issues prior to entering formal mediation. Given the importance of this contract to American and our pilots, we want to be sure to get it right.

Here's an appetizing proposal from the Allied Pilots Association for American Airlines: Why don't we set a date for a strike?

That would be the negative interpretation of a proposal Wednesday from the union to the airline. A more positive interpretation is that the union is proposing an accelerated timeline to an agreement.

For details, check out our story. But let's look at the timetable laid out by the Allied Pilots Association:

1. March 3: The airline and union would begin four weeks of assisted talks (not to be confused with formal federal mediation) on March 3. The four weeks would end on March 31.

2. March 31: On that date, both sides will ask for NMB mediation if either side is not satisfied with the progress.

3. July 29: The two sides would ask the NMB to proffer binding arbitration if there' s no agreement within 120 days of the date that they make the request for the National Mediation Board's help. July 29 is 120 days after March 31.

4. Aug. 28 or after: Let's say the board proffers arbitration, one side rejects it and the board starts the cooling-off period all on the same day, July 29. Then 30 days later is Aug. 28.

In reality it takes some time for that to all play out. The NMB would take a few days to consider the two sides' request, and would take a day or two to start a 30-day cooling-off period after one of the parties rejected the proffer of binding arbitration.

So, add a week to that, and we'll be to Sept. 4, a few days past Labor Day and out of the peak summer travel period.

Under that schedule, a pilots' strike would begin around 12:01 a.m. Sept. 5. It might end by 12:11 a.m., if President Bush steps in and appoints a presidential emergency board. But that's a ways down the road.

For more than 20 years, Herb Kelleher has gotten the nice articles. Now, his replacement as Southwest Airlines CEO, Gary Kelly, is getting the nice writeups.

The latest example comes in the New York Times, which has an article Wednesday about how Mr. Kelly has adapted himself to Southwest's culture without just becoming a Herb Kelleher clone.

With a Halloween 2007 photo of Mr. Kelly dressed as Edna Turnblad of "Hairspray," the article talks about Mr. Kelly's work to blend in, at the same time that he has been forced to modify some of Southwest's long-standing business practices.

Even in drag, oddly, Mr. Kelly was conforming — to a culture that has helped make Southwest the only consistently profitable company in the domestic airline industry. The episode last October revealed him as an unusual corporate chief these days, one trying to fit the mold of his company rather than trying to mold the company in his own image.

Mr. Kelly took over as CEO in 2004 from Jim Parker, who succeeded Mr. Kelleher in that role in 2001. In 2008, Mr. Kelleher relinquishes the chairman title as well, probably to Mr. Kelly.

Delta Air Lines filed an 8-K Wednesday with the Securities and Exchange Commission saying that CEO Richard Anderson has volunteered to give up the big piles of money to which he would be entitled if Delta merges with another airline.

Here's how it is stated in the filing:

[Mr. Anderson] voluntarily offered to waive the change in control provisions of his compensation arrangements. Mr. Anderson volunteered to give up any enhanced or accelerated compensation that he would otherwise be entitled to if any consolidation transaction currently under review is completed. The Personnel & Compensation Committee of Delta's Board of Directors has accepted Mr. Anderson's offer.

According to the Aug. 28, 2007, contract signed between Mr. Anderson and the Delta board at his hiring, Mr. Anderson in a "change of control" would get two years' salary, $1.2 million, plus 200 percent of the target amount of any applicable management incentive plan. His 2008 target is 150 percent of his $600,000 base salary. So that's another $900,000.

Then there are long-term incentive awards, stock from performance awards -- it's a lot of money, millions and millions.
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In addition, the Delta change of control severance plan provides that Delta will "gross up" the payout so that the executive nets the above amounts after taxes. That's worth millions of dollars by itself.

One interesting item from Mr. Anderson's contract: He gets no performance stock awards in a year in which there's no profit sharing paid out to employees.

The British Airline Pilots' Association is non too pleased about plans by British Airways to recruit a non-BA crew for its new OpenSkies subsidiary.

An item in ATW Online says the pilots stand ready to strike if BA goes ahead with its plan.

OpenSkies was unveiled in January and plans to fly between Europe and the U.S., initially between either Paris and Brussels to a New York area airport this year.

The airline, named after the effort to liberalize of flying between Europe and the U.S., would have a fleet of six airplanes by the end of 2009.

According to the article, the pilots are voting by Feb. 20 and could strike as early as Feb. 29.

Travel guru Tom Parsons had a Dallas Morning News column that offers tough-love advice to people who are addicted to frequent-flier miles and other loyalty programs.

His message: Kick them out of the house.

Travelers should forget about airline loyalty based on frequent-flier programs and stick to who offers the cheapest tickets at the time of booking.

Airlines are getting stingier when it comes to earning and redeeming miles. With fewer award seats, fewer promotions and increasing fees, mileage programs are losing their luster.

A New York Times story also talks about how difficult it has become to redeem awards at times when travelers want to travel:

Travelers have long complained about the difficulty of booking frequent-flier tickets, but now it’s becoming even harder. One issue is the airline load factor. Seats filled with paying passengers averaged 80 percent in the year ended October, up one percentage point from 2006. The industry considers that level a near-capacity load factor, and as a result, airlines have less incentive to offer award seats on planes they can easily fill with paying passengers.

Meanwhile, airlines are issuing miles on credit card payments for everything from groceries to rent, resulting in a glut of miles competing for a shrinking number of seats. On top of this, airlines have been tweaking their frequent-flier programs, making miles both harder to redeem and cheaper in value.

See, it wasn't just your imagination.

Two airlines are launching new service to Texas.

US Airways on May 4 will launch service, via regional partner US Airways Express and with regional jets, from its Charlotte, N.C., hub to Austin and San Antonio. Each city will get two round trips a day.

"With a solid business and government base supported by outstanding educational institutions, a diverse economy, culture and tourism, we are pleased to offer central Texas connections to Europe, Latin America and the Caribbean through our Charlotte hub," US Airways director of Express planning Jason Reisinger said Monday.

A more unusual offering was announced last week by Northwest Airlines. It said it will begin service May 2 from Indianapolis to the same two Texas cities, Austin and San Antonio. Like US Airways, Northwest will use regional partner Pinnacle Airlines, but it will offer only a single round trip each day to each city.

One doesn't usually think of Northwest and Indianapolis together. However, Northwest does note that with the new service, it will offer 43 flights to 19 cities from Indianapolis.

UPDATE: Frequent commenter Scott points out this: "Northwest is expanding service from Indianapolis because it perceives the city as 'underserved' because of the demise of ATA. I doubt it will become a 'hub' but Northwest has been developing more 'point-to-point' service in the last 2 years to better support their long-haul hubs. Also, San Antonio has a major attraction as a "convention city" so service there is almost a must."

Back in 1994, Southwest Airlines was a much different animal. Its average flight traveled only 391 miles, and 80 percent of its passengers flew nonstop rather than connect to another flight or take a second flight on the same airplane.

So what about today? The average flight goes 629 miles, and Southwest can now offer connecting service out of Dallas Love Field to anywhere in the United States. That leads to this week’s question:

In 2007, what percent of Southwest's passengers flew nonstop?

A. 37%
B. 53%
C. 61%
D. 79%

A colleague sent me a caution Saturday that some of the reports about Delta Air Lines and its merger plans were not, according to his information, accurate.

That gives me an opportunity to repeat some common sense: When there's a rapidly changing situation with news that's coming from unnamed sources, take it all with a grain of salt.

Each newspaper is hearing a version from a reporter's own sources, and those sources may or may not be getting the whole story. Those sources may be stating a version of the truth that they'd like to believe, or that the person who told them would like them to believe.

For example, anyone who thinks a merger will go through with few front-line job losses is fooling themselves. Anyone who thinks there'll be a major merger like Northwest and Delta, or Continental and United, without hubs being closed is likely misleading themselves.

It may not be on Day 1 or by the end of Year 1. But employees will lose their jobs, and cities will lose a lot of flights, by the time the full effects of a merger shakes out.

Let's hop around the country and see what the newspapers in the hometowns and hubs of Northwest Airlines and Delta Air Lines have been saying lately about the brewing Delta-Northwest merger.

First, the Detroit News says that a merger is "likely" and could be announced next week:

If a deal happens, they [sources] said, the merged company would retain the Delta name, be headquartered in Atlanta and be led by Delta CEO Richard Anderson. It also would likely be a stock-swap deal, with little if any cash changing hands.

The story speculated that Northwest executives including CEO Doug Steenland "would leave after a transition period that could take a couple of years."

The Cincinnati Enquirer says the merger would cause the loss of few jobs of people who deal with passengers, and that no hubs, including Delta's Cincinnati hub, would close.

Several hometown or hub newspapers, including the Atlanta Journal-Constitution, carried an Associated Press story about why Northwest's unions would prefer not to have Northwest CEO Doug Steenland around after a merger.

"Our concern with Doug is we haven't had the best of labor relations since he's been around," said Kevin Griffin, president of the Northwest branch of the Association of Flight Attendants-CWA. "There's a little bit of a trust factor there."

The Atlanta newspaper also advised investors not to jump onto Delta stock if they don't like rollercoaster rides.

It quoted the presidenet of a Georgia financial management company: "The cat is already out of the bag because the word is out that they are talking. There's probably more downside potential at this point than upside."

Ted Reed at TheStreet.com asks the big question: Where is AMR and American Airlines in all of this and will AMR play the spoiler?

Some experts, including Avondale Partners analyst Bob McAdoo, believe that American is likely to become involved. He has said American could bid for Northwest or, if that fails, seek to acquire US Airways(LCC:NYSE) in order to block United from gaining the dominating Northeast presence it has always lacked.

However, were American to seek to pre-empt a Delta and Northwest merger, it might face problems because of the difficulty inherent in topping an all-stock deal and because it is already the largest airline, said a source familiar with the ongoing merger discussions. Additionally, a pact between Delta and Northwest could be sweetened with a cash infusion by the Skyteam global alliance, and it might be hard for American to respond, the source said.

The unfortunate history of American's recent merger efforts may well be a factor in its current analysis. "American has had considerable experience with mergers, and it's hard to say that in recent times they have turned out favorably," says consultant George Hamlin of Airline Capital Associates.

Mr. Reed notes that if Delta-Northwest is followed by United Airlines-Continental Airlines, American goes from being the world's largest airlines to the third largest.

The two runoff candidates to lead the Association of Professional Flight Attendants are squaring off on the question on whether one candidate has made a deal with the ex-Trans World Airlines flight attendants.

John Ward, who led the American Airlines union from 2000 to 2004, claims on his election web site that the ex-TWA employees are going to vote as a block for his opponent, Laura Glading. The understanding is that they'll get something in exchange for their vote, the Ward site claims.

Ms. Glading has responded on her web site, and quotes a message from Tim Daniels, one of the leaders among the ex-TWA flight attendants who endorsed the Glading ticket:

"There were absolutely NO promises made or deals cut with Dixie [Daniels], Nena [Martin] or me by either the Ward OR Glading slates on any issue," Mr. Daniels wrote to another flight attendant.

It's been quiet ever since word leaked out in January that the Delta Air Lines board had authorized merger talks with Northwest Airlines and UAL.

Too quiet.

But Wednesday afternoon, the Wall Street Journal reported that things may be moving:

Merger discussions between Delta Air Lines Inc. and Northwest Airlines Corp. have picked up steam, and a deal could be announced as early as next week, according to people who have been briefed on the negotiations.

At the same time, preliminary talks between United Airlines parent UAL Corp. and Continental Airlines Inc. have grown more serious, according to a person familiar with the situation.

Last week, TheStreet.com reported that Delta had been talking to Continental, but that the Northwest talks were moving faster. On Monday, the Atlanta Journal-Constitution said a deal could be announced within two weeks or never.

On Tuesday, the Detroit Free Press said analysts thought a merger was "imminent."

Reports had said that a Delta-Northwest deal might founder on the issue of who would run the merged company and what role the Northwest executives would play. The WSJ's story this afternoon repeated that problem, but said the Northwest board told Northwest CEO Doug Steenland to resume talks.

On Jan. 28, Ryanair ran an ad in a Paris newspaper showing a photo of French President Nicolas Sarkozy and girlfriend Carla Bruni, and a thought balloon for Ms. Bruni saying "Now my whole family can come to my wedding."

President Sarkozy complained, Ryanair said it was all in good fun, President Sarkozy and Ms. Bruni filed a lawsuit in a French court, and on Saturday, Mr. Sarkozy and Ms. Bruni got married. It was a busy week.

On Tuesday, a French court ruled that the couple owned their images and that Ryanair had used their images improperly. Monsieur Sarkozy, who asked for one euro in damages, got one euro in damages; Madamoiselle Bruni, who is now Madame Sarkozy, had asked for 500,000 euros and won 60,000 euros.

One euro equals about $1.46, so the Bruni damages comes to just under $88,000.

We speculated this week about whether American Airlines was jabbing at United Airlines when American's press releases out of South Florida point out that American doesn't charge passengers for two bags.

A person who knows says that the message wasn't aimed at United, which announced Monday it would charge $25 for the second bag in many cases on domestic flights. American's jab was aimed at Spirit Airlines, which does charge passengers for checked bags.

Spirit, which is expanding aggressively to the Caribbean and Latin America out of Fort Lauderdale, Fla., announced Wednesday that it is increasing its baggage fees. Spirit calls it "an innovative approach to address rising fuel prices."

Hunh. I would have called it a fee increase.

But anyways, Spirit says its $5 charge for a checked piece of luggage will increase to $10, and that's if the passenger has pre-reserved the bag on-line. If not pre-reserved, the current $10 charge will increase to $20.

So, two bags will cost you $20 to check if you make arrangements ahead of time, and $40 if you don't. Passengers can still carry one bag onto the airplane at no charge.

We've got the traffic numbers for the top 10 U.S. airlines for January. Some points before we get to the chart:

* United Airlines and US Airways were the only carriers to see a drop in traffic. AirTran Airways showed the biggest increase.

* American Airlines, United, US Airways and Northwest Airlines all flew less capacity in January than a year earlier. Everyone else in the top 10 grew.

* Northwest's airplanes, at 80.5 percent load factor, were the fullest. Southwest Airlines, at 64.2 percent, was the least full. AirTran raised its load factor the most, 5.3 points to 67.4 percent.

* Only JetBlue Airways and United reported a drop in load factor, down 1.5 points to 76.5 percent. All parts of United's system -- North America, Pacific, Latin America and Atlantic -- showed declines.

US Airways employees are getting $50 bonus because their airline had the best on-time record among the nation's 10 largest carriers in December.

US Airways, you might ask? The same carrier that averaged seventh among the 10 airlines for all of 2007? The airline that finished 14th or 15th out of 20 airlines that report their statistics during the year? The airline that finished below the industry average for 10 out of 12 months in 2007?

Well, yes, that US Airways. Regardless of how poorly it had done for most of 2007, 74.5 percent of its flights arrived within 15 minutes of schedule in December, 10.2 points better than the industry average of 64.3 percent.

On Forbes.com, travel consultant and author Joel Widzer takes aim at airline critics, of which there is no lack.

Rather than recognize the merits and benefits of a strong and viable air transportation system, travel writers resort to a game of political foes attacking their enemies. And enemies they are. I like to think of this group as a grumpy gang of travelers. Those who seemingly believe that airlines are to serve at the whim of the consumer without any consideration toward generating a profit to sustain their business, pay their employees and return value to shareholders.

Mr. Widzer acknowledges that bad experiences, such being kept for hours on a grounded airplane, have soured many travelers. "However, airlines got the message and, for the most part, instituted change."

And he says, "Other than security screening, which really is a TSA process, airlines have been working hard to enhance the flying experience."

We've got a story on Dallasnews.com about the on-time record of U.S. airlines in 2007. If you flew last year, you can probably guess what it said.

The U.S. Department of Transportation says 73.4 percent of all flights were on time last year. To turn that stat around, that means 26.6 percent of all flights were at least 15 minutes late. Only 2000 produced a worse full-year record since the DOT started requiring airlines to report their performance in 1987.

For American Airlines and US Airways, nearly one in three flights arrived late. Southwest Airlines achieved an 80.1 percent on-time rate, best of the 10 largest airlines, which means that one of every five of its flights were late.

For the numbers nerds, I've got particulars down below.

American Airlines has been recognized for having the industry's best wine selection and also for having the best fortified or sweet wine in business class in the Cellars in the Sky 2007 awards.

In case you want to go shopping for the winning sweet wine -- it was La Plaza Vieja, medium golden, Emilio Lustau.

Cellars in the Sky is an annual competition organized by Business Traveller magazine in cooperation iwth Wine & Spirit magaine and the Internaitonal Wine Challenge.

The competition included 26 airlines from around the world and judges evaluated more than 200 different wines in a blind taste test.

American’s inflight wine list is designed by the airline’s wine consultant, Diane Teitelbaum, a wine expert with nearly 30 years of experience in the field. Ms. Teitelbaum maintains 15 different wine lists to accommodate taste preferences on the airline's various routes around the world.

Last August, American earned awards in two categories from Global Traveler magazine in the “Wines on the Wing” International Business Class Airline Wine Competition.

A year ago, American was named a winner in two categories at the Cellars in the Sky 2006 Awards, including best wine list for its first class cabin.

American Airlines has announced a fare sale for trips to Central and South America through mid May.

American noted that one of its "amenities" is "the ability to check up to two pieces of luggage of 50 pounds or less each at no additional cost."

This comes a few hours after United Airlines announced that it'll begin charging $25 for the second bag checked by people flying on discount tickets and who aren't premium members of its frequent-flier program.

But a check shows that American was touting the two-bag policy before United's announcement.

American Airlines said Monday that its traffic increased 0.2 percent in January on a 1.5 percent drop in capacity.

It filled 76.6 percent of its seats in January, up 1.3 percentage points from January 2007.

I'm guessing that's American's highest January load factor in its history, with the possible exception of World War II.

AirTran Airways says it set records for traffic, capacity, number of passengers and load factor during January. But its load factor was well below that of American's.

Its traffic climbed 14.4 percent on a 5.5 percent increase in capacity. AirTran filled 67.4 percent of its seats, a 5.2-point increase from a year earlier.

United Airlines said Monday it will start charging $25 for a second checked piece of luggage for its least profitable customers -- the passengers flying on restricted discount tickets and who don't have status in its frequent-flier program.

Previously, United didn't charge for the second bag. And how does United justify it? It's all "part of its continuing effort to offer customers choice, flexibility, and low fares."

Says United:

For all customers, the cost to check up to four additional bags [beyond the first two] will be $100 per bag. Previous charges ranged from $85-$125 per bag. The cost to check items that require special handling because they are large, overweight or fragile will now be either $100 or $200, depending on the item.

United's most frequent fliers -- customers who have Premier status or higher in Mileage Plus, or Silver status or higher with Star Alliance -- will continue to receive the benefit of checking two bags for free.

From its press release, United says it expects the new policy to mean additional $100 million each year for the airline, either in cost savings or additional revenue.

"This change enables us to continue offering customers competitive fares, and it fits with our overall strategy to tailor our products and services around what our customers value most and are willing to pay for, as we have with our popular Economy Plus seating," said John Tague, executive vice president and chief revenue officer.

"Our customer research shows that only about one in four customers check a second bag, and with this new policy, customers who check extra bags may continue to do so for a service fee, which enables us to offer competitive fares to everyone," Mr. Tague said.

The Dallas Morning News was going to have a story Monday morning about the standoff between American Airlines and its pilots union over a safety program.

The Aviation Safety Action Program , started 14 years ago, gives pilots some immunity from discipline if they report safety problems. It was set to expire Feb. 7 because the pilots were seeking a change in the program to give them more protections from discipline. American wasn't going along.

The program was set up to encourage pilots to report safety issues, including mistakes they may have made, without worrying that they would get punished if they revealed their mistakes.

As written now, a pilot cannot be disciplined "except when data and information is initiated and substantiated from reports or disclosure outside of ASAP." The union wants to eliminate the language in quotes. American wants to keep the language as it is now.

But I learned late Friday afternoon that the Federal Aviation Administration has agreed to extend the Aviation Safety Action Program for another three months, so the showdown has been delayed at least three months.

That's why there's no big story Monday in The News. Check back in early May.

The carrier, which offers nonstop service to Dubai in the United Arab Emirates, now flies the route daily.

Houston airport officials said the fast growth in service by Emirates was fueled by heavy passenger loads.

The carrier had been filling 80 percent of its plane when it offered service only three times a week.

"Entering any new market usually means building up your passenger base and getting the word out about your new service. Most carriers start off at a load factor of about 70 to 75 percent. The fact that Emirates has exceeded that trend from the beginning, confirms that Houston is a very dynamic market," says Richard M. Vacar, director of the Houston Airport System.

Officials for Emirates have said that more than 70 percent of Emirates' passengers come from the city's oil and gas industry. The airline is also carrying about 10 tons of air cargo on each flight.

Houston officials estimate the new daily service will generate up to $300 million in positive economic impact for the local region.

Ted Reed at TheStreet.com reports that Delta Air Lines has talked to Continental Airlines as a possible merger partner.

Mr. Reed says in his story:

Those talks so far have been preliminary, and have not advanced as far as merger discussions with Northwest, according to a person familiar with the situation. However, discussions with Northwest appear to have hit snags, including issues involving the leadership of the combined company.

Delta reportedly is also talking to UAL/United Airlines.

The Allied Pilots Association is holding meetings at all its bases Friday to talk about the ongoing contract talks with American Airlines and anything else that comes up. The Dallas/Fort Worth one is at a Grapevine restaurant.

The union says more than 1,500 pilots attended the meetings. UPDATE: The union later upped it to more than 1,800 pilots at the nine locations.

“By coming together on the same day in such large numbers, our pilots are sending an unmistakable message to American Airlines management,” APA president Lloyd Hill said. “We are unified and determined to restore our profession.”

Speaking of pilots, one of the 143 or so pilots who retired effective Friday was union leader Mark Epperson, a mere lad of 59 who is president of the APA's San Francisco base. He turned over the job on an interim basis to a fellow pilot, Jason Boles.

In a goodbye message to the SFO base Thursday in which he thanked everyone including American, he also expressed some sadness:

"The AA that was once the leader in virtually every industry standard now ranks at the bottom of almost every list. The innovations that once were a hallmark of creative minds have been replaced with colorless and faceless number crunchers who place more value on perceived savings than dedicated and energized employees."

SFO was the same base where a veteran 51-year-old pilot quit his American job last year to join new carrier Virgin America.

UPDATE: Below, we've got the APA's press release on Friday's meetings.

The Nonrev Network-- which caters to airline employee travelers who fly for free or at reduced rates -- has launched upgraded its Web site.

The social networking site allows members to connect online, share tips about destinations, post reviews and upload photos.

Through forums, vistors to the site can browse hot topics or ask other members to check passenger loads so they can guage how likely it is they'll be able to get onto a flight as a standby passenger.

Folks who register can browse blogs that cater to non-rev and revenue travelers alike, such as one about visting Hawaii on a budget, and others like home exchanges that may aim more at non-rev travelers who are frequently on the go.

1. What happened to that Delta merger? It's like hearing footsteps approach your front door -- and then silence.

2. Southwest Airlines CEO Gary Kelly is unusually open in talking about Southwest's possible participation in industry consolidation. Most of the other CEOs are covering their mouths and mumbling something about how they can't say anything.

3. When travel expert Rick Steves was answering questions on KERA last week about the best time to buy an airline ticket to Europe, he quickly recommended that the caller talk to a good travel agent. Remember them? Despite all the online reservations systems that have popped up in the past 10 years, the travel agents are still out there giving good advice.

We have some interesting things going on in international markets. To wit:

Item 1: British Airways announced Friday that it will begin flying from New York Kennedy to London City Airport with little Airbus A318s configured for just 32 passengers.

Item 2: JetBlue Airways says it will begin exchanging passengers with Aer Lingus in early April.

Item 3: Eos Airlines has started a buy-one, get-one offer on its business-class service between New York and London.

I don't know what the final number will be, but it looks like at least 143 American Airlines pilots took early retirement as of Feb. 1.

I say early retirement, because now they can all fly to age 65. But the company said 143 American pilots ended their careers Thursday.

Take all these numbers as informal and incomplete. But a union guy passes along a compilation of the numbers:

(BOS=Boston, DFW=Dallas/Fort Worth, LAX=Los Angeles, LGA=New York LaGuardia, MIA=Miami, ORD=Chicago O'Hare, SFO=San Francisco, STL=St. Louis)

36 Boeing 777 captains, including 1 from BOS, 13 from DFW, 6 from LAX, 5 from LGA, 3-MIA, 8-ORD

2 Airbus A300 captains – MIA

41 Boeing 767 captains - 2-BOS, 3-DCA, 15-DFW, 5-LAX, 1-LGA, 4-MIA, 8-ORD, 3-SFO

1 Boeing 737 captain – DFW

26 McDonnell-Douglas S80 captains – 8-DFW, 3-LAX, 1-LGA, 9-ORD, 2-SFO, 3-STL

5 Boeing 777 first officers - 3-DFW, 1-MIA, 1-ORD

1 Airbus A300 first officer – MIA

3 Boeing 767 first officers - 1-LGA, 1-MIA, 1-STL

2 Boeing 737 first officers - DFW

3 McDonnell-Douglas S80 first officers – 1-DCA, 2-DFW

Another union guy says the final number may be 150 retirements. "This is roughly 2.5 times the largest number I could find since we started keeping track in the early nineties."

Check in Friday's Dallas Morning News and on Dallasnews.com Friday for a story and an explanation.

Donald J. Carty may have left American Airlines and AMR in 2003, but he certainly hasn't left the airline industry.

We bring this up because we just saw a press release announcing that Toronto-based Porter Airlines will begin service between Toronto and Newark, N.J., on March 31. And who does the press release quote?

It's Porter Airlines chairman Don Carty.

Donald J. Carty

Since February 2006, he has also been chairman of Virgin America, a new airline based in San Francisco. In February 2007, he resigned as a director of Hawaiian Holdings, parent of Hawaiian Airlines after about three years on Hawaiian's board.

According to the Porter website, Mr. Carty also serves on the boards of CHC Helicopter, Sears Holdings, Barrick Gold and Big Brothers Big Sisters of America.

When he joined Dell in December 2006, he took note of all his activities and said: “I’ll substantially cut back on other things.”

It seems he's still keeping a pretty full plate.

Business Week has a story about Federal Aviation Administration and its safety oversight about airlines. It's not very encouraging to those who want to believe that the FAA will side with its own employees rather than its airlines.

The story is mostly about an FAA inspector assigned to keep an eye on Northwest Airlines. But there is a reference to Southwest Airlines as well:

Several safety inspectors told BusinessWeek that they had also experienced or witnessed retaliation. (Most of the safety inspectors interviewed by BusinessWeek did not want to be identified by name in this article for that reason.) The House aviation subcommittee is probing an episode in which FAA management allegedly punished an inspector in 2007, according to three sources with knowledge of the subcommittee's probe. Worried that some of the aluminum skins on Southwest's (LUV) older Boeing 737s were prone to cracking, this inspector called for the planes to be rotated out of the fleet until they could all be repaired—a process that would have been time-consuming and costly. He was reassigned though later reinstated in his previous job. A Southwest spokesperson says the airline "is unaware" of the concerns raised by this inspector and "has no knowledge of a probe by the House aviation subcommittee." The FAA declined to comment.

Retaliation against the inspector assigned to Southwest will be the subject of a House aviation subcommittee hearing in March, Business Week says.

Some Mardi Gras revelers heading to New Orleans faced delays Thursday morning.

A line of thunderstorms has jammed up operations in Houston with a ground stop that lasted about 2 ½ hours Thursday morning.

Flights were halted starting about 8 a.m.

Air traffic controllers began to allow limited flights beginning at 10:30 a.m.

Flights were able to take-off and land from Houston’s William P. Hobby Airport on a regular schedule beginning at 11 a.m., said Southwest Airlines Co. spokeswoman Marilee McInnis.

She said about 40 flights were affected including eight from Dallas Love Field.

Ms. McInnis said the storms were moving toward New Orleans and could cause delays for travelers heading to Mardi Gras.

“We expect to be feeling the effects of this throughout the afternoon,” Ms. McInnis said.

The Allied Pilots Association sent out a note Thursday morning pointing out that the National Mediation Board didn't reject the request from the American Airlines pilot union for mediation in its contract talks with American.

The note to the news media said that "there may have been some confusion about the letter APA received from the NMB. Some of you may be under the impression that the NMB can 'refuse' to docket a request for mediation. This is not the case.

"According to the Q+A on their own website, and their policies and procedures, the NMB MUST docket a case and assign a mediator in response to any properly filed request. If you read the text in the letter, the NMB makes this clear.

"We read the letter as a request from the NMB to discuss this matter prior to the official docketing procedure. Suggesting that the NMB 'denied' APA's request is incorrect on a factual basis."

Here's the applicable parts from the NMB Web site:

Q: What happens if the parties cannot reach an agreement in direct negotiations?

A: If either party believes an agreement cannot be reached in direct negotiations, that party can apply for mediation with the NMB. Upon application, the NMB will docket the application and assign a mediator to the case.

Q: What happens after the application is received by the NMB?

A: The application is first reviewed to ensure that it is completed properly and appropriately, and if so, the case is then docketed.

The International Air Transport Association said Thursday that 2007’s international traffic was good and that it won’t be so good in 2008.

The trade group said international traffic increased 7.4 percent in 2007, compared to a 5.9 percent increase in 2006.

“Despite the ambiguity of strong passenger growth accompanied by weaker freight demand, we can say clearly that 2007 was the best in recent memory,” said Giovanni Bisignani, IATA’s director general and CEO.

“We can state equally clearly that there will be no encore performance in 2008,” he added.

IATA predicted that traffic will increase by 5 percent in 2008, on a 5.2 percent jump in capacity. If true, that’ll mean that airplanes will be a wee bit less full in 2008 than in 2007, when 77.0 percent of seats were filled, but better than 2006 with its 76.0 percent loads or 2005 with 75.1 percent.

Explaining IATA’s belief that 2008 won’t be as good for the airline industry, Mr. Bisignani said: “Oil prices are higher than ever. Economic uncertainty accompanying the US credit crunch is broadening. And the slower growth for passenger demand in December sets the trend for the coming months. In a tough business environment the mantra remains the same: efficiency everywhere is everything.”

Mr. Bisignani said the 7.4 percent traffic growth “was a key component of the industry’s US$5.6 billion profit in 2007—the first black number since 2000. But it wasn’t all good news. Freight slowed to 4.3%, below the 4.6% recorded in 2006. It was also below the 7.5% at which global trade expanded, highlighting a competitiveness issue with shipping.”

The National Mediation Board has sent a letter to the Allied Pilots Association and American Airlines saying in essence that it was premature to put their contract talks on the board's docket.

While the board is required to mediate airline labor disputes, mediation usually works best if the two parties have narrowed the list of outstanding issues down as much as possible. Apparently, the board does not believe that American and the union is at that point yet, seeing that they've agreed on approximately nothing so far.

This doesn't help the union's attempts to speed up the process, whether it ends up in an agreement or a strike. The Railway Labor Act lays out a defined path in labor talks, and it has to involve the National Mediation Board.

Before anybody legally can do anything, the board has to put the case on the docket, appoint a mediator, decide after a long time that the two sides are at an impasse, proffer arbitration, declare a 30-day cooling off period and likely engage in supermediation.

Only at the end of the 30-day cooling-off period will the two sides be released from mediation and allowed to engage in "self-help," the catchy way to describe imposed contracts, walkouts, etc.

Even if the NMB had gotten immediately involved, we would have had a long time before we got to the end of the process. The NMB's decision to stay out for the moment adds that much more delay -- to the chagrin of the union.

Look below for the letter.

The average fare at Dallas Love Field jumped 7.4 percent in the third quarter compared to the same period of 2006, trailing only Cincinnati and Salt Lake City in percentage increase.

But here’s the contradiction: Dallas Love Field also had the fourth lowest average fares among the top 100 U.S. markets, behind only three Hawaiian airports.

The U.S. Department of Transportation said Wednesday that tickets at Love Field – for one-way or round-trip purchases – averaged $198.74, up from $185.12 in third quarter 2007. That’s a change of $13.62.

By comparison, tickets for Dallas/Fort Worth International Airport service declined 6.9 percent, the ninth most of the 100 largest airports in the United States.

D/FW fares fell from $395.41 for the 2006 period to $368.22 for the 2007 period – a drop of $27.18 per traveler.

Changes to the Wright amendment probably explain what’s happening at both airports.

Until last October, the farthest one could fly on a Love Field ticket was Birmingham, Ala., 586 miles away. But after Congress changed the federal law that limits Love Field travel, passengers could go anywhere in the United States as long as they stopped inside the nine-state Wright amendment perimeter.

That meant that carriers using Love Field, Southwest Airlines primarily, could sell more-expensive tickets to the edges of their U.S. network, such as Seattle (1,670 miles), Fort Lauderdale (1,110 miles) or Manchester, N.H. (1,540 miles), with more expensive fares.

That expansion of Love Field service also means that flights at D/FW Airport are facing more price competition on long-haul routes, which would bring average D/FW fares down.

Of eight metro areas, the Dallas-Fort Worth area – combining Love Field and D/FW Airport -- showed the biggest decrease in average fares between third quarters 2006 and 2007, and one of only two to show a decrease.

D/FW Airport and Love Field combined had average fares of $331.78, down 6.5 percent and $23.12 from third quarter 2006. Only the San Francisco area, combining San Francisco, Oakland and San Jose, also showed a decrease, of only 2.3 percent or $7.84 to $329.85.

The greater Washington, Chicago, New York City, Houston and Boston areas all showed small increases. Although the D-FW airports showed a decrease, the average Q3 2007 fare was still higher than the San Francisco, Chicago and Washington, D.C., areas.

Look below for the average Q3 fares by airport, ranked in percentage change between 2006 and 2007:

Did that ridiculous BlueFly.com commercial, where a nude woman heading to Los Angeles is reminded at the TSA checkpoint to take off her shoes for screening, turn inspirational?

A "brite" on NPR this morning featured a German travel agency offering flights for vacationers who prefer to go nude.

Don't worry, they'll have to wear clothes in the airport.

The promotion is apparently for a flight to a Baltic Sea resort that has been popular with German nudists.

According to the Reuters story, the crew will have to remain clothed "for safety reasons."

You can thank me now for not including photos.

Airline veteran and consultant Hubert Horan, now based in Phoenix, identifies 10 commonly repeated beliefs about airline mergers.

Then he tells us why they're false, in a commentary distributed by the Business Travel Coalition on Tuesday.

Here are the 10 claims.

1. “There’s a strong, growing groundswell of support for airline mergers.”

2. “Airline mergers would be part of a natural industry shakeout process.”

3. “Airline mergers would be a necessary response to $100/bbl fuel and a downturn in the business cycle.”

4. “Airline mergers could be implemented with limited risk.”

5. “Airline mergers would generate significant operating synergies and strengthen efficiency.”

6. “Mergers are required to rationalize excess industry capacity.”

7. “U.S. airlines need to merge in order to compete with foreign airlines that are better financed and offer better service.”

8. “Airline managers have an obligation to pursue mergers in order to boost their falling stock prices.”

9. “Consolidation would strengthen the entire industry.”

10. “Airline mergers would increase long-term corporate value without harming consumers.”

Interested? Keep reading for Mr. Horan's opinions on why they're all false. (Republished with permission from Hubert Horan.)

Bob Herbst of Airlinefinancials.com has had a look at Bill Swelbar's defense of the MIT Airline Data Project, and adds this perspective:

As Mr. Swelbar notes, we had a lengthy phone conversation. I'd suggest our discussion ended with far less contention than it started.

For clarification, I have no challenge regarding the - numerical - calculations provided in the MIT-ADP.

As Mr. Swelbar identifies in his reply, "capacity purchase agreements" [CPA's] over recent years have added an increasing metric to mainline revenue, expense and traffic totals.

While the MIT-ADP and BTS reports identify this CPA [financial] input, I believe Mr. Swelbar acknowledges in order to conclude true mainline unit metrics requires this CPA revenue and expense be expunged from the equation in order to derive true mainline CASM and RASM airline-to-airline comparisons.

While the MIT-ADP does note -some- reconciliation with SEC reports. It's also true most ADP data calculations use only DOT41 input. As specifically discussed in our phone conversation, the ADP used 371 aircraft units [year 2006] for Delta yet all SEC filings clearly identify 440 units. This large aircraft unit difference must be reconciled in order to achieve credible conclusions regarding productivity where aircraft units are a factor.

In conclusion- I will suggest the MIT-ADP report uses BTS data as the primary input while my analysis primarily uses SEC input with BTS data as a back-up verification. Each of us may have valid arguments as to which -method- is more accurate.

It's my opinion that Mr. Swelbar and myself have a propensity for accurate analysis and that we agree on more than we disagree.

Regardless of methodology used, due to the uniqueness of operations, airline-to-airline comparisons requires some amount of objectivity to derive acceptable conclusions.

Robert Herbst

UPDATE: Mr. Swelbar read Mr. Herbst's comments and asked that I add this reply:

Mr. Herbst,

Thank you for the clarification of our phone conversation and I am in agreement that we are both striving for a better analysis. We are in agreement that there are differences between the two data sets given. The SEC tends toward a year-end reporting of employees, aircraft and other "denominators" whereas the Form 41 leans toward an average, or equivalent, over the year.

Mr. Herbst correctly states that, at this point, the ADP only provides a side by side comparison of the big lines (revenue, labor, fuel and total operating expense, ASMs, RPMs) from each data set in order to calibrate the two and in turn give credibility to each. What is appreciated about this discussion, is that it has nothing to do with personalities, manipulation or anything other than users of whatever data site need to have a healthy debate over the baseline data set - whichever is used.

Bob, I wish you well as you endeavor to build your site.

William Swelbar

To which I might add, I appreciate the civil discourse between Mr. Herbst and Mr. Swelbar, both of whom I believe want to provide airline financial information in a way that's both accurate and useful.

The Saturday night stay requirement may be making a resurgence.

TheStreet.com is reporting that Continental, Delta and United have all recently resumed requiring a Saturday night in certain markets in an effort to raise revenue.

The shift in tactic hasn't exactly gotten glowing reviews from biz travelers.

The Street's Ted Reed quotes Kevin Mitchell, chairman of the Business Travel Coalition saying the requirement is "exhibit A in how to turn off your best customers."

"This and some other onerous charges are what got carriers in trouble with corporate travelers in the past," Mr. Mitchell continued. "Hopefully, it's a short-term act of desperation."

In an item Monday, I welcomed the latest revisions to MIT's Airline Data Project. That prompted some criticisms of the quality of the data, notably from Bob Herbst, a veteran and respected airline numbers cruncher dating back to his days as a pilot with Ozark Airlines and continuing as mergers took him to Trans World Airlines and now American Airlines.

Bob, who does work as an industry consultant, has his own Web site, Airlinefinancials.com, at which he offers his own airline numbers and comparisons of the biggest industry players, commentary on the industry and such. He attacked the accuracy of the ADP's numbers for making airline to airline comparisons.

You can go back to his comments on the ADP item to read his criticism. But in essence, Mr. Herbst said total revenue and total expense per available seat mile are not accurate comparisons of airlines unless one subtracts out the impact of capacity purchase agreements, such as with regional carriers who carry the mainline carrier's passengers for a negotiated amount.

I would agree and disagree. It doesn't allow you to compare the unit revenues and unit costs of mainline Delta to mainline American to mainline Northwest, but it does allow you to compare consolidated Delta to consolidated AMR/American to consolidated Northwest. But what do I know?

Bill Swelbar, industry consultant, MIT research engineer who heads up the data and target of some barbs, responded to Mr. Herbst's analysis today:

It is with interest that I read this morning's comments regarding the MIT Airline Data Project (ADP). Since reading Mr. Herbst's post, I have done the professional thing and called him personally to discuss the issues cited here and elsewhere.

With respect to Mr. Herbst's contention that the ADP is misleading because it does not address capacity purchase agreements (CPAs): the ADP provides for the data necessary to make the adjustments to the revenue and expense line he suggests. In fact, the ADP makes the calculation to certain unit revenue and unit expense calculations in recognition of this very subtle and salient point raised. Further, I have just participated in writing a journal article on this very subject.

I agree with Mr. Herbst that a better mainline to mainline (TRASM:TCASM) comparison is the method he suggests - particularly when comparing sectors of the industry. The calculation he suggests, is simply total revenue excluding transport related revenue per mainline available seat mile (TRASM ex Transport Related Revenue) compared with a total expense excluding transport related expenses per mainline available seat mile. This calculation helps to remove the "noise" of regional capacity purchase agreements.

Mr. Herbst goes on to suggest that the ADP does not reconcile BTS/Form 41 data with the data filed by the carriers with the Securities and Exchange Commission (SEC). This is a fundamentally wrong accusation. There is a tab on the ADP that serves as a way for the user to calibrate the two data sources and one of the best virtues of the ADP was to perform this function which gives credibility to the Form 41 filings in their aggregate form. The ADP does not mix data sources whereas Mr. Herbst does which he revealed in our conversation and can be seen on his website.

There is no data point calculated on the ADP where the source data is not provided. Moreover, the ADP does not produce every possible ratio as there are not sufficient resources to do so and it is not my lifelong project.

Cited very clearly in the text on the ADP site is the notion that the project does not intend to adjust for the various and sundry nuances in data results at each individual carrier. If we were to do that, we would be creating a data set with no objectivity - and we are not going to do that.
It is left to the user to adjust the baselines drawn by the actual data reported - not me.

If there are math errors or data sourcing errors we welcome your comments and we are most easy to reach. The site consists of rote calculations that are used everyday.

William Swelbar

A note from Maxon: We've had comments attacking and questioning Mr. Herbst's and Mr. Swelbar's credentials and allegiances. May I suggest we talk about the issues rather than make these guys the issue? I understand that we should consider conflicts of interest, but all industry consultants have clients, and that fact does not disqualify them from making informed analysis about the industry in which they work.

We won't know the final tally until Continental Airlines updates its numbers to show net figures, but we do know that major airlines as a group lost money in the fourth quarter.

Of the 10 largest carriers, only Southwest Airlines and Alaska Air Group reported profits, and their net income depended on gains from fuel hedging. Continental, maybe, made a profit -- it had $71 million in pre-tax income, but hasn't finished running the numbers as it adjusts for a non-cash tax charge.

The comparison to last year is distorted because Delta Air Lines and Northwest Airlines were in bankruptcy proceeding during that period. Consider that when you look at the net income numbers below, in millions of dollars:

Congress has virtually no authority to stop an airline merger, but House Transportation & Infrastructure Committee Chairman James Oberstar, D-Minn., pledged Tuesday that he would rattle his mighty saber to stop a rumored Delta-Northwest merger.

Mr. Oberstar said the merger would set off a flurry of other mergers and would result in higher ticket prices for passengers. "The problem is the only effective tool is anti-trust intervention by the Justice Department, which only looks at the instant merger, not at the domino effect of what will happen if one merger is consummated," Mr. Oberstar said. "As soon as that happens, other carriers will look for partners to be able to compete against this big colossus."

Merger Watch ranked high on the House Democrats' list of transportation priorities for 2008, which they detailed at a Tuesday news conference. Aviation subcommittee chairman Jerry Costello, D-Ill., said he would hold a hearing to examine a merger as soon as a deal is made public. Mr. Oberstar said a hearing would attempt to mobilize public opposition to any merger.

Mr. Costello also plans hearings on safety, including what he called the "number-one threat to safety" -- runway incursions.

On Monday, we reported that a number of U.S. airlines had said on their earnings calls that they could see no signs of a recession as they looked at first-quarter demand.

On Tuesday, JetBlue Airways repeated that message. UPDATE: So did Northwest Airlines.

"Looking ahead, our revenue outlook for the quarter is very positive," JetBlue CEO Dave Barger told industry analysts. "Demand is strong, especially relative to the economic environment. While we experience some demand softness during the trough periods in the fourth quarter, we have not yet seen any significant signs of an economic slowdown in our forward-booking curve."

Mr. Barger said the near-term future "looks strong at this time. And while it's still early, we're seeing positive numbers for the Easter travel period as well."

He said the airline expects its passenger unit revenues -- the average revenue per seat per mile -- to be up 10 to 12 percent. Of course, a year ago, JetBlue's results were roughed up by winter storms that destroyed its schedule, particularly around Valentine's Day.

Tim Griffin, Northwest’s executive vice president marketing and distribution, told analysts an hour later that Northwest's unit revenues strengthened during 2007 as it trimmed capacity, and said Northwest expects to build on that performance in 2008.

"In fact, our bookings remain strong across the system and we have seen no evidence of slowing demand,” Mr. Griffin said.

Continental Airlines said Tuesday it’ll begin offering 36 channels of television on its airplanes and onboard Wi-Fi services a year from now.

The service will be offered by LiveTV, the company owned by JetBlue Airways, with programming from DirecTV. Continental’s Wi-Fi service will also be provided by LiveTV and allow email and instant messaging.

"Our customers want more inflight entertainment and communication options," said Continental's chairman and chief executive officer Larry Kellner said in Continental’s announcement.

“We have been closely watching technology developments and are delighted to have teamed up with LiveTV to offer live television programming and communication to our customers,” he said.

First-class customers will get the TV free; coach customers who want the service will pay $6.

Continental said the technology will go in its next-generation Boeing 737s and its Boeing 757-300s beginning in January 2009.

Ryanair, the cheeky Irish-based airline, has hacked off the French government, or more particularly, President Nicolas Sarkozy.

To promote a fare sale, Ryanair bought ads in the Paris newspaper Le Parisien with a picture of President Sarkozy and serious girlfriend Carla Bruni and the tag line, "Ryanair, pour toutes les occasions," or Ryanair, for all the occasions.

The photo includes a thought balloon from Ms. Bruni: "Avec Ryanair, tout ma famille peut venir assister à mon mariage!", or with Ryanair, all my family can come to my wedding!

The Associated Press quoted a Sarkozy spokesman as saying the president had asked his lawyers to take legal action against Ryanair:

Sarkozy adviser Franck Louvrier said the French leader is requesting the immediate removal of the ad, although it was not immediately clear if he would also seek damages. He said Sarkozy's office considers the ad "an improper use of the president's image."

Ryanair Holdings PLC, in a statement, said: "It was a humorous comment on a matter of great public interest in France. We apologize sincerely for any offense caused."

Mr. Sarkozy has all but said he and Ms. Bruni will marry. Ms. Bruni, who would be his third wife, met Mr. Sarkozy in November, shortly after his divorce to wife No. 2 was final.

The National Business Travel Association today issued Congress and the Bush Administration a C+ grade for its progress on key business travel issues.

The government got improving marks for steps taken to better handle and attract international visitors -- an area that continues to lag since 9/11-- and also for taking a closer eye on travel related taxes.

But the government got poor marks for failing to fund FAA, leaving the nation's domestic capacity strained.

You can read the details in the full report here.

Here's how the grades fell on each issue:

Federal Aviation Administration Funding: D

Airline Performance and Air Traffic Congestion: C

Domestic U.S. Registered Traveler: C

International Registered Traveler: B-

Traveler Taxes: B-

Western Hemisphere Travel Initiative (WHTI): B+

Model Ports of Entry Program: B

Visa Processing and the Visa Waiver Program: B+

The Airline Data Project at the Massachusetts Institute of Technology has been updated with numbers for the first half of 2007.

Let us note that the project, done by MIT's Global Airline Industry Program and the International Center for Air Transportation, has been attacked by the Allied Pilots Association on a number of grounds. APA represents American Airlines pilots.

Among the grounds are the fact that the project gets funding from the airline industry (the MIT Airline Industry Consortium); that the head of the project has consulted with American Airlines and other airlines and sits on the board of Hawaiian Airlines; and APA smart guys see some flaws in the data analysis.

But the news media generally likes the site because MIT has done research that we'd otherwise have to do ourselves. For example, I can spend the rest of the day looking in the annual reports of 15 airlines over the past decade to find out how much operating revenues and expenses the airlines reported. Or I can take 15 seconds and look at the Airline Data Project.

Virgin America kicked out a press release today about its upcoming in-flight entertainment offering from Internet TV network Revision3.

The programming will debut in March through the airline's network, which includes New York,San Francisco, Los Angeles, Washington D.C., Las Vegas, San Diego and Seattle.

Virgin's director of Inflight Entertainment, Charles Ogilvie, described the programing as "edgy, smart and engaging."

The shows last between 3 minutes and 45 minutes.

Taking a look at the line-up--I wonder if I'm cool enough to watch.

Here's the list:
Diggnation
Tekzilla
The Totally Rad Show
Web Drifter
XLR8R TV
The Digg Reel

Feeling hip just from reading the list?

A Southwest Airlines flight slid off a taxiway as it was making a turn after landing in Spokane, Wash., on Sunday. Nobody was hurt.

Here's an Associated Press story, and here are some local reports from the Spokane Spokesman-Review, television stations KHQ and KREM, which have video, and KXLY.

Air Transport World has named the winners of its annual awards. Here we go, with quotes from ATW's announcement:

* Singapore Airlines was named "airline of the year" for 2008.

The editors "applauded SIA's history-making commercial introduction of the Airbus A380, the world's largest commercial passenger aircraft. SIA donated all ticket revenues from its innovative online auction of seats on the first A380 flight to charity. The editors also cited SIA's Singapore Airlines Suites, which have raised the bar for ultra-premium airline service, as well as the airline’s $360 million investment in upgrading all cabin classes of its long haul international aircraft."

* Republic Airlines was named "regional airline of the year."

Republic, based in Indianapolis, "has posted 29 consecutive quarters of profitable operations while its unblemished safety record underlines its commitment to operational excellence. Republic increased revenues tenfold between 2000 and 2007, while its regional jet fleet increased from 18 aircraft to more than 200 over the period."

* The magazine gave Air New Zealand its "passenger service award."

The editors "recognized both the airline’s physical product and the service delivered by ANZ staff. The carrier's new Business Premier and Pacific Premium Economy products have been extremely well-received. And, in a recent survey, 95% of ANZ customers said they would recommend the carrier."

* It gave Malaysia Airlines its "Phoenix Award," given to carriers that survive life-changing transformations.

Malaysia Airlines "came within months of shutting down in 2006 due to financial losses, but turned itself around through a restructuring program that contributed to record earnings for the first nine months of 2007, without affecting its reputation for excellent service."

* The Star Alliance, headed by United Airlines and Lufthansa German Airlines, received the magazine's "market leadership award," the first time it has gone to a global airline alliance.

The Star Alliance "continues to set the standard for constructing a seamless travel product for passengers."

These and other awards will be presented Feb. 18 in Singapore, writers' strike or no writers' strike.

Fitch Ratings on Thursday downgraded its ratings on $1.6 billion in Southwest Airlines debt, from A to A-.

Fitch said the ratings drop "reflects Fitch's expectation that an increasingly fragile U.S. airline industry operating environment over the next few quarters will likely contribute to a modest weakening of Southwest's credit profile this year."

Fitch questions Southwest's decision to spend up to $500 million to buy back its own stock.

"The Negative Outlook reflects Fitch's concern that a weakening operating environment in 2008, accompanied by lingering pressure on passenger yields and RASM, may require Southwest to increase debt again this year," Fitch said.

PlaneBusiness.com editor Holly Hegeman weighed in the Southwest buyback, and her outlook was negative, too:

In this case, given the industry metrics we are looking at, I thought the announcement by Southwest was ill-timed. It appeared to me that the airline was making a play to increase market support for its stock price, at a time when it might be a better idea to keep its cash in the bank.

1. That $3.5 billion to $4.5 billion profit projected for the U.S. airline industry in 2008 is looking distressingly optimistic.

2. Is Las Vegas making book on whether Delta hooks up with Northwest or United? Who's the favorite?

3. This is always a grim time of year -- all the half-price chocolate-covered, marshmallow-filled Santas are gone, and we're still three weeks away before the chocolate-covered, marshmallow-filled hearts hit the Valentine's clearance table.

Passengers flying on American Airlines can now check-in for their flights with a mobile phone or PDA using a mobile-friendly version of aa.com

For now, customers can also use the mobile-friendly site to see their itinerary, check schedules, check the status of their flights, get information on destinations, weather or airports and contact American.

Later this spring, the site will allow travelers to book flights, change their reservations, view fare specials, request upgrades and enroll in American's frequent flier program.

When accessing aa.com using a mobile device, the content is condensed and the design is simplified to make it easier to navigate.

Those folks with fancier phones or PDAs can also choose the full HTML version that you see when using a regular computer.

Even on the mobile version of the site, many pages will be viewable in Spanish.

Dallas-based Southwest Airlines Co. has has a similar service for two years. Southwest's system allows passengers to check-in, cancel boarding passes, and get information about the airline and its policies.

Alaska Air Group, like Southwest Airlines, reported a profit for the fourth quarter.

Alaska Air, like Southwest, would have reported a loss, were it not for its fuel hedges.

Alaska Air reported Thursday morning that it earned $7.4 million in the fourth quarter, but would have lost $17.9 million if it hadn't benefited from fuel hedges.

In particular, Alaska Air gained $25.3 million, net of taxes, because of "adjustments to reflect the timing of gain or loss recognition resulting from mark-to-market fuel-hedge accounting," Alaska Air said.

On Wednesday, Southwest reported net income of $111 million, but those numbers included a $300 million gain related to fuel hedges.

I thought Southwest's news today that it would test a satellite broadband system was very interesting.

I had understood that one reason Alaska was going for it was because it had so many flights across the ocean (both to Alaska, Hawaii and Mexico) that it couldn't rely on a ground-based system similar to what American is testing (and what Virgin America has announced it will test).

But Southwest's current route system is over land.....perhaps another maneouvering by our Dallas-based carrier to position itself for partnering with international partners to in the future??

Thoughts out there blogosphere?

Southwest CEO Gary Kelly and CFO Laura Wright have finished their Thursday morning chat with analysts and the news media. Among the highlights:

Mr. Kelly:

Without fuel hedges, Southwest would not have made money in the fourth quarter.

And Mr. Kelly acknowledged that the carrier will have to grow revenues in the first quarter to avoid a loss, considering that it expects to average $2 a gallon for jet fuel and have its non-fuel unit costs go up 3 percent or more.

“It’s not a foregone conclusion that we’ll have a loss in the first quarter,” but revenues will have to go up to avoid a loss.

Southwest's last quarterly loss came in first quarter 1991, when high fuel prices and a dropoff in demand because of the Iraq-Kuwait conflict combined to hurt everyone's results.

Southwest Airlines said Wednesday it earned $645 million in 2007. That beats its previous best year for net income, 2000, when Southwest earned $603 million.

But as we note in our story, $645 million on $9.86 billion of revenues isn't as good as $603 million on only $5.65 billion in revenues.

That's a net margin of 4.9 percent in 2007, versus 10.7 percent in 2000.

The operating margin for 2007 -- operating income as a percentage of revenues -- was 8.0 percent. By comparison, Southwest posted an 18.7 percent margin in 2000. Even 2006 was better, with an operating margin of 10.3 percent, even though net income was $146 million less than in 2007.

Delta Air Lines kicked off the latest merger speculation when it was reported that its board has authorized its executives to talk merger with Northwest Airlines and United Airlines.

Obviously, that's what people want to hear about from Delta executives on Wednesday morning's earnings call with industry analysts. And obviously, CEO Richard Anderson had little to say about it.

“The process is ongoing,” Mr. Anderson told anlaysts.

Delta is committed to obtaining the best long-term outcome for shareholders, employees, customers and community, he said, but added that he "“will not comment on any specifics.”

Delta Air Lines CEO Richard Anderson told analysts Wednesday morning that the carrier will distribute $158 million in profit sharing to employees in a few weeks.

On Tuesday, UAL chairman, president and CEO Glenn Tilton said United Airlines employees were dividing up $110 million in profit sharing, $40 million in incentives and $20 million from a special stock dividend.

Continental Airlines said last week its employees were getting $158 million in profit sharing, exactly the same amount as Delta employees are getting.

Southwest employees will also get profit sharing, but the amount hasn't been disclosed.

The AMR board has changed the annual incentive plan (AIP) for American Airlines employees, and it may well make it easier for employees to pick up a little extra money.

The AIP will no longer use Survey America, an independent survey in which American hasn't fared very well at all.

Instead, it will use an American internal survey to measure how likely customers are to recommend that others fly American Airlines. Eligible employees will get $40 each month that the "likelihood to recommend" percentages are at least one point better than in the same month of 2007.

In addition, employees can earn $40 each month that American meets or exceeds its internal goal for flights departing on time.

And employees can earn $250 for 2008 if it finishes in the top half among competitors in on-time arrivals as measured by the U.S. Department of Transportation. On-time means that a flight arrived less than 15 minutes late.

Officials at the National Business Travel Association are supportive of more transparency in the aviation system but would prefer that the government not get into the business of micromanaging customer service when it comes to the airlines.

"Our basic position is this: government should establish systems for basic consumer protection and then get out of the way to let business function," said Bill Connors, NBTA's executive director and chief operating officer. "No one benefits from micromanagement of customer service; the added costs of overregulation of the airline industry would only serve to inhibit innovation in the industry and increase costs for passengers.”

The press release from NBTA went on to say that the organization supports increasing transparency in the aviation system, including reports on tarmac delays, a "bright-line test" for chronically delayed flights, and publishing delay data on carrier websites, arguing that it would help passengers and corporate travel buyers make better informed decisions.

NBTA also proposed that carriers compensate travelers the greater of $400 or half of their airfare if they're bumped from a flight and arrive at their destination within two hours of their original itinerary and the greater of $800 or half of their airfare for travelers involuntarily denied boarding and arriving at their destination more than two hours after their scheduled arrival time.

Both Laura Glading and John Ward participated in the 2000-2001 negotiations between the Association of Professional Flight Attendants and American Airlines.

But who led the talks? It's become a bone of contention between Mr. Ward, who served as union president in 2000-2004, and Ms. Glading, a New York-based flight attendant.

Ms. Glading led Mr. Ward by nearly eight percentage points in the first round of balloting last week for the president's job, putting them both in a runoff. The final balloting ends Feb. 26.

On a previous blog item, I had repeated what Ms. Glading put on her Web site, that she had led the negotiations. That prompted this email note from Mr. Ward:

Contrary to what Laura Glading, my opponent in the APFA National Officer runoff election, claims, she did not "chair the negotiations" that led to APFA's industry leading contract in 2001. I did. This issue is addressed fully in the Q and A section of my web site at www.thewardticket.com.

On their Web sites, the two candidates have sharply differing memories of those negotiations:

American Airlines announced today that it has completed its first installation of Aircell LLC's wi-fi broadband access on one of its 767-200 airplanes.

So it's one down, 14 to go, right? American has committed to outfitting its 767-200 fleet- -which is 15 planes.

In reality, many travelers would argue its one down, 654 to go--- since American has about 655 airplanes in its system. And then there's the 305 American Eagle planes.

Could get expensive, but then again, there have been some surveys out there that suggest folks wouldn't mind paying to have that kind of access in the air.

Read our story about the system in today's paper or on DallasNews.com.

Glenn Tilton, UAL Corp.'s chairman, president and CEO, told analysts Tuesday morning that UAL's position on merger and consolidation is about the same as it has been for three years -- it's in favor of it.

“We believe the industry can benefit from constructive consolidations, and the work we have done improving the company has put us in very good condition to participate in that consolidation as we see fit,” Mr. Tilton said on UAL's fourth-quarter earnings call.

“The goal for our company is to make the right choice at the right time,” he added.

Having said that, he put analysts on notice that they won't be getting any more during the Q&A session. It would be “inappropriate to discuss any further than I have,” Mr. Tilton said.

Jake Brace, UAL's CFO, said that weather disrupted United Airlines schedule more in December than in any other month in the airline's history.

Officials for American Airlines regional partner American Eagle said Monday that it will increase its service to Roswell, N.M., beginning April 7 by adding a third daily round trip between Dallas/Fort Worth International Airport and Roswell International Air Center.

The service will use American Eagle's 50-seat ERJ-145 aircraft.

American Eagle launched its service to Roswell from D/FW last September.

When Southwest Airlines changed its color scheme in 2001, it added blue to its fuselage. But not just any blue. Anyone who saw "The Devil Wears Prada" knows that it has to be just the right shade of blue.

What shade of blue do we see on Southwest Airlines' fleet of Boeing 737s?

A. Canyon blue
B. Pacific blue
C. Bluebonnet blue
D. True blue

Answer below.

Tom Parsons of BestFares.com says that it looks like the $40 fuel surcharge started last week by American Airlines has stuck.

As expected, US Airways today [Sunday] joined the other major airlines in raising airfares by doubling the fuel surcharge to $40 roundtrip.

On Thursday (January 17, 2007), American Airlines began the process of getting the major airlines to raise their airfares by doubling the current $20 roundtrip fuel surcharge to $40 roundtrip.

Delta Airlines was the first to match the increase initiated by American. Friday afternoon, Continental and United also joined in matching the increase, leaving Northwest (the spoiler from last week) and US Airways as the holdouts.

On Saturday, Northwest joined the others in matching the increase which left US Airways as the only major carrier to resist the fuel surcharge hike.

If US Airways had refused to match the surcharge increase, the other major carriers would have likely rolled back the surcharge to $20 roundtrip.

With US Airways matching the increase, this all but guarantees that the surcharge hike will stick on domestic routes not served by a low-cost airline such as Southwest Airlines, AirTran, JetBlue, Virgin America and others.

The Times of London has a thoughtful story on the possible causes of Thursday's crash of a British Airways Boeing 777 as it was landing at London's Heathrow Airport.

Rather than conclude it was one thing or the other, the article examines the possible causes, why they are more or less likely and includes analysis from pilots who have flown the Boeing 777. Those pilots also reflect on what the pilots of the BA flight would have been doing during the last minutes of the flight.

No conclusions -- just walking us through the possibilities.

The Air Accidents Investigation Branch of the U.K. Department for Transport says that the engines of a British Airways flight that landed short of the runway Thursday didn't respond to requests for more power.

The preliminary report said:

At approximately 600 ft and 2 miles from touch down, the Autothrottle demanded an increase in thrust from the two engines but the engines did not respond.

Following further demands for increased thrust from the Autothrottle, and subsequently the flight crew moving the throttle levers, the engines similarly failed to respond.

The aircraft speed reduced and the aircraft descended onto the grass short of the paved runway surface.

But the board hasn't concluded why the engines didn't respond -- that'll take a lot more investigation.

Here's the complete preliminary report from the AAIB:

First we have the airplane accidents. Then we have the theories. (And much later, we have the official rulings.)

Here's what the British newspapers are saying about Thursday's crash of a Boeing 777 flown by British Airways:

The Mirror says the thrust reversers may have deployed too early. It quoted a British pilot with 25 years' experience:

Looking at the pictures I can see the engines were in reverse thrust. It's a normal routine auxiliary braking system but if the computer malfunctioned and thought the plane was much lower than it really was, it could have caused this.

The pilot reported loss of power and that's how it would feel - the plane would be trying to push itself backwards. Witnesses reported louder-than-usual engine noise and that's what you get in reverse thrust.

But the systems are almost foolproof and it's difficult to see how it could occur several hundred feet up.

1. By all accounts, American Airlines CEO C.R. Smith was beloved and respected by his employees. Yet, American had at least 10 strikes on his watch, compared to two during Robert L. Crandall's tenure and none on that of Donald J. Carty and Gerard Arpey, to name the three most recent CEOs. Times were different. Go figure. (And yes, I know, no contracts have become amendable during Mr. Arpey's term.)

2. Nobody liked my dual-headquarters idea last week for a United-Delta merger (Denver in the summer and Orlando in the winter) or Northwest-Delta (Minneapolis-St. Paul in the summer, Orlando in the winter). So let's put the headquarters in the middle between their present headquarters: Louisville for the United-Delta HQs, or St. Louis for the Northwest-Delta HQs.

3. And what would a good name be? How about Delta Orient for a Delta-Northwest merger or Ted's Song for a Delta-United merger? Delted? Deltawest? Other suggestions?

A British Airways flight from Beijing landed short of the runway at London's Heathrow Airport at midday Thursday, thoroughly tearing up the Boeing 777 but leaving only a handful of minor injuries.

Here are a couple of photos:

(CREDIT: AFP/Getty Images)

(CREDIT: Bloomberg News)

The pilot declared an emergency on final approach and reportedly told officials that the airplane's engines lost power. The pilot was being hailed as a hero for bringing the airplane down without any major injuries.

Eyewitness Neil Jones told the BBC (as quoted in the Evening Standard): "The aircraft was banking to the left and it was coming in very low over the surrounding houses. The plane was significantly lower than it would normally be. I could see the undercarriage was down and the wing flaps were down.

"You could see the pilot was desperate, trying to get the plane down. The aircraft hit the grass and there was a lot of dirt. The pilot was struggling to keep the plane straight. I think he did a great job."

"On its approach it took the runway too low, just missing the roof of my cab," a cab driver told the Evening Standard. "Debris was everywhere, there was an enormous bang and it skidded sideways."

One British Airways worker said in The Times of London: ""It's a miracle. The man deserves an absolute medal as big as a frying pan."

We do have this comment from a reader of The Times posted online:

I just love the way that the pilot always gets praise heaped upon him/her when there is a fortunate outcome to an aircraft that has failed in some way. I'd like to point out that he/she does not have an ejector seat and is generally first to hit the ground. Under those circumstances I suspect that any well trained commercial pilot would operate at a level of brilliance few mortals sat at a desk could comprehend. When your arse is on the line you would do anything up to and including flapping your arms if it would help.

Thursday morning, executives at Continental Airlines echoed what executives at AMR/American Airlines had said Wednesday afternoon -- if there's an economic slowdown, they haven't seen one yet.

In his opening remarks, Continental chairman and CEO Larry Kellner put it this way:

Looking at 2008, there’ve been numerous reports that the US is on the cusp of an economic recession. We’re watching our future bookings closely, and do not see a slowdown based on our current booking levels.

We did see some softness in bookings over the holiday period. This softness may have been caused by a slowing economy or could have been due to how the holiday fell with Christmas and New Years falling on a Tuesday.

However, we are pleased with the strength of our bookings over the last 10 days, and again do not see a slowdown based on our current booking levels.

On Wednesday, AMR CFO Tom Horton had to respond to some somewhat pleading comments from analysts who think airlines need to be cutting capacity.

"Maybe it’s just because I am in New York here," Credit Suisse analyst Dan McKenzie, "but the macro backdrop just seems absolutely frightening. I guess, I am just kind of curious. What do you need to see before concluding it makes sense to cut more capacity?"

Mr. Horton said that American "can respond if we think it’s appropriate, and it may well become appropriate. I am not suggesting we’ve rule that out by any means. But we do try not to kind of manage our capacity based on headlines day-to-day."

While everyone is expecting to demand to fall off, Mr. Horton said American's booked load factor -- the percentage of seats sold for future flights -- is up about 0.8 percent over 2007.

"We do try to be very thoughtful about this and watch our advance booking, watch the pricing environment," he told Mr. McKenzie and other analysts. "We look at all the sort of corporate demand survey data, and we talk to our corporate customers. So, at this point, we think we’ve got a fairly conservative capacity outlook. But we’re going to keep watching. I think that’s really all I can say."

Because Continental Airlines is still calculating some charges, we don't know its 2007 net income yet for the fourth quarter and full year.

But it did announce pre-tax income of $566 million, and $158 million in profit sharing to be distributed to employees. They'll get their profit-sharing checks on Feb. 14.

"That's $47 million more than we distributed last year," chairman and CEO Larry Kellner pointed out on a Thursday morning conference call.

Those numbers will undoubtedly catch the eyes of AMR/American Airlines employees, since American didn't achieve sufficient pre-tax income to trigger profit sharing. AMR instead gave one-time $800 payments to American Airlines employees and $500 to American Eagle employees.

Not all employees get the profit sharing. Having said that, American had just over 73,000 employees as of Sept. 30, while Continental had just over 36,000. So $1 of profit sharing goes further per employee at Continental. Using that number, the average Continental employee will get over $4,000.

And that $158 million doesn't include another $33 million that Continental employees divided for scoring well in U.S. Department of Transportation stats for on-time arrivals.

American Airlines' profit sharing doesn't start until American goes over $500 million in pre-tax income. Then employees would divide up 15 percent of all income over $500 million. For example, $1 billion in pre-tax income would bring employees $75 million in profit sharing.

Continental gives employees 30 percent of the first $250 million of pre-tax income, 25 percent of the next $250 million and 20 percent of everything over $500 million.

So for that $1 billion example, here's how the two carriers would differ:

Chairman and CEO Gerard Arpey and CFO Tom Horton are talking to analysts and media. Among the points:

Mr. Arpey: Total debt is down to $15.6 billion and net debt -- total debt minus cash, short-term investments, etc. -- is about $11 billion. Total debt had been nearly $21 billion at one point a few years ago.

One result is that AMR spent $174 million less in interest in 2007 compared to 2006.

AMR's pension obligation is 96 percent funded, up from 76 percent at the end of 2002.

Jamie Baker, airline analyst at JPMorgan, put out a report Wednesday morning that questioned why AMR didn't agree to go along with the Allied Pilots Association on the union's request for help from the National Mediation board:

We are puzzled by AMR’s resistance to federal mediation, which we thought might have helped shift the pilot focus away from management pay (seemingly its primary gripe) back toward the fact that AMR's labor costs are above the industry’s.

Meanwhile, AMR has begun canceling numerous 777-operated flights in February, which we believe is associated with greater-than-planned pilot retirements - echoing the widebody challenges Delta at one time faced.

In short, we expect the management-pilot relationship to fracture further in coming weeks.

Mr. Baker called AMR's guidance for the first quarter "unremarkable"

AMR Q1 capacity and cost guidance appear to imply a loss in the $1.00 to $1.50 range, comparing to a sparsely-populated ($0.67) consensus. Consensus achievable if one assumes Q1 revenues exceed those of Q4, though they didn’t last year and don't seem poised to this year in light of a recession. F2008 capacity guidance unchanged (a bit surprising, though we still expect AMR to shrink in 2008).

As to the Boeing 777 cancellations, a pilot forwarded to me company postings that outlined flight cancellations out of Dallas/Fort Worth, Chicago and New York Kennedy in February: three round trips from D/FW to Tokyo; four round trips from Chicago to London Heathrow; three round trips from Chicago to Shanghai, China; and four round trips from Kennedy to London Heathrow.

The issue appears to be that the falling stock market is persuading more pilots than expected to retire. They locked in the value of their B Fund shares previously, and the recent drop in the stock market is making them decide it's time to leave rather than hope the shares will recover soon.

APA leaders blame the cancellations on bad planning by the airline that left manning levels too low.

I was talking to a guy this morning about the $800 payments to eligible American Airlines employees. The question was: How will it be received by rank-and-file employees?

I don't expect organized labor to applaud much, considering. But will the $800 help employee morale, at least a little?

I don't know. We'll see.

Someone identifying himself as an American Eagle employee tells me Eagle employees are getting $500 bonuses.

I made a small mistake in an early version of the AMR earnings story.

Eligible employees will get an $800 payment.

I apologize if any American Airlines employee saw the original language -- when I said eligible employees would get $800 million -- and believed it.

Go tell your boss you didn't mean the things you said and you'd like your job back.

AMR as expected lost $69 million for the fourth quarter, or 28 cents a share.

I say "as expected" in the sense that the company met the diminished expectations of analysts, expectations that kept diminishing.

If you exclude special gains and losses, AMR lost 74 cents a share. The consensus from analysts surveyed by Thomson Financial was that AMR would lose 75 cents.

But as recently as last Friday, the consensus was for a 71-cent loss. A month ago, the consensus was for a 14-cent loss. Three months ago, it was for a 3-cent profit.

So it would probably be more accurate to say that AMR on Wednesday met Wednesday's expectations.

AMR, parent of American Airlines, will report its fourth quarter and full-year earnings Wednesday morning, the first of the airlines to report results.

Man, it feels like the first day of spring training, doesn't it?

We plan to listen to CFO Tom Horton's 1 p.m. conference call and keep a running update of the points that grab our fancy. If you're checking the blog, keep clicking that item because it will keep changing, probably, until the call is over between 2:30 p.m. and 3 p.m.

We're also interested to see how the unions respond to AMR's announcement of a bonus for lower-ranking employees.

Batter up. Play ball. And so forth.

American Airlines plans to launch direct service between Dallas/Fort Worth International Airport and San Salvador, El Salvador this spring.

For North Texas travelers, it means avoiding a stop at American's hub at Miami International Airport, where transfering between terminals can require a 20 minute walk. American also serves San Salvador from Los Angeles.

The new service begins April 7, and the airline will begin taking reservations on Sunday, Jan. 20.

American will fly the route four times a week with a 148-seat Beoing 737-800, which includes 16 first class seats.

Southbound flights from DFW to San Salvador will operate on Monday, Wednesday, Friday and Saturday. Northbound flights will operate from San Salvador to DFW will operate Tuesday, Thursday, Saturday and Sunday.

San Salvador is also served three times a week by Grupo Taca.

SOUTHWEST AIRLINES

But they came to the conclusion that some savings just don't make sense.

Southwest number crunchers figured out they could save $100,000 a year by swapping out the red, heart-shaped stir sticks used during beverage service and using the cheaper generic straw-type stirrers instead.

Last year, Southwest used 2,857 cases (at 6,000 per case) of the sticks in 2007.

Stirred by the possible loss (I know, a bad pun), a blogging flight attendant even wrote a little ode to the beloved stir stick.

Apparently, the heart-shaped stir stick had captured the hearts of many, used to spear limes for Bloody Mary's and even as part of a birthday crown and other homemade decorations made by flight crews.

After the feedback from employees, the airline decided to keep their distinctive stir sticks.

"The item is a cost to Southwest, but the extension of our brand and culture within the cabin to our customers is priceless," spokeswoman Beth Harbin said.

For those interested in Allied Pilot Association politics, this is for you. The rest of you can wait for something else.

Monday was the deadline for pilots to seek out the positions of chairman and vice chairman at the Dallas/Fort Worth, St. Louis and Washington National bases. The incumbents at the D/FW and Washington bases announced recently they wouldn’t be running for re-election.

Here is the lineup as posted by the union, and any little tidbit I may know about them.

An American Airlines pilot late Sunday sent me an email warning that the recent drop in the stock market may cause a shortage of pilots in February.

How, you might ask?

It’s like this: Pilots thinking about retiring may elect to jump now rather than wait for further declines in the stock market and a loss in value of one part of their retirement, the B Plan.

Yeah, but it’s a lot more complicated than that.

Let me interject here that American Airlines says it’ll be staffed okay in February, even though it has asked Boeing 777 pilots and some pilots on other equipment at some bases to postpone any vacations in February.

At a 4:30 p.m. meeting Monday, American Airlines negotiator Denny Newgren told Allied Pilots Association negotiators that American Airlines isn't ready to call in the federal mediators.

On Thursday, the union had asked the airline to join it in a request to the National Mediation Board, saying that negotiations were proceeding too slowly or not at all.

Of course, bringing in the NMB would accelerate the timeline that could end up with American's pilots walking off the job. For some reason, American Airlines declined.

Doesn't matter, probably. Expect the NMB to appoint a mediator in the fairly near future.

Consultant Michael Boyd applauds Southwest Airlines' expansion in Denver, and issued a warning for other carriers:

"Our advice for airline strategic planners: Think of Southwest as a bear that just came out of hibernation. It's hungry, cranky, and in a very bad competitive mood."

Mr. Boyd, president of The Boyd Group of Evergreen, Colo., says Denver-based Frontier Airlines won't necessarily be the big loser of a beefed-up Southwest in Denver. United Airlines and non-hubbing careers like ExpressJet's Delta Connection flights from Los Angeles to Denver face a greater threat, he says.

All in all, the evidence is mounting that Southwest is repositioning itself well, Mr. Boyd says:

The market capitalization of the 10 largest U.S. airlines Thursday went up more than $4 billion, nearly 16 percent, after word leaked out that Delta Air Lines directors would be asked to authorize merger negotiations with UAL and Northwest Airlines.

Friday, there was no more news.

The market cap of the same 10 airlines declined nearly $900 million, or nearly 3 percent.

Stocks go up. Stocks go down. It happens every day. It happened Friday.

!. I bet they're lining up at the National Mediation Board to volunteer to mediate the American Airlines' pilot negotiations.

2. If Delta Air Lines and Northwest Airlines merge, they should agree to move the headquarters to Orlando in the winter and Minneapolis-St. Paul in the summer. If it's Delta and United Airlines, how about Orlando and Denver?

3. I hope there are enough people in Denver who want all the flights that United, Frontier Airlines and now Southwest Airlines are throwing at them.

In the case of the largest U.S. airlines, rumors and speculation added up to more than $4 billion on Thursday alone.

Airline stocks, which had sunk to their lowest level in a long time on Tuesday and Wednesday, rallied big time Thursday after word got out that Delta's board will be asked Friday to authorize merger talks with United and Northwest.

Our seat-of-the-pants calculation is that the 10 largest U.S. passenger carriers saw their market capitalization -- stock price times number of shares outstanding -- rise from $25.9 billion at the close of trading Wednesday to over $29.9 billion at Thursday's close.

Sadly, that also means that FedEx Corp., with a market cap of only $26.3 billion, is now worth less than all those passenger carriers combined.

The big winners Thursday were, naturally, Delta, Northwest and United in absolute dollars. But not far behind was Southwest Airlines -- not up that much percentage wise, but up a lot in dollars by virtue of its large market cap and huge number of shares outstanding.

Here's the chart, derived from Yahoo! Finance stock information. Dollar amounts are in billions of dollars. Consider the numbers as approximates:

The union representing American Airlines Inc.'s 12,000 pilots is asking the airline's management to join them in asking for help from the National Mediation Board for their ongoing contract negotiations.

American and the Allied Pilots Association began early negotiations in September 2006, but the contract is not amendable until May 1, 2008.

“It is in the best interests of all concerned—including our pilots, the passengers we serve and our shareholders—to bring our contract negotiations to a prompt conclusion,” said APA President Captain Lloyd Hill. “We are hopeful that federal mediation will provide the necessary impetus to get a deal done quickly.”

Officials for American weren't immediately available for comment.

Airline labor union talks often involve the National Mediation Board. Only the board can declare the talks at impasse, which could set the stage for a strike or a lock-out if the sides are unable to reach terms.

To say that the latest round of negotiations between the pilots and American have been tense may be an understatement.

The union voted out its incumbent board this summer and elected new officers who pledged to negotiate more aggressively with management.

American's management has said that the union's proposals aren't realistic considering the airline's financial pressures and have sent a memo complaining about the the lack of productive discussions with the pilots union.

Last September, officers for the pilot's union sent a memo to AMR Chairman and CEO Gerard Arpey that included a paragraph saying: "Enjoy your blood money and your union-busting meetings. We'll see you in court, in the newspapers, and on the picket line."

In October, the pilots union proposed raises that it said would return them to 1992 pay rates, adjusted 2.68 percent annually for inflation.

That would have increased the pilots' pay rates more than 50 percent from 2007 to 2008, with 6 percent raises and cost-of-living adjustments annually after that.

American rejected that proposal in November, saying it would cost the airline $1.4 billion a year.

The Allied Pilots Association has made many other proposals that would raise American's pilot costs, including a $140-a-month computer allowance, changes to holiday and vacation accrual, and other items.

The union said in a statement that it would wait until close of business on Monday for management’s response to the union’s invitation before contacting the NMB.

“Without question, we have made little progress in our negotiations, which is why we believe federal mediation is warranted,” Mr. Hill said.

The Wall Street Journal is reporting that the Delta Air Lines board will be asked Friday to let new CEO Richard Anderson "begin formal merger discussions" with Northwest Airlines and United Airlines parent UAL.

It cites "people familiar with the matter."

That process, if it gets the green light, would follow exploratory conversations Delta had in December with both of those airlines as well as Continental Airlines Inc., according to another person with knowledge of the situation.

Of course, Delta's board may decline the request, or send Delta executives back to do more work, or only approve talks with one carrier. And if formal merger talks do commence, they may not wind up with a deal, given the challenges of combining carriers.

A couple of Wall Street analysts wrote this week that they see a growing likelihood of airline industry mergers in the fairly near future. The head of Delta's pilot union alerted pilots Wednesday that consolidation "may be at our door."

Southwest's announcement yesterday that it would trim 57 flights from its schedule and add back 40 to more productive markets may signal similar announcements are ahead by other airlines, according to this story by TravelMole.com

The story suggests that high fuel prices and a sluggish economy will push other airlines to make trims and shift resources to more profitable routes.

Southwest and JetBlue have both announced they would rein in growth.

The story then quotes from Reuters, who quoted airline consultant Robert Mann here.

"It stands to reason that with higher energy costs and the inability to recover those, more and more of the domestic network is going to be unprofitable," Mr. Mann said in the Reuters piece.

Savvy travelers may also connect the dots at reduced service could also translate into higher fares on those routes.

In case you haven't been noticing, airline stocks are getting whacked around pretty badly.

Southwest Airlines closed at $11.31 on Tuesday. I've got records going back to the start of 1980, and $11.31 is the lowest price I can find.

Of course, the stock has split a number of times, so one share on Jan. 1, 1980, would have become 106.79 shares by now. But since the last split on Jan. 18, 2001, the stock has never closed at a lower price than it did on Wednesday.

Since that split, the only time Southwest Airlines closed below $12 was on six days in the second half of 2002 and every trading day in 2008.

It has company in its misery.

AMR, parent of American Airlines, closed Tuesday at $11.74 a share on the New York Stock Exchange. The last time it closed at a lower price was Oct. 12, 2005, nearly 27 months ago.

Travelers take heart: It turns out you CAN bring spare litihium batteries for your consumer electronics on the plane.

Federal regulators sent an advisory just before Jan. 1 reminding folks not to bring lithium batteries, as a safety tactic to prevent possible risk of fire.

Apparently, the rule only applied to industrial type batteries, not the ones you might take as a spare for your mobile phone, laptop or digital camera.

Joe Sharkey at the New York Times has an illustrative column on what a mess communication has been about the new rule (or, according to Mr. Sharkey's column, what regulators are calling a "safety tip"????).

We have a case of an airline giving up before it was too late.

Big Sky Airlines, the regional airline unit of MAIR Holdings Inc., isn't bankrupt. But it has closed down its eastern U.S. operations and is trying to find someone to take over its western routes.

As of Monday, it ended its service as a Delta Connection carrier in the Northeast, service that it had begun only last year. As Paul F. Foley, MAIR president and chief executive officer, told investors Dec. 20:

Big Sky no longer sees an opportunity for profitability in these routes due to a combination of factors. First, unusually bad weather caused numerous flight cancellations. This fact combined with lower yields and passenger traffic resulted in very disappointing revenue. Second, continually escalating fuel prices significantly increased Big Sky’s expenses.

As a result, Big Sky, almost exclusively because of the eastern operations, incurred significant losses in the month of November. Preliminary unreviewed numbers indicate the losses at about $1.3 million.

More importantly, we do not see future conditions improving to the level required. As a result, MAIR’s Board is no longer willing to provide additional capital to Big Sky to develop the eastern operations.

JetBlue Airways' growth continues to decelerate as it gets bigger.

JetBlue said Monday it will trim its growth rate in 2008, with plans to expand its available seat miles by six to nine percent over 2007's capacity.

“We experienced strong demand during the holiday season,” JetBlue's CEO Dave Barger said. “However, given an uncertain economic environment and record high fuel prices, we plan to grow more conservatively in 2008.”

He added: “Assuming market conditions remain favorable, we expect to take advantage of continued strength in the worldwide aircraft market to manage our fleet growth, and we currently plan to increase capacity between six and nine percent for the full year.”

JetBlue grew 11.6 percent in 2007, growing from 28.6 billion available seat miles in 2006 to 31.9 billion last year. Among the 10 major carriers, it ranked behind only AirTran Airways in rate of growth. At the beginning of 2007, JetBlue officials had projected growth of 11 to 14 percent.

Robert Ciminelli, who had been American's managing director at New York LaGuardia Airport, is joining US Airways as vice president of the carrier's Philadelphia operations.

Robert Ciminelli (CREDIT: US Airways)

“US Airways plays a key role in Philadelphia, and I am very excited to build on the positive momentum already in place," Mr. Ciminelli said in US Airway's announcement.

"Northeast airline operations can prove extremely challenging given the unpredictable weather patterns, high-density markets and other complex elements that drive a hub’s operation," he said.

"However, we will address these challenges with a focus on improving coordination and communication across all of our operating departments,” Mr. Ciminelli said.

Suzanne Boda (CREDIT: US Airways)

US Airways also named Suzanne Boda as senior vice president for East Coast, international and cargo operations. Ms. Boda had been vice president of inflight services for Northwest Airlines.

Among her responsibilities will be Philadelphia. The airport operations people will answer to Mr. Ciminelli; Mr. Ciminelli will answer to Ms Boda; and Ms. Boda will answer to Robert Isom, US Airways executive vice president and chief operating officer.

Less than a week after New York State's passenger rights legislation took effect, travel industry pub Travel Weekly is reporting that two other states are considering a similar law.

According to Travel Weekly, lawmakers in Rhode Island and Arizona are planning at legislation.

New York's passenger rights law, which is being appealed by the airline industry's Air Transport Association of America, took effect Jan. 1 and requires the carriers to provide food, water, waste removal and fresh air and lights on flights that wait more than 3 hours on the tarmac before take-off.

We've had some tough questions lately, so today's trivia question is a simple one.

Name all the former Southwest Airlines chief executive officers who have not written a book?

Answer below.

The Allied Pilots Association, which represents American Airlines pilots, “expressed its concern” Friday about proposal legislation affecting how airline unions would merge their seniority lists when their airlines merge.

The legislation, backed by the two Missouri senators, Democrat Claire McCaskill and Republican Kit Bond, would set up binding arbitration to decide how seniority lists from the merging airlines would go together.

“While this legislation is no doubt well-intentioned, APA does not favor legislative branch involvement in any aspect of labor negotiations,” APA president Lloyd Hill said. “We believe this legislation could have adverse, unintended consequences for the very same unionized workers that Congress was trying to help.”

1. Vacations are always more fun to consider two days before they start than two days after they end.

2. The airlines' best defense against consumer protection legislation won't be well-paid lobbyists. The best defense will be good weather.

3. I want to see the plans for the new terminal at Love Field.

The carry-on restrictions for British airports are lifting as of Monday at six of BAA's seven UK airports, but you'll need to check with your airline whether or not it applies to you.

Officially, the one-bag limit in the cabin will be lifted at Heathrow, Stansted, Glasgow, Edinburgh, Aberdeen and Southampton.

North Texas travelers should note that the limit has not yet been lifted at Gatwick.

At that airport, which is served from D/FW by American Airlines and British Airways, the restriction is expected to be lifted early this year as the airport completes some engineering work. BAA officials said passengers connecting in Gatwick's South Terminal can travel with more than one item if their airline alllows.

Flights connecting through Gatwick's North Terminal (served by British Airways and American) can do so as of Feb. 11.

Whew! Did you keep track of all that?

Bottom line: Check with your airline before you depart so you won't have any nasty surprises.

Last week, the chairman and vice chairman of the Allied Pilots Association's Washington, D.C., base said they weren't running for reelection.

Thursday, the chairman and vice chairman of the union's Dallas/Fort Worth base said the same thing.

In an email to members, D/FW base chairman Mickey Mellerski revealed that he and vice chairman Mike Leone weren't going to seek new two-year terms. Both were pretty staunch supporters of ex-APA president Ralph Hunter, as were the Washington officders.

"Mike and I each have our own reasons for not running, but are fully committed to making sure that whomever you elect will have the best possible chance for success in the future," Mr. Mellerski told members.

Former APA president Jim Sovich was voted out of his Boston base chairmanship last year, before Miami pilot Lloyd Hill ousted Mr. Hunter in the national elections in June.

All in all, the national leadership and the base officers, which make of the union's board of directors, are presenting a much more aggressive face to the airline's management than top executives faced as recently as a year ago.

Here's the ranking of airlines by on-time arrivals (within 15 minutes of schedule) in November:

After I posted a story Thursday about on-time arrivals in November, a reader raised this point:

I think it might be noteworthy in your article from this morning to mention that controlling nearly all of the gates at Love Field may be a bit advantageous to Southwest in regards to their on-time performance. It would be interesting to see them keep this performance record if they had to operate out of DFW like they should be.

Just making sure we are comparing apples to apples...

I replied that he made a good point. But here's more of the story:

For trips beginning Jan. 29, passengers traveling on Southwest Airlines may check only two bags for free instead of three.

Beth Harbin, a spokeswoman for the airline said the rule change is an effort to help the carrier handle its bags more efficiently. Ms. Harbin said only 2 percent of passengers in 2007 checked a third bag.

She said the airline is trying to raise customer awareness about how much they're packing.

"It's 100 pounds of stuff," Ms. Harbin said, adding that the limits would "make it easier for us to move everyone’s bags."

Here's a link to Southwest's baggage policy.

The airline saw its volume of checked bags grow by as much as 30 percent following the restrictions on liquids in August 2006.

The airline issued a spoof of TLC's What Not To Wear with its What Not to Pack video last month. Here's our blog post on it.

US Airways has awarded a $500 gift card to Marlene Patrick of Cheltenham, Pa., who won the carrier's second annual holiday story contest.

Ms. Patrick's story was about a nice pilot who told a nice story over the public-address system.

Her story is below.

The Centers for Disease Control are trying to contact 44 passengers who sat near a North California resident on an American Airlines Dec. 13 flight from New Delhi, India, to Chicago, the Los Angeles Times reported Thursday.

The Sunnyvale woman tested postitive for tuberculosis, and authorities want to find other passengers on the 16-hour flight who may have come into contact with her. Says The Times:

The woman's multi-drug-resistant TB, or MDR TB, is less dangerous than a virtually untreatable form known as extensively drug-resistant tuberculosis, or XDR TB. But authorities are particularly concerned because during the flight the patient showed symptoms that increased the chances of spreading the disease.

Violence in Kenya and uncertainty in Pakistan helpd send oil prices to $100 for the first time today.

That's bad news for airlines, whose financial woes have been driven by rising fuel costs.

Share prices for several major airlines dipped today, led by United, which was down about 10 percent shortly after 2 p.m. today.

I wouldn't be surprised to hear about some additional fare increases as the airlines try to recoup some of the extra expense through ticket prices.

All hail UAL, parent of United Airlines.

Investors who owned UAL on the last day of 2006 would have lost only 19 percent of their money during 2007.

That may sound bad, but UAL investors fared better than people who put their money on other airline stocks.

Take US Airways Group Inc. -- please. The stock fell from $53.85 at the end of 2006 to $14.71 on the last day of 2007, down 73 percent. In other words, a $100,000 stake in US Airways on Dec. 31, 2006, would have been worth $27,316.62, to be precise, on Dec. 31, 2007.

Southwest Airlines Co. was off 20 percent, second best to UAL. AMR, parent of American Airlines, fell 54 percent, better than only US Airways and JetBlue Airways on my chart.

By comparison, the S&P 500 climbed 4 percent, the Dow Jones Industrials were up 6 percent and the Nasdaq Composite was up 10 percent.

For the airline list, keep reading.

Bloomberg News is reporting that workers at BAA Ltd.'s seven British airports have called off a Jan. 7 strike.

According to the report, a union spokesman said the operator of London's Heathrow and Gatwick airports had met the workers' "main concern” and agreed to negotiate over the introduction of a new pension plan.

The workers had announced three 24 hour strikes on Jan. 7, Jan 14 and a 48 hour strick Jan. 17.

Only the Jan. 7th strike has been called off for now.
The 5,000 BAA security, maintenance and administrative workers in the union protested the end of a final-salary pension plan and voted on Dec. 21 for 24-hour strikes on Jan. 7 and Jan. 14 and a 48-hour strike on Jan. 17.

The Associated Press is reporting that NASA has "begrudgingly released" some results today from an $11.3 million federal air safety study it "previously withheld from the public over concerns it would upset travelers and hurt airline profits."

According to the AP, the NASA published the findings in a format that makes it difficult for analysis by outsiders. "Earlier characterizations from people who have seen the results said they would show that events like near collisions and runway interference occur far more frequently than previously recognized," the AP wrote.

Air Transport Association of America ATA President and Chief Executive Officer James C. May kicked out a press statement saying the United States has "the safest air transportation system in the world, in large part due to the absolute commitment by the Federal Aviation Administration (FAA) and the airline industry to safety, including the proactive use of safety data and analysis.”

“While we appreciate any insight that might be derived from the NASA study, as the FAA noted, the study was not designed to capture real-time, verifiable data. As such, it is important that the report be viewed in that context,” Mr. May said.

Read the full story on DallasNews.com here.

To read NASA's report, click here.

UPDATE: Blog item has been modifed to include additional lawsuit by Kate Hanni.

An Arkansas passenger who was stranded a year ago on a diverted American Airlines flight filed a lawsuit Dec. 27, 2007, against the Fort Worth-based airline and is seeking class action status.

Plaintiff Catherine Ray says she was held against her will on the ground in Austin for about 11 hours on Dec. 29, 2006, then delayed further as the airline recovered in days following the event.

The incident was credited for launching efforts by another passenger on Ms. Ray's flight -- Kate Hanni -- for an airline passenger's bill of rights through the Coalition for an Airline Passenger's Bill of Rights.

Ms. Hanni, who lives in Napa, Calif., filed a similar lawsuit against American on Dec. 28.

American has since modified its protocol, making it easier for operators to see how long planes have been stuck. The airline also now has movable stairways at some airports in case a diverted plane can't be accommodated by a jetbridge.

The formatting isn't great, but you can read a word version of Ms. Ray's complaint on the jump.

The Allied Pilots Association overwhelmingly voted its incumbent national officers out of office in June and ushered in a new group that pledged to win huge pay raises and other contract gains.

The APA is at the forefront of unions nationwide that have begun efforts to reverse concessions extracted earlier in the decade -- $660 million a year, in the case of the American pilots.

Incumbent Ralph Hunter may very well have lost his re-election effort, anyway – the APA tends to toss out the incumbent. But his willingness to work with management for much of his term probably doomed him, particularly after American Airlines executive and managers divided up about a quarter billion dollars in stock bonuses in 2006 and 2007.

New president Lloyd Hill has distanced himself from American president and chief executive officer Gerard Arpey, and his union from any cooperative efforts with American’s management.

The union has demanded pay raises of more than 50 percent through 2008, plus additional pay raises in following years, as part of a wide range of contract proposals laid before the management negotiators.

Nobody knows when this battle between American’s pilots and management will come to a head – but the early signals are that a major confrontation is coming.

AMR and American Airlines were the success stories of 2003, with labor and management working together to avoid bankruptcy and all the bad things that go with it. Those good feelings lasted for nearly three years.

But union members objected when top executives and other “key employees” in April 2006 split nearly $100 million in bonuses based on how AMR shares had performed compared to other airlines.

And the anger really exploded after those management people divided up more than $150 million in AMR stock in the April 2007 version of the performance plan – particularly since employees have yet to get any post-2003 profit sharing.

AMR and American chairman and chief executive officer Gerard Arpey and other executives have defended the awards as part of a proper executive compensation program and one that the unions knew about in 2003.

But the employee groups said the slogan from 2003 was “Pull Together, Win Together,” and the rank-and-file employees weren’t winning like the top management was.

Southwest Airlines chief executive officer Gary Kelly quite openly admits that the carrier either has to raise fares 25 to 30 percent or find money somewhere else.

He’s set a goal of increasing the carrier’s revenues by $1 billion a year from somewhere other than its traditional sources.

First up was “Business Select,” a new top fare that lets Business Select travelers board in the first boarding group and gives them a drink coupon, among other things.

The airline is pressing for more business travelers, with sales teams aimed at wooing corporate accounts, improvements coming to its frequent-flier program and a link-up with the Galileo reservations system to sell its tickets.

By 2009, it plans to be selling tickets to international destinations by using a code-sharing partner like current partner ATA Airlines. It doesn’t rule out the possibility that it may offer its own service to places like the Caribbean, Mexico or Canada.

These are all actions that would have been unthinkable in the very recent pasts. But Southwest has labor costs above that of most competitors now, and, even with favorable fuel hedges, sharply rising costs for jet fuel.

So Southwest is having to think about the unthinkable.

The U.S. Department of Transportation issued its final order on upcoming U.S.-China passenger routes today.

This ties up what was already announced as a tentative decision back in September .

The awards are the result of an agreement signed this summer to double the number of daily flights allowed between the United States and China over the next five years.

“We are taking every opportunity to make it easier to do business and more convenient to stay connected with one of our largest trading partners,” said Transportation Secretary Mary Peters said, in a news release. “These new direct routes will provide more options for both business and leisure passengers traveling between the United States and China.”

Under this order, U.S. Airways will launch its first service to China between Philadelphia and Beijing, starting on or around March 25, 2009.

American will serve Chicago-Beijing; Continental will operate a new flight between Newark /New York and Shanghai, and Northwest will fly between Detroit and Shanghai.

Southwest Airlines chairman Herb Kelleher, now a member of the Dallas Federal Reserve Bank's board, is interviewed in the Dallas Fed's November/December issue of Southwest Economy.

Among his opinions is that the U.S. economy isn't in recession yet, although things appear to be slowing.

"What we have seen is a gradual softening that started at the beginning of this year. If you look at the consumer confidence readings from the Conference Board or the University of Michigan, you can see there has been a downward trend," he said in the interview.

"For us, the trend wasn’t totally manifest until the second quarter, but there’s little doubt that many people are getting a little more cautious with their discretionary spending. Consumer demand is looking somewhat dicey, and the public seems increasingly skittish about the prospects for the U.S. economy."

Here's the entire interview.

AMERICAN AIRLINES

Edward Brennan, the long-time chairman of Sears, Roebuck and Co. who helped American Airlines Inc. parent AMR Corp. navigate its dance with bankruptcy in 2003, has died according to a report by the Chicago Tribune.

Mr. Brennan, who also served on the boards of 3M Co., Exelon Corp. and McDonald's Corp., was named AMR's executive chairman after CEO Donald Carty was forced to resign.

Doug Walsh, a retired American Airlines pilot living blissfully in Nevada, shares with us this Top 10 list of ways to tell if your pilot is over age 60:

10. Orders a "Geritol frappachino" at Starbucks.

9. Layover clothes consist of black shoes, white knee socks, bermuda shorts, and yellow golf shirt.

8. Yells, "I've landed and I can't get up," then laughs uncontrollably.

7. Uses his AARP card as a second form of I.D. at the jumpseat desk.

6. Medic alert bracelet keeps setting off the metal detector.

5. Uses the aircraft power outlet to charge up his wheel chair batteries.

4. Carries a Commodore 64 computer on the road.

3. Thinks the United flight attendants in Narita are "hot".

2. Bids the Dehli layovers, but doesn't remember why...

And the number one way to tell if you're flying with someone over 60:

1. Flies across the country with the lights on all of the time to help him read the maps.

(What about if he leaves his blinkers on all the way from O'Hare to LaGuardia?)

Herb Kelleher has been the public face of Southwest Airlines for nearly 30 years, starting when he became chairman in 1978. He came to fame as Southwest’s bulldog long before then, waging the legal battle that allowed the carrier to begin operations in 1971.

He took on the title of chief executive officer and president in 1981 and, with his quick wit, jovial nature and fierce competitiveness, became one of the best known business leaders in America.

With him all along the way was his one-time legal secretary, Colleen Barrett, who moved from the secretarial ranks and into the executive ranks, with a particular passion for making sure Southwest stayed the people-loving place it had been from its beginning

In 2001, Mr. Kelleher gave up his title as chief executive officer and president and made plans to slow down. The Sept. 11 terrorist attacks changed that, forcing him back into an active role inside Southwest and in national aviation matters.

Ms. Barrett took over the president’s job, becoming the highest ranking woman in the U.S. airline industry.

Now, both will be stepping down – Mr. Kelleher as chairman and member of the Southwest’s board after the airline’s annual meeting in May and Ms. Barrett as board member in May and as president in July. They’ll remain as employees in roles yet to be determined.

The board hasn’t named their replacements, but chief executive officer Gary Kelly is likely to be a frontrunner for either or both jobs.

But in a sense, they won’t be replaced – there is only one Herb and one Colleen.

Wintry weather plagued United yet again-- this time in Denver.

This was the fourth straight day that United canceled flights, according to the report by the Associated Press.

Air Canada is testing a system that allows pasengers to create and attach their own bag tags from the check-in kiosk, according to this story by the Globe & Mail.

One analyst quoted in the article suggested self-tagging would become an international trend.

The story caught my eye, after a conversation the Dallas Morning News editors and reporters had with Southwest Airlines chief executive Gary Kelly earlier this month in which he hinted at efforts to streamline the check-in process.

Might Southwest soon ask customers to tag their own bags???

We asked him about whether Southwest would consider giving the airlines most frequent fliers access to special lines for security. Here was the pertinent part of Mr. Kelly's answer:

If, you translate that thought to the ticket counter where we’re primarily checking bags, that’s where, I think, you can differentiate. Not because you’re special, but because you are prepared for a streamlined service.
...
So if you’re a frequent flier and you somehow pre-register with us with your bag and we know who you are and we can check you in faster because of that, well that has some appeal to us.
...
If you’re coming to us and you need to change your reservation and its going to take time to do that, then we can organize our services around your needs better.

That’s a different need than your question about security. But that whole check-in process is something that we’re very focused on. We want to speed up the check-in process and speed up the check-out process and you haven’t seen anything from us yet on that but you will.

Okay, this is not earth-shaking and doesn’t change the future of the world as we now know it.

But Southwest Airlines so rarely changes its basic operating procedures that it’s worth singling out.

The airline spent over a year studying changes to its boarding process, including the possibility of assigning seats like most U.S. carriers do. It listened to passengers, tried out different methods and thought long and hard.

It wound up retaining its policy of not having assigned seats, but revamped the procedures to spare customers the experience of crowding up to the gate with too many other passengers. Instead of having three boarding groups, A, B and C, the airline now adds numbers, and numbered columns in the gates to gather by.

The new boarding process was combined with spiffed-up gates with amenities to attract business travelers and families.

United is coping with delays and cancellations for a third day Wednesday following bad weather over the weekend, creating some travel headaches for the airline's O'hare passengers, according to this report by the Associated Press.

I checked with the folks at American Airlines and Southwest Airlines today and both reported fairly smooth operations.

Rainy conditions this morning created delays for a little more than half of American's flights from D/FW airport, but airline spokesman Tim Wagner said most were limited to 10 to 20 minutes. He said delays Wednesday afternoon were mostly under 10 minutes and were on less than half the Fort Worth-based carrier's flights.

Mr. Wager said while the airline's ontime performance Wednesday hasn't been "stellar," it has overall been a good holiday travel day.

Southwest spokeswoman Christi Day said Wednesday afternoon Dallas Love Field was running smoothly and that more than 90 percent of the carrier's 3,400 flights systemwide were running ontime.

The U.S. airline industry is having its most profitable year since 2000, but rising fuel prices are threatening the new-found prosperity.

Spot prices for jet fuel are up more than 75 cents a gallon in December compared to the same period in 2006. The International Air Transport Association recently cut its profit estimates for 2008 to $5 billion, down from its original 2008 estimate of $7.8 billion and its estimate of $5.6 billion for 2007.

IATA thinks the world’s airlines will spend $149 billion on fuel in 2008, up from $135 billion on 2006 and only $40 billion in 2002.

On Nov. 15, 2006, US Airways Group said to Delta: Let’s get married.

Delta said to US Airways: No way.

Faced with fierce opposition from Delta management and employees, US Airways withdrew its offer Jan. 31, 2007. But the abortive attempt stirred up Wall Street, investors and some airlines.

We had the United-Delta rumors. We had the American-Northwest speculation. We had the United chief executive officer’s regular statements of interest in consolidation.

AirTran Airways offered to buy Midwest Airlines, which fought off its suitor only by finding another pair of suitors – TPG Capital and Northwest Airlines.

A major shareholder in Delta and United has urged the two to consider a merger. Stay tuned, to dust off a cliché.

Better think again.

The Associated Press is reporting that all- "business class" carrier that flew to London's Stansted airport from New York, Las Vegas and Los Angeles halted operations Monday, claiming the price of fuel had gotten too expensive.

Airline consultant Robert Mann, however, suggested in the article that American Airlines' launch of service between JFK and Stansted in October was the "coup de grace."

MAXjet said halted traded earlier this month pending a "clarification" of its financial position.

Here's what MAXjet says on its Web site:

IMPORTANT UPDATE FROM MAXJET
Information below regarding those who have booked travel

Dear Friends of MAXjet:

William D. Stockbridge
President and CEO

Okay, the annus horriblis actually began Dec. 29, 2006, when a thunderstorm squatted over the Dallas-Fort Worth area for hours and hours and messed up American Airlines’ schedule in a major way.

At airports all over the Southwest, American’s aircraft sat for hours and hours while the carrier waited for the weather to clear, angering thousands of passengers – including Kate Hanni of Northern California.

Ms. Hanni formed the Coalition for a Passengers’ Bill of Rights to lobby Congress for laws to protect passengers from poor airline service – including eight or nine hours sitting in parked airplanes.

A big snowstorm paralyzed New York airports on Feb. 14 and prompted a JetBlue Airways rerun of the AA fiasco. American faced day after day of rain, primarily at its D/FW hub, and struggled to maintain customer service levels. Other carriers had their own problems.

To date, the airline industry has fended off any federal laws forcing them to improve customer service. But a federal court on Dec. 19 upheld a New York state law that requires airlines to provide a basic level of service when flights are disrupted.

American appointed a customer service tsar to look at all sorts of ways the carrier could improve its service, particularly in light of surveys that consistently put American at or near the bottom.

Meanwhile, airline delays are the worst in years, and the federal government focuses on ways to improve operations at New York area airports.

Some holiday week Monday Morning trivia---

You'd have to be asleep to not realize that American Airlines and its regional partner American Eagle carry the most passengers at Dallas/Fort Worth International Airport. Actually, for the first 10 months of 2007, they carried 84.7 percent of passengers.

But who's next?

Name the three carriers who carry the most travelers at D/FW other than the two named above.

Bonus question: What percentage of traffic do they each carry?

Delta Air Lines and Northwest Airlines entered bankruptcy on the same day in September 2005, and exited bankruptcy court a month apart in spring 2007.

When Northwest emerged from bankruptcy on May 31, 2007, it marked the first time since 2002 when no major U.S. airline was operating in bankruptcy. At one time, four of the industry’s seven largest carriers found themselves in Chapter 11 proceedings.

United Airlines and parent UAL entered bankruptcy in December 2002, and exited on Feb. 1, 2006. US Airways Group made two trips into bankruptcy courts, finally emerging upon its September 2005 merger with America West Holdings.

One result of the industry's financial woes earlier in the decade: U.S. carriers are carrying a lot of cash on their balance sheets, much more than pre-2001, to guard against future downturns.

U.S. airlines looked east and west in 2007 and saw greater opportunities.

U.S. negotiators worked out a deal with the European Union to allow airlines from the United States and the European Union countries to fly between any two cities across the Atlantic.

The most immediate effect was a flurry of announcements from U.S. carriers about their new service to London Heathrow Airport, an airport long closed to any U.S.-London flights except those offered by American Airlines, United Airlines, British Airways and Virgin Atlantic Airways.

But the new treaty, which goes into effect in late March 2008, is also expected to spur more flights to and from secondary cities on either side of the Atlantic.

In addition, U.S. and Chinese negotiators worked out a deal to increase service between the United States and China, not long after the Department of Transportation gave United a coveted route between Washington, D.C., and Beijing.

American Airlines chose not to apply again for Beijing-D/FW Airport service, instead asking for Chicago-Beijing rights, a route it was awarded and will begin flying in 2009.

I know... these are a little late, but better late than never???

1.Is it wrong for me to have mean thoughts about travelers who dump their carry-on bags in the forward cabin bins and then head to the back where their seat is?

2. If Santa flew on a commerical airline, would Christmas gifts be delivered on-time?

3. If you bring a pie on the plane, will you stow it underneath the seat in front of you, or in the overhead bin? If its the overhead bin, please don't wad up my coat and put it on top.

VIRGIN AMERICA

It seems the incident was No. 1 in the magazine's top 10 list of travel snafus in 2007.

Fortune titled the incident "Fly the not-so-friendly skies."

No. 2 was Singapore Airlines' request that passengers refrain from having sex in the $15,000 double-bed suites on its A380 airplane. That fell under the heading "Fly the don't-get-too-friendly skies."

Dallas-based Southwest was dinged a second time for asking a man to change out of a shirt depicting a fisherman's shack called the "Master Baiter."

Thanks for reading Scott!

It’s our first annual Top 10 list. We’re counting down the most important events and issues that affected aviation, with a distinct Dallas-Fort Worth slant.

And we’re starting today with No. 11 – we started the Airline Biz blog!

Well, it was big to us. It also kept us extremely busy since May 5, the day we launched the first airline-oriented blog among Dallas-Fort Worth daily newspapers.

Through Thursday, Dec. 20, we’ve posted 1,039 items, ranging from items with a single paragraph to one item with more than 200 paragraphs. But who’s counting?

On Saturday, we’ll start with the more substantive items, beginning with No. 10. Feel free to disagree at any time.

Round one goes to the passengers.

A federal judge ruled today that New York state can require airlines to provide food, water and fresh air during three-hour delays, dealing a blow to efforts by the industry group the Air Transport Association to block it.

The trade association, which represents major carriers including Fort Worth-based American Airlines Inc., had argued that the state law was invalid because the industry is regulated by the U.S. government.

According to a report by Bloomberg News, the ATA is considering an appeal. New York's law takes effect Jan. 1.

The so-called "passenger bill of rights" law stemmed from several high profile incidents in which passengers were stuck on planes for extended periods of time during bad weather, including ones involving American Airlines and JetBlue. Other efforts have been initiated at the federal level.

New York Attorney General Andrew Cuomo called the judge's decision "a victory for airline passengers in New York and potentially across the country."

Under New York's law, whenever airline passengers have boarded an aircraft and are delayed more than three hours prior to takeoff, the carrier shall ensure that passengers are provided as needed with:

● Adequate snacks, drinking water and other refreshments.
● Electric generation service to provide fresh air and lights.
● Waste removal service of holding tanks for on-board restrooms.

Some tips on holiday travel, thanks to our friends at American Airlines, Southwest Airlines and the Transportation Security Administration.

--Allow extra time for parking. The cheap lots fill up early, so you may have to check a couple places. Some off-site companies allow you to reserve a spot if that helps ease any anxiety.

--Allow extra time for security. Hey, those lines may be speedy during the rest of the year, but there will be plenty of folks there who don't know the drill as well as you. Take a deep breath and just bear with everyone (especially families with small kids).

--Review the rules on liquids, gels or aerosols at www.tsa.gov. (I always forget my asthma inhalers and I should know this stuff!)

--Bring snacks. Flights get delayed and sometimes, you just get hungry. Aim for something that isn't too crumbly (aka, no wafer cookies, like the ones I brought with me from the Czech Republic -- sorry about the crumbs on the floor American!), too sticky or melts easily.

--Bring stuff to read or entertain yourself or little ones (or just impatient ones) traveling with you.

--Bring some holiday cheer. Things happen, and in all likelihood, the person on the other side the counter isn't to blame. Try to be patient and not everything goes according to plan.

Southwest chief executive Gary Kelly visited with Dallas Morning News business editors and writers for our Executive Forum series.

We got to lob all sorts of questions at him for about an hour an a half. You can read our story on the meeting at DallasNews.com.

Among the highlights:

-- Southwest may consider buying another airline.

-- Mr. Kelly is preparing for a slower economy next year and is building a conservative summer schedule. If things change, the carrier is prepared to add more flights.

-- Southwest plans to introduce a new frequent flier program that may better rationalize award tickets based on the type of flying a customer has done.

You can read the entire transcript below. It's long. If you want to send sympathy notes to me and Terry for having the tedious jobs of transcribing, we'll take them.

We'd much rather be blogging with you, than transcribing.

Across the U.S.-based airlines, 59-year old commercial pilots are rethinking what to do now that they can work 5 years longer than planned.

Until Thursday, Dec. 13, U.S. pilots were required to retire as of their 60th birthday-- five years earlier than their counterparts outside the U.S.

The rule is not retroactive, so any pilots who turned 60 before Dec. 13th won't be reinstated.

Here's a small glimpse into what Fort Worth-based American Airlines expects, at least until the end of the year.

A spokesman told me that as of Wednesday morning.....

-- Seven of the 11 American pilots who turn 60 by December 31, 2007 are staying with the company.

-- Three of the 11 are retiring.

-- One is undecided

JFK and Newark airports will join LaGuardia in having caps on the number of operations that are allowed, Transportation Secretary Mary Peters said in a news conference.

The feds will also appoint an airspace "czar" to help ease delays.

New take off and landing rights at JFK and Newark would be auctioned off.

Read more at DallasNews.com.

Stay tuned for more on how the Bush Administration plans to ease congestion in the New York/ New Jersey airspace.

Here's an early story from the Associated Press...looks like we'll be hearing more about shifting flights to less busy times, though no official caps.

JFK, LaGuardia and Newark airports have the worst on-time records in the U.S. for the first 10 months of the year.

Transportation Secretary Mary Peter's press conference today has been postponed until 11 a.m. Dallas time, but the statements by various constituencies are already flying.

David Stempler, president of the Air Travelers Association, is questioning how the auction of take-off slots at New York and Newark airports would reduce congestion and delays.

“All we end up with is the same number of planes, but with different paint jobs on the side," Mr. Stempler wrote in a statement to Ms. Peters.

Mr. Stempler believes that the result would be higher fares, as airlines seek to cover for the auction fees.

"These high slot auction costs for passengers will be added to the higher airfares from slots caps and higher fuel prices," he said. "These DOT proposals to raise airfares come at a time when airlines are stressed financially and the economy is struggling to stay out of recession.”

A study released today by the Reason Foundation argues that congestion pricing could minimize delays at New York area airports.

The lead author is Robert Poole, who was an advisor to the DOT on this subject.

Mr. Poole argues that runway fees that vary by demand and time of day would cause airlines to reduce the amount of overscheduling that occurs today. The idea is that if it costs more to fly during the busiest times, you might consider flying at an off-peak time instead.

He also argues that the fees generated by congestion pricing could go into a fund to pay for airport expansion.

Mr. Poole wasn't happy about some of the comments made earlier this week by the Bush administration on how to tackle the issue.

"It is disappointing that the federal plan to reduce delays was unable to incorporate congestion pricing or produce a real auction that puts every runway spot up for bid," he said. "The new plan is a band-aid that won't cure delays."

Here's a link to the entire report.

Are you all out there with baited breath to see what the Bush Administration recommendations will be for solving the congestion issues in the New York area?

Apparently, there will be some news later this week, unless the hints made yesterday about easing travel woes for next summer already give the strategy away.

Thoughts out there on what needs to happen?

Southwest Airlines has a light-hearted look at packing with a YouTube video that takes a cue from TLC's What Not To Wear.

Instead of Clinton and Stacy, Southwest has Clayton and Michelle, who will teach one traveler "What Not to Pack."

They don't say how long this trip to Denver is, but geeez! SEVEN SWEATERS!!!!!! And THREE checked bags?????

I just got back from a 2 week trip to Europe and I managed with four (ever hear of dropping things off at the laundromat?).

Here are their tips if you don't want to watch the video:

-- Wear your heaviest or largest coat on the plane. If the plane is chilly, you can use it as a blanket.
-- Anything important such as birth certificates, medicine, keys, or negotiable documents should be placed in your carry-on bag and kept with you at all times.

-- Roll your items rather than fold. This

-- Make sure to add baggage identity cards on the inside and the outside of your bag. This will help identify your luggage, as well as deter luggage theft.

-- Get to the airport early to ensure your bag will make your flight.

Here's one from this travel-savvy blogger: Don't pack your whole closet. You don't need to have five choices for each day. Seriously, simple is better when it comes to traveling.

The Dallas-based carrier will be handing out cookies, hosting the Dallas Wind Symphony Tuba Quartet and offering some promotions today from 1:30 to 5:30 at its headquarters airport.

On Friday, airline employees -- who are getting trained by Coppell-based The Container Store -- will offer free gift warpping from 9 a.m. to 5 p.m. on Friday, Dec. 20 near Love Field's Gate 5.

The idea is that the service can help those folks packing gifts in their carry-on luggage. Per guidelines by the Transportation Security Administration, gifts should be left unwrapped for the security screening process.

A report issued today by the U.S. Department of Transportation's Bureau of Transportation Statistics, U.S. scheduled passenger airlines employed 3.5 percent more workers in October 2007 than in October 2006.

That's the ninth consecutive increase in full-time equivalent employee (FTE) levels for the scheduled passenger carriers from the same month of the previous year.

Adding FTEs from October 2006 to October 2007 were network carriers Continental Airlines, Alaska Airlines, Delta Air Lines, American Airlines and, for the first time since September 2001, United Airlines.

All of the low-cost carriers except ATA Airlines, and regional carriers American Eagle Airlines, SkyWest Airlines, ExpressJet Airlines, Comair, Horizon Air, Pinnacle Airlines, Mesaba Airlines, Mesa Airlines, Executive Airlines, PSA Airlines, Republic Airlines and GoJet Airlines also increased their employment ranks compared to last year.

The 417,554 FTEs employed by the industry in October was the most in any month since July 2005. Nearly 60 percent of those work for network -- or legacy -- carriers, while about 23 percent work for low-cost carriers and the rest work and nearly 15 percent worked for regional carriers.

American Airlines said Monday that it plans to recall or hire 200 to 250 maintenance employees to handle increased workloads in 2008.

The workforce expansion, which begins in this month and will continue through the first quarter of 2008, will add folks to The Fort Worth-based airline's three overhaul bases in Fort Worth, Tulsa, Okla., and Kansas City, Mo., as well as its line maintenance facilities across the airline's system.

American has begun work on overhauling landing gears on American's Boeing 777 and 737 fleets as well as the landing gears on the American Eagle ERJ fleet. The airline will also start heavy checks on the General Electric CFM56-7 engine, which powers its Boeing 737-800 fleet.

American, along with its joint venture with Rolls-Royce -- Texas Aero Engine Services Ltd. -- performs about 90 percent of all its maintenance work.

Frequent business traveler Scott Cytron wanted to let me know he's putting his points to work.

Here's what he's got planned for a Christmas getwaway to San Francisco and Napa Valley.

-- Air Travel (American Airlines) - 50,000 points = 2 round trip tickets
-- Hotels (J.W. Marriott in San Francisco, Marriott Courtyard in Napa ) = Marriott points for the entire two stays
-- Spending money. He converted American Express points into four $100 gift cards to spend on food, incidentals
-- Park n' Fly - used points for six days of free parking

Hey Scott- if its not too cold, stop at Taylor's Automatic Refresher in St. Helena for a great burger and shake.

And drink some Pinot Noir for me!

The Air Travelers Association is asking the Bush administration not to cap flights to and from the New York area airports, saying the caps would mean higher airfares for travelers.

“By limiting the supply of flights at JFK/Newark, with the demand remaining the same, fares in the entire New York/Newark metropolitan area will shoot up, said the organization's president David Stempler. "Airline passengers are not interested in reduced flight delays at the cost of significantly higher airfares and significantly fewer flights.”

Mr. Stempler called the administrations talk of slot auctions reminiscent of "Hugo Chávez’s nationalizing of oil companies in Venezuela" and called caps on flights in the area a bandage solution.

"The real, long-term solutions to these safety and efficiency problems is to put into service a new, safety-based, GPS, next generation air traffic control system, as soon as possible," Mr. Stempler said. "Airline safety, savings, and service depend on it.”

In Saturday's Dallas Morning News, we had a story about pilots who have just turned 60 or about to turn 60. In the story, two 60-year-old pilots, one American and one Southwest, wished they had had the opportunity to decide; an AA pilot who turns 60 on Friday will retire as planned, another AA pilot who turned 60 on Thursday will keep flying; a Southwest pilot who turns 60 on Jan. 1 will keep flying.

I didn't spell it out in the story, but I'd like to note the difference between the two AA pilots who made different decisions.

Frank Walters, who turned 60 on the day the president signed the law extending the retirement age Thursday, has been working at AA only since 1991 and he's a first officer on the Boeing 767. He doesn't plan to retire.

Richard Metts, who turns 60 Friday, has been an AA pilot since 1976 and is flying as captain on a Boeing 777.

Their financial situations, other things being equal, would be vastly different. Mr. Metts has had 15 years more to build his defined benefit plan, build his defined contribution plan, contribute to his 401(k), although the 401(k) is relatively new.

In addition, Mr. Mett's annual pay is much higher than Mr. Walters. Without knowing their W-2s, the hourly pay rate for a Boeing 777 captain is about 68 percent higher than for a 767 first officer, if I did my calculations correctly.

So Mr. Walters has good reason to want to hang around longer to improve his pay and pension, in addition to any job satisfaction from working.

AA has 11 pilots scheduled to reach age 60 between Thursday, Dec. 13, when the law was enacted, and Monday, Dec. 31. It had contacted six of them; four plan to keep working.

By the way, if you're an airline pilot, do you plan to keep working past age 60?

The Allied Pilots Association, which fought raising the pilot retirement age, reflected on the decision by Congress and President Bush to raise it to age 65.

Here's what it said on its Friday hotline:

Considering we have a government that often takes months, if not years, to resolve controversial issues, it was remarkable to see powerful politicians fast-track legislation this week. A stand-alone bill increasing the airline pilot retirement standard to 65 years was introduced and passed by the U.S. House of Representatives on Tuesday, accepted without objection by the U.S. Senate on Wednesday and signed into law by the president on Thursday.

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Mr. Kelleher and other members of the class were selected by the NAHF's 130 member nominating board. The incoming class of inductees includes a WWII triple ace, a naval aviation pioneer and an aerobatic champion.

The big to do will take place this summer in Dayton, Ohio, where the NAHF is based and operates a learning center.

Mr. Kelleher was lauded for his role as a founder of Southwest and leadership in building it into the dominant industry force it is today.

Southwest spokeswoman Beth Harbin said Mr. Kelleher was unavailable for comment, but that the announcement was "a fitting honor for a man whose vision and dogged determination revolutionized air travel, much as the Wright brothers did more than a century ago."

Other inductees include:

-- Col. Clarence E. “Bud” Anderson, USAF (Ret.), veteran WWII triple ace and experimental test pilot

-- The late William A. Moffett, architect of naval military aviation

--Sean D. Tucker, champion aerobatic air show performer and instructor.