Bag-check datapoint of the day, AA edition


In March 2010, I had the bright idea — stolen shamelessly from Eric Joiner — that airlines might charge a negative bag-check fee. A lot of people, of course, simply hate the idea of risking their bags being lost, and/or of milling around at a baggage carousel waiting for their bags to arrive. But many others would love the idea of getting paid, in dollars or in frequent-flyer miles, for checking their bags… Passengers would get on and off planes more quickly, the airlines would make more money, and everybody would be happier. My commenters were unimpressed. Wouldn’t this just encourage people to pack more and therefore add more weight to the plane? Wouldn’t it even — at the margin — encourage people to check empty cardboard boxes, and not even bother picking them up at the other end? But lo — look what American Airlines has just announced! Through November 22, 2011, American Airlines will offer AAdvantage® elite status members the opportunity to earn a minimum of 500 AAdvantage bonus miles for checking bags on flights departing Boston Logan International Airport (BOS). Earning the bonus miles is easy – simply visit a BOS Self-Service Check-In machine on the day of your departure and follow the normal steps to check-in with bags. Check at least one bag under your own name to earn the bonus miles, which will automatically post to your AAdvantage account five business days after you have completed the travel associated with your itinerary. As a reminder, all AAdvantage elite status members are entitled to check two bags free of charge (within current size and weight limits) in addition to earning the bonus miles with this special offer. By confining the offer to elite status members — you need to be gold or platinum — AA has presumably minimized the number of people who will try to check empty cardboard boxes, or pack more than they need. But this does seem to confirm that AA has begun to realize that its current incentives are misaligned: it’s got far too many business travelers wheeling on luggage which is carefully designed to go right up to the limit of the carry-on rules. As a result, it takes far too much time to get people on and off planes, whose luggage bins are permanently overstuffed. And flyers unhappily schlep heavy bags all over airports across the country. I have no idea whether AA’s experiment will catch on — for the time being it’s only at one airport, and it’s only lasting a few weeks. And AA is in pretty desperate straits right now — it’s probably willing to try things it wouldn’t normally consider. But this is a big conceptual leap from AA’s current policy of charging extra for checked bags and therefore giving people an incentive not to check. If it’s a success, dare we hope that those bag-check fees might start going away? (via the indispensable Joe Brancatelli)

This was posted 7 months ago. Notes.

Bag-check datapoint of the day, AA edition


In March 2010, I had the bright idea — stolen shamelessly from Eric Joiner — that airlines might charge a negative bag-check fee. A lot of people, of course, simply hate the idea of risking their bags being lost, and/or of milling around at a baggage carousel waiting for their bags to arrive. But many others would love the idea of getting paid, in dollars or in frequent-flyer miles, for checking their bags… Passengers would get on and off planes more quickly, the airlines would make more money, and everybody would be happier. My commenters were unimpressed. Wouldn’t this just encourage people to pack more and therefore add more weight to the plane? Wouldn’t it even — at the margin — encourage people to check empty cardboard boxes, and not even bother picking them up at the other end? But lo — look what American Airlines has just announced! Through November 22, 2011, American Airlines will offer AAdvantage® elite status members the opportunity to earn a minimum of 500 AAdvantage bonus miles for checking bags on flights departing Boston Logan International Airport (BOS). Earning the bonus miles is easy – simply visit a BOS Self-Service Check-In machine on the day of your departure and follow the normal steps to check-in with bags. Check at least one bag under your own name to earn the bonus miles, which will automatically post to your AAdvantage account five business days after you have completed the travel associated with your itinerary. As a reminder, all AAdvantage elite status members are entitled to check two bags free of charge (within current size and weight limits) in addition to earning the bonus miles with this special offer. By confining the offer to elite status members — you need to be gold or platinum — AA has presumably minimized the number of people who will try to check empty cardboard boxes, or pack more than they need. But this does seem to confirm that AA has begun to realize that its current incentives are misaligned: it’s got far too many business travelers wheeling on luggage which is carefully designed to go right up to the limit of the carry-on rules. As a result, it takes far too much time to get people on and off planes, whose luggage bins are permanently overstuffed. And flyers unhappily schlep heavy bags all over airports across the country. I have no idea whether AA’s experiment will catch on — for the time being it’s only at one airport, and it’s only lasting a few weeks. And AA is in pretty desperate straits right now — it’s probably willing to try things it wouldn’t normally consider. But this is a big conceptual leap from AA’s current policy of charging extra for checked bags and therefore giving people an incentive not to check. If it’s a success, dare we hope that those bag-check fees might start going away? (via the indispensable Joe Brancatelli)

This was posted 7 months ago. It has 26 notes.

UPDATE 1-China Eastern cancels order for 24 Dreamliner 787s


Oct 17 (Reuters) - China Eastern Airlines said it has terminated an order for 24 Boeing Co 787 Dreamliner planes due to delivery delays and will instead spend $3.3 billion to purchase 45 new Boeing 737 aircraft.In a filing with the Hong Kong stock exchange on Monday, the Shanghai-based Chinese carrier also said it would buy 15 Airbus EADS A330s worth $2.5 billion, due for delivery from 2013 to 2015.While the narrow-body 737 is not an obvious replacement for the wide-body 787, the A330 is a competitor to the Dreamliner. The purchase of the A330s by China Eastern may put new pressure on Boeing to produce the overdue 787s rapidly to avoid more order cancellations.”China Eastern is using the delays as an excuse, and Airbus came in with a very aggressive price,” said Alex Hamilton, managing director of EarlyBirdCapital.”That said, all this highlights the risk to the 787 backlog, especially if they can’t get to 10 per month,” Hamilton said referring to Boeing’s 787 production target.”This is the first time we’ve seen this,” he said. “My guess is they sort of expected this to come.”Boeing said the 24 787s, which list at $185 million each, were part of an agreement between Boeing and the Chinese government for the purchase of 60 787s.”China Eastern Airlines made the decision based on operational considerations,” Boeing spokesman Marc Birtel said. “We will continue to work closely with the Chinese government and customers to find solutions that meet the future fleet needs of the Chinese airlines.”An Airbus spokeswoman did not immediately respond to a request for comment.The Boeing Dreamliner is about three years behind its original schedule because of kinks in the sprawling global supply chain.But Boeing still has more than 800 orders for the lightweight, carbon-composite aircraft on its books. The company made first delivery of the Dreamliner to a customer All Nippon Airways last month.In its Monday filing, China Eastern also said it plans to dispose of five A340-300s.Shares of Boeing were down 2 percent at $62.66 in midday trade on the New York Stock Exchange.

This was posted 7 months ago. Notes.

BHP Australia coal miners to continue work stoppages


Ninety-two percent of union workers voted the BHP proposal down on Thursday, but BHP said it would revise the plan and put it to the workers for a vote again before the end of the year.”The agreement was voted down, in line with the history of first votes. The result has not changed BMA’s resolve to reach an agreement that meets the needs of the business and its employees as quickly as possible,” BHP said in an emailed statement on Friday.BHP’s proposed employee contract offered a 5 percent annual pay raise for three years and some job security provisions as well as a A$15,000($15,186) signing bonus paid over the course of a year. About 3,500 workers belong to unions at the BMA mines out of a total workforce of around 10,000.Union spokesman Stephen Smyth said BMA and the union were still “miles apart” in terms of their views on what would be acceptable in an employment agreement.The work stoppages have resulted in around 2 million tonnes of lost metallurgical coal production to date, according to a UBS estimate. Metallurgical coal is used in steel-making.BMA-operated mines have a combined output capacity of more than 58 million tonnes per year of mostly metallurgical coal, representing about a fifth of annual global trade.

This was posted 7 months ago. It has 172 notes.

JGBs flat after shares rebound, Europe woes support


By Akiko TakedaTOKYO, Oct 12 (Reuters) - Japanese government bond futures trimmed earlier gains to end Wednesday flat as a rebound in Chinese shares negated a slight drop in Japan stocks, with continued concern over Europe’s debt crisis providing firm underlying support.While investors took comfort after Germany and France pledged to deliver a plan to protect Europe’s banks, many still doubt that risk assets have much room for further gains, given concerns over whether euro zone policymakers will be able to form a united response to the debt crisis.”Capital injections into banks by governments or the EFSF (European Financial Stability Facility) mean using tax money and that is not something that’s easy to get agreement on, so we still need to watch arguments at meetings such as the EU summit,” said Makoto Yamashita, chief Japan interest rate strategist at Deutsche Securities.Germany and France, the leading powers in the 17-nation euro zone, have promised to propose a comprehensive strategy to fight the debt crisis at an EU summit delayed until Oct. 23.The Nikkei stock average lost 0.4 percent on Wednesday, after Alcoa Inc’s earnings suggested that Europe’s debt crisis was set to hurt U.S. corporate profits.December 10-year JGB futures closed flat at 142.48, after rising above their 20-day moving average of 142.57.In cash bonds, the 10-year yield edged down 0.5 basis point to 0.985 percent, but stayed in the middle of a range near 1 percent that has been in place since last month. There was little reaction in the JGB market to a retreat in prices of U.S. bonds on Tuesday.”If the 10-year Treasury yield rises above 2.5 percent, I don’t think the 10-year JGB yield will stay at 1 percent … but at the moment it is staying around that level because European and U.S. yields remain in recent ranges. It is hard for worries about the economy and the financial system to just disappear,” Yamashita said.JGBs have also been well supported by demand from investors who have been looking to purchase JGBs on dips to meet their investment plans for the second-half of the fiscal year that started this month, market participants said.BROKER HEDGINGThe yield curve steepened as superlongs such as 20- and 30-years underperformed other maturities, with broker hedging and position squaring weighing ahead of Thursday’s 700 billion yen ($9.1 billion) 30-year auction. The 20-year yield inched up 0.5 basis point to 1.700 percent, while the 30-year yield climbed 1 basis point to 1.905 percent.The yield spread between 20- and 30-year bonds stood at roughly 20.5 basis points, inching down from last week’s high near 21 basis points, which was the widest since October 2010.Although new bonds looks expensive in terms of absolute value, analysts said they are likely be supported by their relative cheapness on the yield curve and by easing concerns about additional debt sales to finance an extra budget for reconstruction from the March earthquake.

This was posted 7 months ago. It has 54 notes.