The parties’ collective bargaining agreement became amendable a year ago.

“The truth is Alaska management can afford an industry leading contract,” said Jeffrey Peterson, president of Alaska’s chapter of the Association of Flight Attendants-CWA. “Management’s unwillingness to present adequate proposals brought us to this strike vote announcement.” 

• Related: The bittersweet side of the Alaska-Hawaiian deal

The vote will take place from Jan. 8 through Feb. 13. 

Under the Railway Labor Act, which regulates strike actions in the airline industry, passage of the measure would not lead to an imminent strike. Several more steps would have to play out before Alaska flight attendants could actually walk off the job. Still, a strike authorization could raise the stakes for the mediated negotiations taking place between Alaska management and the AFA, which are taking place under the auspices of the National Mediation Board. 

Alaska said that its merger deal with Hawaiian does not impact its ability or desire to reach an agreement with flight attendants. The airline also noted that it has recently completed labor agreements with five other work groups. 

“We continue to plan for significant increases to our flight attendant contract,” the airline said.

Alaska said it has already offered an immediate 15% increase to its flight attendant wage scale. But AFA says it is pressing for top industry pay rates as well as other improvements, including pay during the boarding process and additional holiday and vacation time. 

Thus far, the two sides have agreed on 38 of the 45 sections within their labor contract. And AFA acknowledges that by the standards of labor negotiations in the airline industry, its negotiations thus far with Alaska have not been ongoing for long.

For example, Southwest and the TWU Local 556 union have been negotiating a new contract for five years. 

Still, with the announcement of a strike authorization vote, the Alaska AFA chapter has become the latest flight attendant group to ratchet up pressure on airline management. Along with Southwest, flight attendants’ labor agreements at United and American are also up for renegotiation. 

Earlier this month, Southwest flight attendants voted down an agreement-in-principle that had been reached between management and TWU 556. 

Last month, American Airlines flight attendants asked the National Mediation Board for permission to be released from mediation, a step that would have set the stage for a potential strike. But the board rejected the request and mediated negotiations between American management and the Association of Professional Flight Attendants union are continuing.

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Airlines and fuel producers are praising Treasury’s guidance issued Thursday. But it garnered a circumspect reaction from the Environmental Defense Fund. 

The program, created as part of the Biden administration’s 2022 Inflation Reduction Act, will provide tax credits of between $1.25 and $1.75 per gallon to fuel producers and air carriers for SAF sales and usage. To qualify for the minimum credit, SAF has to offer a lifecycle emissions reduction of at least 50% relative to traditional kerosene-based jet fuel. SAF that provides reductions of more than 50% will get additional credits. 

The goal of the program is to propel SAF production in the U.S. toward a target of 3 billion gallons annually by 2030, enough to account for 10% of U.S. aviation’s fuel consumption. This year, SAF production globally will come in at just more than 150 million gallons, IATA estimates. 

At issue in the Treasury Department’s guidance is the methodology that can be used to determine the lifecycle emission benefits of specific SAF products. 

As laid out in the authorizing legislation for the tax credit program, lifecycle SAF emissions are to be calculated under the methodology established by the U.N.’s aviation arm, the International Civil Aviation Organization (ICAO), or “any similar methodology.”

Airlines and ethanol producers lobbied the Treasury Department to accept as a similar methodology the calculation system developed by the Department of Energy that is known as GREET. That’s the methodology Congress stipulated for use in a tax credit program for nonaviation biofuels.

At the center of the ICAO-GREET debate is corn- and soy-based ethanol. 

GREET, at least under its current guidelines, is expected to attribute lower lifecycle emissions to ethanol-based SAF than the ICAO methodology. The primary reason: It views indirect land-use changes, such as the conversion of food production to ethanol feedstock, less harshly. 

Environmental advocates want SAF production to be focused on inputs that create fewer indirect consequences. Among those inputs are forestry residue, garbage, used cooking oil and waste fat. 

But producers and airlines have argued that the ICAO methodology is dated since it relies mostly on data published in 2012. Airlines for America (A4A) has also argued that incentivizing a robust slate of SAF feedstock options is the best way to enable the desired SAF production ramp-up.

In its Thursday guidance, the Treasury Department said that for the time being it will use the ICAO standard for determining the lifecycle emissions reductions of various SAF products. But the agency also announced that the federal government will update the GREET evaluation model by March 1, at which point GREET will become a second methodology under which SAF products can be evaluated. 

“The updated model will incorporate new data and science, including new modeling of key feedstocks and processes used in aviation fuel,” the Treasury Department said. “The updated model will also integrate other categories of indirect emissions like crop production and livestock activity, in addition to best available science and modeling of indirect land use change emissions.”

The decision appears to be an attempt by the Biden administration to find a middle ground between opposing sides of the debate. Still, it was greeted with praise on Friday by A4A, the Renewable Fuels Association and United Airlines.

“While there are important carbon modeling updates and details that still need to be worked out, we are cautiously optimistic that today’s guidance could open the door to an enormous opportunity for America’s farmers, ethanol producers and airlines,” Renewable Fuels Association president Geoff Cooper said. “The Biden administration is recognizing that the best way to meet ambitious SAF targets is to maximize marketplace flexibility, make use of existing low-carbon fuel assets, and stimulate innovation and competition across the entire supply chain.”

In contrast, the Environmental Defense Fund said the guidance raises questions about sound science, the will of Congress and cutting climate emissions.

“We’ll need to wait until March to see whether the Biden administration will make decisions to award generous sustainable aviation fuel tax credits based on sound science and the congressional intent clearly stated in the Inflation Reduction Act,” said Mark Brownstein, the organization’s senior vice president of energy transition.

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The carrier’s daily service between New York JFK and Tulum will start June 13. 

Tulum Airport, which sits approximately 90 miles south of Cancun, opened Dec. 1. The first routes from the U.S. are scheduled for March. 

So, far, United has announced routes from Newark, Los Angeles, Chicago O’Hare and Houston Bush Intercontinental. American has announced service from Miami, Charlotte and Dallas. Delta will fly daily from Atlanta, and Spirit will fly from Fort Lauderdale and Orlando.

Tulum will be JetBlue’s fourth Mexico destination, joining Cancun, Puerto Vallarta and Los Cabos.

Tulum is known for its beaches and Mayan ruins.

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Current PerksPlus member companies that prefer to book directly with United won’t be left in the lurch. Those small and midsized business will transition to the United for Business portal. 

Earn rates and redemption benefits for each category of United’s two programs for unmanaged business travel will remain the same, said Adam Keeter, director of United for Business Products & Partners.

He explained that United is making the change so that current PerksPlus member companies that do their bookings on the United website or app can take advantage of the increasing capabilities offered by United for Business, which the airline launched late last year. Among its features, United for Business enables travel administrators to choose among three discount travel plans, view reports on travel activity and set booking and payment preferences.

“As more features have been rolled out this year, we’re moving small and midsized enterprises that already use United channels for their PerksPlus travel to the new portal to deliver more functionality and a better customer experience,” Keeter said. 

The PerksPlus program is open to companies that spend more than $5,000 annually on business travel on United or its international joint venture partners. PerksPlus fliers accrue points that can be redeemed for items such as travel certificates, MileagePlus Premier status and United Club access.

United’s decision to leave the PerksPlus program unchanged for companies that book through a travel agency contrasts with a recent move by American Airlines. 

In October, American announced it would phase out the Business Extra rewards program for small and midsize businesses and replace it with AAdvantage Business, a new program that only rewards companies that book directly. 

In a memo to PerksPlus members on Dec. 7, United said that it recognizes the value that many customers place on agencies.

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The lawyer, Ryan Shores, said JetBlue needs Spirit to be a “viable challenger” to the four airlines that control most of the domestic market.

“That mandate is even more urgent today,” Shores said during closing arguments in a federal court trial over the U.S. Justice Department’s lawsuit to block JetBlue’s $3.8 billion purchase of Spirit, the nation’s biggest low-fare carrier.

A Justice Department lawyer argued that the deal would push fares higher by 30% and leave fewer options for travelers on a budget.

Edward Duffy said if JetBlue absorbs Spirit, it would cut the ultralow-cost carrier share of the market by half — or 6 million fewer budget flights per year.

Duffy said JetBlue was contradicting itself by arguing that because of its smaller size it needs Spirit to grow fast enough to challenge the bigger airlines, while also claiming that even smaller low-cost rivals such as Frontier Airlines would have no trouble growing fast enough to replace Spirit’s presence in the market.

“And most tellingly, they have invited the court to look past the harms caused to passengers who can’t pay for JetBlue’s richer experience,” Duffy said.

There is no jury in the trial, which has stretched over several weeks and included testimony by the CEOs of both airlines. 

During closing arguments, the judge peppered JetBlue and Spirit lawyers with questions. Young, who was nominated for the federal bench by President Ronald Reagan in 1984, said, “If the merger goes forward, there is going to be some disruption. That is inevitable.”

The judge asked Shores how long it would take for consumers to see benefits that JetBlue promises, such as more competition with the bigger airlines.

The JetBlue lawyer suggested that it could be two or three years, “after the market has arrived at its post-merger competitive equilibrium.”

Before the trial started, JetBlue sought to win regulatory approval by agreeing to sell Spirit’s gates and takeoff and landing slots at airports in Boston and the New York City area and give up some gates in Fort Lauderdale.

On Tuesday, the judge said he was “having trouble” with a permanent injunction that would block the merger in “a dynamic industry facing unique opportunities and challenges in this post-COVID environment.”

The judge asked both sides if there were other divestitures by JetBlue and Spirit that might make the merger acceptable.

Duffy, the Justice Department lawyer, tried to close the door on more divestitures. He said the merger is so anticompetitive that nothing short of a full injunction against the deal would suffice. Shores, the JetBlue lawyer, said any remedies imposed by the court should be narrow.

The government sued to block the deal in March.

The trial represents another test for the Biden administration’s fight against consolidation in the airline industry. Earlier this year, the Justice Department won an antitrust lawsuit and broke up a partnership in New York and Boston between JetBlue and American Airlines.

The outcome of the current trial could reshape the field of ultralow-cost airlines, which charge low fares but tack on more fees than the traditional carriers that dominate the U.S. market. If Spirit is acquired by JetBlue, Frontier would become the biggest discount carrier in the U.S., followed by Allegiant Air and new entrants Breeze and Avelo.

JetBlue is the nation’s sixth-largest airline by revenue, and it would leapfrog Alaska Airlines into fifth place by buying Spirit.

On Sunday, Alaska announced an acquisition of its own, striking an agreement to buy Hawaiian Airlines for $1.9 billion including debt. The Justice Department has not indicated whether it will challenge that deal.

Previous administrations allowed a series of mergers that consolidated the industry to the point where four carriers — American, Delta, United and Southwest — control about 80% of the domestic market. The Justice Department filed lawsuits to extract concessions in some of those earlier mergers, but JetBlue-Spirit is the first one that has gone to trial.

Spirit agreed to merge with Frontier Airlines, which shares its ultralow-cost business model, but JetBlue beat Frontier in a bidding war.

Some Wall Street analysts have recently suggested that JetBlue is paying too much for Spirit, which has struggled to recover from the pandemic, and believe it should renegotiate the deal. JetBlue has given no indication that intends to do so, however. 

If it wins in court, JetBlue will nearly double its fleet, repaint Spirit’s yellow planes and remove some of the seats to make them less cramped, like JetBlue planes.
___

David Koenig contributed from Dallas.

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Alaska currently makes all of its fare content available to the GDSs and doesn’t charge a distribution fee. Hawaiian, conversely, withholds its Hawaii interisland fares from GDSs, requiring travel advisors to use Hawaiian’s direct or NDC-enabled channels for those bookings. 

Hawaiian also assesses a GDS surcharge of $7 per segment as part of its strategy to push agencies toward NDC-enabled booking options. 

In an email Tuesday, Alaska said it hasn’t decided how it would integrate Alaska and Hawaiian’s distribution content. 

“We’re still working through plenty of issues that will take time,” a spokesman said. 

Alaska announced Sunday that it has agreed to purchase Hawaiian for $1.9 billion, including debt. The airlines have set an estimated timetable of 12 to 18 months to close the deal, which must receive approval from antitrust regulators at the Department of Justice. Should the deal go through, Alaska intends to maintain the Hawaiian brand.

Kathy Campbell, who heads leisure air bookings for Frosch Travel, said she hopes Alaska will align the distribution approach of Hawaiian with Alaska’s existing methods. 

“In my opinion, it would make the agent’s job a lot easier if all of HA content was available in the GDS,” she said, referring to Hawaiian by its IATA code. “The interisland process is time-consuming and frustrating for the front-line agent.”

Brett Snyder, who pens the Cranky Flier blog and owns the Cranky Concierge travel agency, said he thinks Alaska will put Hawaiian’s interisland flights back in the GDSs. Hawaiian’s removal of that flight inventory in late spring 2022, he said, has handicapped the carrier against its primary interisland competitor, Southwest, which now embraces GDSs.

“I think Alaska sees the value in that channel and will be seeking to bolster itself,” Snyder said.

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The combined company would keep both airlines’ brands, rooted in the U.S.’s 49th and 50th states. 

Alaska will pay $18 in cash for each share of Hawaiian, whose stock closed Friday at $4.86. The deal also includes $900 million in Hawaiian debt, which the airlines said brings the acquisition’s total value to $1.9 billion.

The acquisition, approved by the boards of both airlines, is conditioned on approvals from regulatory authorities and Hawaiian Holdings shareholders (which is expected to be sought in the first quarter of 2024). The deal is expected to close in 12 to 18 months. 

The combined organization would be based in Seattle under the leadership of Alaska Airlines CEO Ben Minicucci. A leadership team will be established to focus on integration planning, Alaska said.

The combined airline would be in the Oneworld alliance, which includes American Airlines, British Airways and Cathay Pacific. It would also combine two networks to offer more connectivity to 138 destinations, including tripling destinations that can be reached within one stop in North America for travelers from Hawaii.

The companies said they would keep Honolulu as a key hub and that they’re “committed to maintaining and growing a union-represented workforce” in Hawaii. Alaska said it intends to maintain “robust” interisland service in Hawaii.

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The company’s Green Fares include compensation for carbon emissions within the ticket price. This is achieved through a combination of use of sustainable aviation fuel (SAF) and contributions to climate-protection projects, according to Lufthansa.

U.S. routes with Green Fares available are Zurich-Los Angeles and Frankfurt-Miami. The remaining 10 routes are between European gateway cities and destinations in Africa and Asia.

For the long-haul routes, a traveler’s CO2 emissions for that flight are reduced by 10% through the use of sustainable aviation fuel, with the remaining 90% offset by contributions to climate-protection projects, according to the company. Lufthansa began offering Green Fares in Europe in February after a pilot in the Scandinavian market.

The short-haul flights are compensated with 20% use of SAF and 80% offsets. 

Since the expansion earlier this year, more than half a million passengers have opted for a Green Fares flight, according to Lufthansa.

Source: Business Travel News

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Salt Lake City will be Hawaiian’s 16th gateway on the U.S. mainland. The carrier will fly a two-cabin Airbus A321neo on the route, competing against twice-daily Delta service. 

Hawaiian will also expand service next summer to Sacramento, flying four times a week from the California capital to Lihue on Kauai and three times weekly to Kona on the Big Island. The flights will begin respectively on May 24 and May 25, also with A321neo aircraft. 

The Kauai and Kona routes augment Hawaiian’s existing Sacramento service to Honolulu and Maui. The carrier will be the only airline flying the new routes.

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The airline intends to launch operations sometime next year on two high-profile routes: London Gatwick to New York JFK and LAX. And its differentiator will be especially big: the Airbus A380. 

“Passengers love it, if it’s the right setup,” Asquith said of the planes, the largest civilian aircraft in the sky.

Longer-term plans call for global expansion using only A380s.

Global Airlines’ unique business concept appears to defy industry practice. The A380 gets little affection from established airlines, largely due to high operational costs and the challenges of finding markets large enough to consistently fill seats. 

Poor sales of the A380 led Airbus to cease production of the plane in 2021. More than half of A380s currently in service are operated by just one airline, Emirates. 

But for Global, that lack of interest has spelled opportunity. The company now has four A380s under purchase contracts at undisclosed prices presumed to have been bargains. Global hinted in a May statement that it acquired the first plane on the used market for an amount in the tens of millions. That compares to the pre-pandemic Airbus list price of more than $400 million for a new A380. 

Asquith said Global Airlines will make the A380’s enormous double-decker size an asset by taking advantage of the flexibility it affords in terms of cabin layouts. The carrier will outfit its planes with economy, business-class and first-class cabins. 

Of special note, Global Airlines interiors will feature social areas or lounges, offering what Asquith promised will be a throwback to the glamour of transoceanic flying’s golden days, when airlines such as Pan Am flew the world’s first jumbo jet, the Boeing 747-400. 

He’s also promising a top-of-the-line experience in economy, although not by offering more legroom than most competitors. Global’s A380s will have 471 total seats, similar to the number offered by several other carriers. Where the Global economy cabin will excel, Asquith said, is through top-level food and entertainment, quality service and amenity kits.

Travel on a Global Airlines A380, said Asquith, will give transatlantic flyers the sense of pride that fizzled away in the modern airline industry. 

Such assurances aside, Global Airlines to date has been relatively coy on certain specifics. The nascent carrier is a subsidiary of the U.K.’s Holiday Swap Group, best known for a platform that enables travelers to swap homes. Global hasn’t revealed how much financing it has raised, nor has it announced fundraising targets, though Asquith said the airline is in a strong position. 

Similarly, the company has not set a target launch date as it works on startup requirements, including aircraft certifications. It also hasn’t revealed images of the cabin interiors; Asquith said that is likely by early January.

‘The math doesn’t seem to work’ 

Unsurprisingly, a concept as novel as an all-Airbus A380 airline has generated skeptics. One is Brad Beakley, CEO of consultancy Hospitio.

“I love the idea of something better, and I’ll give him a world of kudos for being able to generate the interest and news stories, and enough interest with investors, to be able to do what he’s done,” Beakley said of Asquith, who holds the Guinness World Record for being the youngest male to visit every sovereign nation in the world. “But the math just doesn’t seem to work for me.”

As an example, Beakley said the hourly operating cost of an A380 is approximately double what American Airlines pays to operate its Boeing 777-300s, though the Global A380s will have just 55% more seats. And consistently filling such a large plane will be difficult, especially on routes already crowded with major airline competitors. 

“The idea is not wrong,” said Beakley. “But the practicality of unlimited demand, even for something like Gatwick-New York, is not there.”

Asquith said he believes the A380 will be Global’s decisive advantage.

“If there’s not enough space in the plane, you can’t justify things like social areas,” he said. “So, we are needing to make a statement different from what people have done before and failed. If you race to the bottom, you are going to be pushed out by incumbents who have bigger loyalty platforms, bigger networks and decent product.”

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