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And The Top Airline Stories of 2014 Will Be…

I’m down in Florida and I’ve gotten sick (along with my wife…and one of my children)…I’m a bit feverish and I dreamed it was December 30th, 2014, and I saw the following post on this blog about the top stories of 2014. I take no responsibility for these, since it was all a dream…

1) Frontier is the breakout airline of the year.
Indigo Partners bought the airline in October, 2013, and pledged to continue remaking the company into a so-called Ultra Low Cost Carrier (or as we used to call it, a Low Cost Carrier). Indigo Partners is led by William Franke, one of the guiding forces of the wildly successful turnaround at Spirit Airlines. I know you hate Spirit, but they are, along with Allegiant and US Airways, one of the 3 best-run airlines in the country. They were profitable every quarter through the economic collapse, and check out their stock – started the year at $17.50 and ended close to $45. Hate all you want, but their run a great business. Anyway, Franke was (along with Spirit’s operating team) one of the reasons for that success. He’s going to remake Frontier – which has already started moving in that direction – into a, if not copycat, a similar operation to Spirit. Check out what they’re doing with their service in Trenton and Wilmington (Delaware), trying out a bunch of point-to-point service to a mix of leisure and non-leisure destinations. Plus they’ve introduced leisure routes between cities like Lansing (MI) & Cancun and Puerto Vallarta. Even Spirit’s CEO admits there’s plenty of room for another Spirit-like airline to join the ranks. We’ll be hearing a lot of good news coming out of Denver in 2014.

2) Something has to give with Alaska Airlines
Alaska has played by its own rules forever, quietly being a driving force of change in the airline industry. They were leaders in online checkin, mobile checkin, kiosks, ill-fated flights to Siberia, and partnerships with other carriers allowing them to generate feed for their flights without the complexity of joining an alliance. Delta’s aggression toward the partner in Seattle suggests that some changes are afoot. I don’t think Delta will make a play to purchase them, but it’s a possibility. Could Southwest, which is still dealing with the AirTran acquisition, make a move for them? It wouldn’t be crazy at a different time, but probably not now. Could Alaska acquire Hawaiian Airlines as a defensive play? Maybe, but it doesn’t really solve anything. Could US Airways/American try to grab them in 2015 or 2016? That’d be my guess. But 2014 will be interesting for Alaska.

3) Etihad somewhat quietly and pretty suddenly becomes the 4th major airline alliance.
The airline community wondered whether the Gulf needed 3 massive airlines serving such a small population once Qatar and Etihad decided to take on Emirates. But while Qatar certainly seems to be replicating the global-domination strategy employed by Emirates, Etihad has taken a somewhat different approach. Sure, they’re attempting to fly to everywhere from Abu Dhabi. But they’ve made investments in a bunch of airlines: Air Berlin, Air Seychelles, Aer Lingus, Virgin Australia, Jet Airways, Air Serbia (formerly JAT Airways), and Swiss carrier Darwin Airlines, which will be rebranded at Ethiad Regional. That’s beginning to look quite a bit like an alliance. Do they take a 24.9% stake in Alaska? Hm, that’d be interesting.

4) Travelers who fly <50,000 miles a year, especially on cheap tickets, are going to reconsider their loyalty, and that's going to benefit JetBlue.
Airlines made significant changes to their frequent flyer programs in 2013 that were designed to reward very frequent travelers while at the same time devaluing their miles, especially on premium international routes. I think the outcome of that is that travelers who fly less than 50,000 miles a year have less reason to be loyal to one airline. Flying 35,000 miles on United (as I did in 2013) gets me roughly the same benefits as I’d get if I just had United’s credit card. Airlines haven’t exactly eliminated the lowest level of status, but they’ve made it much less meaningful. At the same time, JetBlue has invested in their premium transcon offerings, designed both to make Virgin America’s product pale in comparison and to provide an alternative to United and American on those routes, at a much lower fare. Plus it’s still so easy to print frequent flyer miles with credit cards that it’s not really worth killing yourself and paying extra to get an extra 8,000 miles (or whatever) by but-in-seats. I think JetBlue is the primary beneficiary here.

5) You’ll hear more about Africa’s Asky Airlines
This one’s a little random, but I did have a fever. I’ve been interested in Africa’s crazy aviation situation, and Asky Airlines may become a bright spot. After Air Afrique disappeared 10 years ago West Africa was left without much point-to-point air service, in many cases making a connection in Paris the only way to fly between 2 cities 400 miles apart. Asky Airlines launched back in 2010 to provide reliable service to West Africa. They’re based in Togo, but it’s essentially operated by (and funded in part by) Ethiopian Airlines, a carrier that doesn’t nearly get enough credit for what it’s been able to do. They fly 7 aircraft (3 737-700s and 4 Q400s) to serve more than 20 destinations in West and Central Africa, and even the Q400s have a business class offering. They’re essentially acting as the West African arm of Ethiopian Airlines, and given that they turned a profit in 2013, they’re seeing some success. They’re looking at European operations in 2015 or so, and I wouldn’t be shocked if they’re either folded into Ethiopian or otherwise become a Star Alliance affiliate.

What stories will I have missed?

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  1. Jared,
    You forgot to predict the top-10 credit cards for 2014. Ha. Ha. Seriously, I think we’ll see fare increases of 15-20%.

  2. I wouldn’t be surprised if some cost cutting airlines didn’t start trying out self boarding.

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