The Skift Airline Innovation Report is our weekly newsletter on the business of airline innovation. We look closely at the technological, financial, and design trends at airlines and airports.
Brian Sumers writes and curates the newsletter, and we send it on Wednesdays. You can find previous issues of the newsletter here.
For years, Los Angeles has considered building a new terminal, just east of Southwest Airlines’ Terminal 1, in what is today an airport-owned parking lot.
Now it seems it might happen. In an interview last week, Southwest CEO Gary Kelly told me airport operator Los Angeles World Airports, or LAWA, is “very serious about it,” and said the terminal, if built and awarded to Southwest, could change the scope of the airline’s operation. But with competitors also begging for more gates, it’s no guarantee Southwest would get the facility, which might be called Terminal 0 or Terminal 1E and could have up to 10 gates.
“We haven’t been able to grow in L.A. in forever,” Kelly said. “To their credit, LAWA wants to keep the balance of competition healthy. If we are unable to grow and competitors are growing in other terminals, that’s not good. So yes, I think that certainly we have a good argument for why we would be able to utilize those additional gates.”
Kelly and I were speaking in Southwest’s newly renovated Terminal 1, a more than $500 million renovation to a building that was until recently a dark, dilapidated facility shared by Southwest and US Airways. It’s beautiful and does not look like a terminal belonging to a low-cost-carrier. Southwest did not pay for it directly — the airport operator covers most improvements — but as Kelly told me, “the airlines pay these bills one way or the other.”
More improvements will come soon. Southwest is next focused on Terminal 1.5, a building to connect Terminals 1 and 2 that will provide more space for ticketing. It should open in 2020. As for when the completely new terminal might open, Kelly said, “obviously, we would like it to be shortly after 2020 but I just don’t have a timeline yet.”
Be sure to read my story for more information from Kelly, including why the airline still hedges fuel, and why its plans to fly to Hawaii might be taking longer than some had hoped.
Best Of Skift
Southwest CEO: Cheaper Fuel Won’t Change Our 2019 Game Plan: Oil prices rose markedly earlier this year, forcing many airlines, including Southwest, to reexamine 2019 capacity planning. Now fuel is cheap again, but it’s too late to make many changes for next year, so Southwest will stick with its plan. That should lead to higher than expected profit, but you never know. Fuel could spike again.
Frontier Owner Steps In to Rescue Wow Air: We thought for a few hours last week that Wow Air, the Icelandic discount airline, might go out of business. Icelandair had walked away from plans to acquire it, leaving Wow vulnerable. But later on Thursday, private equity firm Indigo Partners stepped in, saying it wanted to invest, pending due diligence. Will this deal stick? And what does Indigo, which owns Frontier Airlines, among others, gain here?
United Airlines Capitalizes on Robust Demand Amid Falling Fuel Prices: United Chief Commercial Officer Andrew Nocella is practically giddy when he wakes up. Why shouldn’t he be? “It’s an exciting time to kind of wake up every morning and look at the bookings that we’ve taken over the last day or two and the type of yield we’re taking,” he said at an investor conference.
Amadeus to Pay $3 Million to Settle an Antitrust Lawsuit in the U.S.: Seven U.S. consumers alleged Amadeus colluded with Sabre and Travelport to wrangle advantageous content distribution contracts with airlines. As part of the settlement, Amadeus didn’t admit to wrongdoing or violations of antitrust law. Skift Travel Tech Editor Sean O’Neill has details.
Best of the Rest
LaGuardia Haters May Have to Find a New Airport to Insult: Given that I’m in Los Angeles, and a local rule in New York bans flights from California to LaGuardia, except on Saturdays, I don’t spend much time at this airport. But I hear it has been bad, and it is getting better. Bloomberg has details on an early phase of the airport’s $8 billion renovation.
Alaska Named ‘Healthiest Airline’ as Shift to Quality Ingredients Takes Off: Alaska Airlines sells the healthiest meals and snacks according to a new study by a public health advocate. Delta was second, and JetBlue Airways was third. Airlines that did not fare as well included several ultra-low-cost carriers, such as Spirit Airlines and Frontier. The Airline Passenger Experience Association has more details.
This Airline Is Now Weighing Passengers’ Carry-On Luggage: Your newsletter author makes an appearance in this MarketWatch piece as an expert source. The reporter, Jacob Passy, asked me whether I expect U.S. airlines also will weigh bags. I told him I don’t see much appetite for it, and noted that while a couple of U.S. carriers have published limits, even they don’t often weigh bags. What do you think?
15 Best Gifts for Families That Love to Travel: Here’s another piece in which your newsletter author is quoted. I have a kid, and we love to travel as a family. But it’s not easy, and we take our gear seriously. What’s my favorite piece of travel gear? Click on the link from Conde Nast Traveler to find out.
Air France Weighs Joon Closure as New CEO Seeks Labor Deals: There have been whispers for weeks that new Air France-KLM CEO Ben Smith would close his company’s lower-cost airline called Joon. Last week, a French newspaper pronounced it dead. But the company has pushed back on that report, telling me and others it is not a done deal. Reuters has background.
I’m back on the road next week (finally!) to visit the headquarters of one of North America’s most intriguing and evolving low-cost carriers.
No, it’s not Southwest, or JetBlue or Alaska. By now, that trio is mostly set in its ways. Instead, I’ll be visiting Sun Country Airlines, a 35-year-old company that recently changed its model. Rather than continuing to be a full-service airline hubbed at Minneapolis/St. Paul that provides quixotic competition to Delta, Sun Country has gone full low-cost, while deemphasizing Minneapolis and growing elsewhere.
For now, Sun Country is small. But late last year, the airline was sold to Apollo Group, a private equity firm, and recently it closed on $28 million in financing. I’m guessing more change is coming, and I’m looking forward to learning more during my visit.
Is there something you want to know about Sun Country? Send me a message, and I’ll see if I can learn the answer.
Skift Senior Aviation Business Editor Brian Sumers [firstname.lastname@example.org] curates the Skift Airline Innovation Report. Skift emails the newsletter every Wednesday. Have a story idea? Or a juicy news tip? Want to share a memo? Send him an email or tweet him.