I wanted to fly out on Monday midday because I had an appointment in the morning. Sure enough, there was an 1145a flight out of LAX on the 777LR, the one that comes from Sydney. I picked that one and found myself booked into BusinessElite. This was gonna be good.

I headed to the airport a little early and found the terminal bustling even though it was a relatively low time of day. I went over to the SkyPriority area for first class and elites and I checked myself in at the kiosk. Then it was off to security.

Like I said, this wasn’t a peak time, but security was disorganized. I looked for an elite line and didn’t see one (nor did I see any signs at all, really). A lineminder pointed me to a line on the far side and I went there. Then I sat. With only a few people in front of me, it still took more than 10 minutes to get through.

Once through, I headed to the SkyClub. It was set up for me to go in so that I could see the newly-renovated club, and they’ve done a really nice job. The club is quite large with one huge room separate by a snack bar with, of course, ample free liquor. On the other side, there were a couple of small rooms, one for working and one for “quiet.” I’m fairly certain that the entire club was reserved for golfers, actually. Check out this magazine rack.

My flight was leaving from next-door Terminal 6, (Delta doesn’t have enough room to handle all the widebodies in its own Terminal 5) so I realized I had to get a move-on. I came back downstairs and then went into the old underground tunnel to get to the other terminal. That is one long, white, and barren pathway, but it popped me out right on the other side so that’s all that matters.

I walked up to the gate to find a mob of people in the throes of boarding. I looked for the SkyPriority (old Breezeway) lane for First Class boarding but it was mobbed as well. When I finally got to the front of the line, I said, “No SkyPriority line today?” The agent looked at me and said, “No, it’s just too hard to do over here. I’m sorry about that.” At least he was nice about it, I guess. With that, I went onboard.

Most of the airplane had already boarded, though there were still a few behind me. I found my seat, the prime spot at the back of the cabin, and started to explore. The back of the cabin is excellent because you have a tall fixture on the back and side that gives you more privacy. There’s nobody looking in on you, as is often the case with herringbone seats.

The seat itself looked good, but the wear on this new plane was already showing. The blue leather looked a bit tired and the plastic fixtures were chipping a little as well. But the seat itself was comfortable, and I just waited for takeoff. The next thing I saw was actually quite shocking.

I saw flight attendants taking bags from passengers in coach and finding empty spots for them in BusinessElite. No, it’s not shocking that they were using BusinessElite bin space. It was surprising that the flight attendants were doing the heavy lifting. It was great service. What wasn’t great was the dude who sat down, promptly flipped his shoes off, and displayed his dirty bare feet for the world to see.

Soon, it was time to push back but the captain said we were just waiting for more cargo to be loaded. We pushed back about 15 minutes late and then headed toward the runway. The safety demonstration was interesting. Since there are no open monitors allowed on the ground in BusinessElite, we could only hear the video but couldn’t see good ole’ Deltalina. Instead, we just had a couple flight attendants up front doing the demonstration for us.

Then we took to the skies and I sat back to play with the seat. There are 7 different buttons and I found it pretty confusing. I can’t imagine what an older or less tech-savvy person would do with this. I brought my seat down into a relaxing position and then went to pull out the television. It came out and then slammed back shut. Yep, the screw was a little loose and my guess is that it was on the way in from Sydney as well since there were some plastic wrappers shoved in there to try to make it steady. It became less of a problem once we leveled out, of course.

The other problem was with the headset jack. It’s a two-prong jack and they give you a single prong headset with an adapter. Unfortunately, the headset kept popping out of the adapter. It took me awhile to find a magic spot where it would stay still.

The lead flight attendant came by with a very long paper print out from a dot matrix printer. She took my order and wrote it down on the page. I said, “That’s a heck of a long list you have there.” She unrolled it and said, “Yep, take a look at all those precious metals. I’m just kidding, everyone is precious.” It’s amazing how much nicer things can sound with a southern accent.

I opted for a ginger ale and the hot chicken sandwich, and I went to pull out my tray table. That’s when I realized you couldn’t do it without getting out of the reclined position. So I did and then pulled the tray out after some difficulty. The tray itself got stuck, so I had to jiggle it out. Then I was ready to go. I had a movie on, I had my tray out, and I was in a semi-comfortable position.

The food was pretty good, and I kept the bag of Ruffles for later. Then I watched a couple movies and settled in. The bed was actually quite comfortable in the flat position. I had plenty of room to stretch out since I’m short, and the width wasn’t a problem.

I had the chance to finally join an exclusive club. Yep, I’m now a laviator. I had a heck of a large lav to work in – on the right side between the two BizElite cabins. There was even a full length mirror in there. I don’t think I’ve seen that before.

Back at my seat I had a nice scotch and watched another movie. Later, the flight attendants came through with a snack basket. Somehow, I was able to pass on the junk food (they had Twix, this requires serious self-restraint) and instead had a really good banana.

As the afternoon grew longer, we made our way into the deep south. Soon we were descending through a high layer of clouds. We had an uneventful landing to the east. After parking at the E gates (the plane was heading on to Dubai), I had a long way before I got back to the terminal.

As I’ve already mentioned in a previous post, the visit was fantastic, but soon it was already time to come home. I arrived at the airport by 620a for a 735a flight, but I didn’t need that much time.

I used the SkyPriority line and it took me a little more than 10 minutes to get through security. I’m actually surprised that there was only one x-ray machine and security gate for SkyPriority in Atlanta. Then I hopped on the train for the long ride out to gate E3.

The gate area looked empty and the flight clearly wasn’t full. They boarded the flight on the early side, so I just hopped on and did some work online. I was determined not to log on in the air despite this airplane having wifi. I like being disconnected up there.

This flight was on a 757 with the regular domestic First Class. As mentioned, it had wifi and it also had individual screens. I was set.

It was a beautiful day in Atlanta, and we had only a short wait before launching into the morning blue. We turned around and started making our way west. Breakfast was served and I opted for cereal, which also came with yogurt, a bagel, and fruit.

I finished a movie from last time, and then I flipped on the Karate Kid. I missed about an hour in the middle when I actually fell asleep. That does’nt happen to me very often, but I was exhausted. When I woke up, we were somewhere over New Mexico and they brought back a snack basket for anyone who wanted. Eventually, we landed at LAX and had to wait a little while for the alleyway to clear. Just a few minutes late, I hopped off and went home.

See, Delta and I had been trying to coordinate a visit for about 6 months, but it never worked for one reason or another. This time, I knew it was last minute, but Delta’s corp comm team went above and beyond to pull the thing together. It was an absolutely fantastic visit, but I’m exhausted. I probably have enough material to fill two weeks worth of posts, but I just don’t have time to get started with details today. Want to know the highlight? Here it is:

Yep, that’s Delta’s Ship 41, the first DC-3 that carried Delta passengers. It was painstakingly restored and now sits in the Delta Museum, which is located in the airline’s original Atlanta hangars. It is only open for employee visits once a month, but Curator Tiffany Meng kindly opened it for me to take a look. I also had the pleasure of finally meeting Archives Manager Marie Force. I could have spent a week in the archives easily.

It’s actually not fair to say this was the highlight, because there were just so many other excellent meetings. I had the chance to tour TechOps (maintenance) and speak with the head of the organization. I did the same with cargo, and I was able to interview the people running eCommerce and SkyMiles. (Yes, I asked about the award calendar and SkyMiles redemption, don’t worry.)

I met with the head of reservations about the new @DeltaAssist effort, and I ended the day with Glen Hauenstein, CMO and EVP Network Planning, Revenue Management and Marketing. I shouldn’t say the day ended there, because we had some good ole’ Southern food afterwards. My arteries are not happy.

They even flew me out in the front of the bus, which was certainly unnecessary. I ended up on the 777 on the way out with the herringbone seats, and I’m riding a 757 home. As you can tell, there’s a lot to share with you after this visit.

Overall, I found the trip to be a good (if very basic) look inside the Delta culture. Seeing a corporate communications group that’s so willing to open up and talk with a blogger individually is rare, but it’s especially surprising when it comes from a legacy carrier.

While I don’t agree with everything Delta has done, I found a very driven group of people that had really already considered every question I asked. They aren’t just sitting still. Sometimes they didn’t know the answer, but other times they just hadn’t been able to implement things yet because they’re trying to do so much.

Sorry I don’t have more to report today, but there’s a lot of digesting left to do. I’ll start writing and posting on this tomorrow. It may take me awhile to get through it all, so please be patient.

You’re probably thinking that B looks best, and there’s no chance anyone is going to pick deal A, right? But that’s exactly what’s just happened now that the Department of Justice (DOJ) has given its approval to United and Continental to merge. All Continental has to do is take United’s 18 daily flights and give those slots (or equivalent) to Southwest. Done deal. Those other two deals? Yeah, that would be the rejected slot swap between Delta and US Airways in Washington (C) and New York (B).

I know, I know. These are totally different things and the approvals came from different branches of government. True, but it also shows how screwy it can be dealing with the feds. I should be clear here. I think the Continental and United deal should be approved. I just think the slot swap should have been approved as well.

Let’s start with the Continental/United deal. Apparently, the Department of Justice (which tends to be more strict than the Department of Transportation) had no concerns about this deal outside of Newark. Newark, of course, is a highly-congested airport with no slots available. So Continental agreed to permanently lease 18 slot pairs (the same number of flights United operates today) to Southwest. In other words, United gives up its slots to Southwest and everything else is fine. Here’s the state of the airport after this deal.

I’m sure Southwest is thrilled to be getting in there, but it’s still a pretty small number of flights in the scheme of things. And of course, everyone else is still frozen out for now. Contrast that with the slot swap deal. First, here’s the Washington/National chart had the deal been allowed to go through.

Here you can see an airport with more balance and greater low cost carrier penetration than Newark, but that’s nothing compared to LaGuardia.

When compared to National, there’s a greater transfer of slots here, but the dominant carrier would still have held a smaller position than at the other airport. Note the even higher LCC penetration of 12.7%. That’s more than double where Newark will be after Southwest gets its 18 slot pairs. So what gives?

Well it’s hard to say exactly what’s going on when you’re dealing with political bodies. Making sense is never the highest priority. But in this case, I would assume it’s simply an issue of looking at current versus potential scenarios. Continental won’t grow in Newark with this transaction while Delta and US Airways would have grown at LaGuardia and National respectively in that deal. Really, that shouldn’t be the issue here.

If the feds want to act like they’re sticking up for the consumer, they have the ability to hold airlines over a barrel. The Department of Justice chose not to do that with Continental and United while the Federal Aviation Administration has apparently gone the opposite route with the slot swap. Go figure. One thing we do know is the feds do seem to love Southwest these days.

You’ll remember that Southwest voiced a large number of objections when it came to the slot swap. The feds came back and agreed with the airline. Remember, Southwest actually said that open auctions were the best outcome. Now it’s gone and done a back-room deal. Not bad for Southwest, and certainly not bad for Continental and United. Then again, it probably just frustrates Delta and US Airways even more. Or maybe not.

Maybe this suggests that the better path for US Airways is to get bought (as they’ve been saying for some time anyway). Then it won’t need to get an FAA waiver to give its LaGuardia slots to another airline. It’ll be that other airline, so the FAA won’t get to ruin the party. If this helps build up US Airways’ efforts to get bought, then that’s good news for the airline.

Never a dull moment inside the Beltway, that’s for sure.

I’m talking more about this from the Continental/United perspective at BNET, but here I want to focus on Southwest. An airline that used to consider Islip a New York City airport will now be serving two of the biggest and most congested airports serving New York. Crazy.

This slot deal will allow Southwest to have 18 flights in and 18 flights out per day, unless they figure out some magical way to have more departures than arrivals. I’m gonna guess that physics makes that a tough sell. The first flights will begin next March with the full amount of slots going into Southwest’s possession by June.

This move is really funny when you think about it. It’s old-school Southwest meets new-school Southwest. Yes, the airline is flying into one of the most crowded, delay-filled airports in the US. You never would have seen that 10 years ago. But it’s also the tried and true Southwest strategy of bracketing a big metro area. You now have LaGuardia on the east (along with Islip on the waaaaay east) and Newark on the west. (It also conveniently brackets New Jersey with Philly on the South. That’s about as close as you’d want to get to NJ anyway.)

So what is Southwest gonna do with this? Well, 18 flights is a lot. It’s more than double the measly 8 flights they were able to squeeze into LaGuardia. At LaGuardia, there are five daily flights to Chicago/Midway and 3 down to Baltimore. But for Newark, we have some good guidance. Take a look at what the DOJ had to say about this:

The proposed merger would combine the airlines’ largely complementary networks, which would result in overlap on a limited number of routes where United and Continental offer competing nonstop service. The largest such routes are between United’s hub airports and Continental’s hub at Newark airport, where Continental has a high share of service and where there is limited availability of slots, making entry by other airlines particularly difficult.

In other words, Chicago/Midway, Denver, and Houston/Hobby have to be a lock. Baltimore? Probably. (And, as I talk about on BNET today, Continental and United must be happy not to have exact airport competition on these routes.) You could probably fill a schedule with that pretty easily, but there could be other cities as well.

Unlike from LaGuardia, Southwest can run Phoenix or Vegas from Newark, if it so chooses. The reality is that with Southwest’s focus on business travelers, Florida might not make as much sense. Sure, you can always fill those airplanes, but with scarce slots, that doesn’t seem like the best plan. Then again, maybe we’ll see Florida at some off-peak times.

Southwest has to be thrilled to have benefited from the merger here. Apparently the feds were happy with this deal as well. It may not seem like a huge number of slots, and really, it isn’t. For United and Continental’s nearly 450 flights per day, this is a drop in a bucket. Then again, Southwest does know how to make a drop in the bucket feel like a tidal wave.

American’s Express Seats: How Not to Introduce New Fees to Customers – BNET Headwinds
American has a new fee, and while it could be relatively straightforward, the way American released it was anything but.

US Airways Positions Itself as a Takeover Target with New York Moves – BNET Headwinds
The US Airways build-up in New York seems goofy, but it could actually be a smart play to get itself bought.

Passengers shocked by new touchy-feely TSA screening – Boston Herald
I didn’t even know that the TSA was tightening its screening process until I was contacted for this article. Sounds like a cheap way to get felt up to me.

Hmm. Alaska Air Group May Be Looking to Sell Horizon Air – BNET Headwinds
Horizon Air has changed its business model, and that has me wondering if Alaska is looking to sell.

Mammoth Mountain Lures United to Bring Bay Area Folks to Ski – BNET Headwinds
Another small town getting new air service. But this one makes more sense than many.

American Mechanics Shoot Down Tentative Agreement, Move Closer to Strike – BNET Headwinds
Unsurprisingly, American’s mechanics voted against the tentative agreement that had been presented. They’re moving toward a strike, but I doubt they’ll ever get there.

Hipmunk was actually started by a couple of guys with no travel industry experience. That is generally not a good sign since navigating the world of selling travel requires some serious insider knowledge, but it also means they can look on the process with fresh eyes. I spoke with co-founder Adam Goldstein and he walked me through their thoughts. I think they’re on a good path. Here’s what the search results page looks like (click to enlarge):

The idea was to create a very simple and clean way to book travel. So to start, they’ve contracted with Orbitz for the feed and they’ve slapped their user interface on top of it. The result looks a lot like what you might find on ITA Software, but with booking capability. The goal was to put as many flights in as small of a space as possible. This set up allowed them to show you all possible options on one screen so that you don’t have to keeping clicking to see more options. It works quite nicely.

There are a few things that really make this stand out in my mind.

• The “Worse” Feature
  On the far right side, you’ll see random scattered “worse” buttons. This is all part of the plan to reduce the clutter on the screen. The worse button automatically hides flight options that nobody would want. I should say, almost nobody. For example, let’s say you’re connecting. There might be an option that has the same connecting flight but an earlier first flight, like this.
  

  That longer layover in Denver might be great if your Great Aunt Mildred lives there, but otherwise you don’t want it. But that’s why they hide it instead of delete it entirely. The info is still there for the rare few who dream of a long layover.

• The “Agony” Sort
  The first sort you see is not intuitive. It’s the agony sort, which right now looks at price, total trip duration, and number of stops.

  The idea is to get away from the straight price sort, and that’s a good thing. But it’s not where it needs to be. Adam mentioned that they were talking about creating a profile where you could sign up and create your own variables for the agony sort. Then anytime you search, it would use those presets. This would be excellent. Right now, the first thing that pops up in the above agony sort is a nonstop but it’s a redeye. I hate redeyes, so I would want to have that in my profile and have it never show up at the top again.

• The “Time” Bar
  You’ll notice there are no time filters here, and that might bug some people, but the filter is actually hidden in the site. On each side, there are black bars that you can drag to be your earliest start time and latest arrival time. It would be nice to have a little more flexibility than that, but with the searches I’ve done, it’s actually narrowed it down plenty.

There are a few bugs here and there, but it’s only been up for a couple weeks so they’ll work through them. Once they have more providers that can provide more robust info, this site will be come even more useful. Like I said, I like where it’s going. It’s just not quite there yet. And that’s why this is a travel tool I might love.

Cranky: Some would say that the rapid growth of JetBlue is what caused you problems there. Is that an issue here? Or do you not think that was issue there?
David Neeleman, CEO Azul Airlines: I’m not gonna tell you it wasn’t an issue. JetBlue was kind of built for lower fuel costs than what we had. So it took an adjustment period. That was part of it, certainly infrastructure. I was more focused with growing the business from a marketing perspective and I think our operation didn’t keep up maybe as well as it should have.

I had a COO [current President and CEO Dave Barger] that was in charge of that. I think the Valentine’s Day storm showed a weakness in operational recovery areas so that’s an issue. I looked at that experience in Brazil and we have a great team of people down there. We built all of our systems in the beginning, where JetBlue should have been. There was some people who were supposed to be focusing on that, obviously they weren’t. So I’m not leaving anything to chance.

Cranky: It seems, the article I was reading, it seems that there’s still sort of an almost bitterness about what happened there. Maybe it’s just a dissatisfaction. Does it still bother you? Obviously, Azul means blue. Is this still something that bugs you?
David: Yeah, it bugs me. You had a board that was rash and hasty and made a decision that didn’t need to be made at the time. The crewmembers didn’t really deserve that kind of treatment either. They had a certain vision for the company, an expectation. All of a sudden overnight that was changed. Things are different at JetBlue today. They’re not the same as they were.

Maybe some areas they needed a change, but you know, the camaraderie we had, a lot of things we did in the customer service area, I just don’t think it’s the same company and there are a lot of people lamenting that. Every time I fly, people say such things. “Wish you were back.” I wish they would say, “We’re doing great, it’s awesome. Thanks for starting it.” I would much rather have that.

I built JetBlue for one reason. I didn’t need the money. I wanted it to be a great place to work, a great place for people to fly differently than the other guys. Same thing at Azul. It’s your legacy, you know. And you want to make sure. I still think JetBlue is better than anyone else but it’s not the same. When you get bigger, it’s hard to keep it the same. But Southwest Airlines has been around for 40 years and they’ve been able to maintain a lot of happy people working there.

Cranky: You’re still a fairly large shareholder. As a shareholder, what would you want to see JetBlue do differently?
David: I would like to see it focus on customer service. I tell people that at Azul. I only have two goals for the company. I want this to be the best place you ever worked and I want every customer to say, “wow, that was a great flight.” If you can do those two things, you’re gonna grow and be successful. That’s really it. It’s just a focus. I’ve been on some delayed flights on JetBlue lately and didn’t hear anything about the customer bill of rights. In those days, we did things that were special.

JetBlue still wins the JD Power award every year but if you look at the scores, it’s all the TVs and more legroom. If you look at the customer contact scores, Southwest wins all those awards, those categories. And they never did. I think you can make a difference in a commodity business.

Cranky: Back to Azul for a second then I’ll let you go. Can we expect to see Azul outside the Brazilian borders?
David: The market size just isn’t that big. Don’t know if you saw the news on TAM and LAN, still trying to figure out what the heck that is, but the cross border stuff in South American countries is just a tiny fraction. Maybe it’s just a play for TAM to get some management over there, but the market’s just not that big and the market in Brazil is huge. So we’re going to focus on Brazil. Never say never, but we’ve got plenty to do.

Cranky: Not likely to see any widebodies coming in, right?
David: No, not now. We’re small guys now. We like smaller – much bigger opportunity there.

Cranky: I appreciate it. Good luck continuing to grow Azul. Maybe one of these days I’ll be down there and take it for a ride.
David: That’d be great, we’d love to have you.

Cranky: I’m curious about the fleet choice. You started with the Embraers. I assume it was a conscious decision to go with a smaller gauge than you started with at JetBlue?
David Neeleman, CEO Azul Airlines: Yeah, we have our competitors down there, Gol and TAM. Between the two of them they have over 200, which doesn’t seem like a lot, but they have a lot of narrowbodies. Gol flies mainly 737s, mostly 800s with 185 seats in them. TAM has Airbus 319s, 320s, and 321s, so that kind of market was being served in a lot of big markets. And we couldn’t get in to the big, the filet mignon, they call it, Conghonas in São Paulo, so we thought well, what’s the best strategy? It was to go between cities with no nonstop service.

Of the 22 markets we fly, in 16 we’re the only nonstop. And the others, with one exception, we’re the market leader. The interesting thing about the Embraer 195 is that our trip cost is about 35 to 40% less than those guys are. So that means you can actually be making 15% to 20% on a market and they could be losing 20%. We have higher RASM [measure of unit revenue] than they do. Even though our average fares are less. For example, we had in May an average fare that was 30 Reais [about US$17] less than they had, but our RASM was 20% higher because we had an 85% load factor and they had a 58% load factor.

Cranky: Was part of the decision with the Embraers also a political aspect? Choosing a Brazilian-made plane?
David: That was just the frosting on the cake. We would never have done it just for political reasons, but having that advantage, we’ve certainly made the most out of it. Now with the ATRs come along. . . .

Cranky: Yeah, I was going to ask about that.
David: There are a lot of cities that just don’t have service, period. So we’re going into a bunch of cities in interior São Paulo that either have 1 or 2 flights a day or none. We give them good service, we’re kind of doing to ourselves what we did to the other guys. Because the ATR has about a 40% lower trip cost and about the same seat cost, which is astounding. The reason for that is that turboprops burn a lot less fuel and the cost of fuel in Brazil is about $1 more than in the US.

Cranky: With the ATRs, I looked at that and said, ok, you’re clearly not going to look at Embraer. You could have gone to an Embraer 170 if you were just concerned about the seats, but from a cost perspective that’s not a cheap plane.
David: Yeah, people like jets but jets just burn a lot more gas. An Embraer 145 with 50 passengers burns twice as much gasoline as a 70 seat ATR.

Cranky: Yeah, that’s why nobody wants the 50 seaters anymore.
David: Yeah

Cranky: I’m assuming you also looked at the Q400 so what was it about the ATR?
David: It was a couple things. The Q400 offers two advantages – it’s faster, flies about 50 knots faster [Cranky note: ATR says the ATR 72-600 max cruise speed is 276 kts while the Q400 is 360 kts] and it carries 6 more seats at the same seat pitch. The first hour doesn’t really save you that much with the speed. Most of our flights are 1 hour or 1.5 hours so it was not a big deal to us.

And the Q400 weighs 10,000 lbs more than the ATR [Cranky note: Operating empty weight for the ATR 72-600 is 28,682 lbs and for the Q400 HGW is 37,888 lbs] and burns about 30% more fuel. We didn’t need the speed, we didn’t need the seats, so why would we spend 30% on gas? For us, it was really a no-brainer to go with the ATR.

Cranky: With the ATR, are you treating it as the same type of experience onboard or is more of a traditional express type of service?
David: Well, it’s a very short flight. The average stage length is under an hour. I’m not going to put LiveTV on those planes. We’ll have that by the end of the year on the Embraer 195s. There’s 2/2 seating, leather seats, good seat pitch. Comfort issues will be the same as what we have on our 195 fleet. We just won’t have in-seat TV sets.

Cranky: Back to the Embraers. I know there were teething probelms with JetBlue in terms of dispatch reliability. Have those been worked out?
David: Every single plane has kind of a break-in period. We’re finding that the dispatch reliability on the 195, and that’s our bread and butter, every plane has its little idiosyncrasies, but we’re really happy. We’re flying them 14 hours a day and our dispatch reliability is over 99%, so we hardly ever canceled a flight due to maintenance.

Cranky: 14 hours a day?
David: Yeah, 13 or 14 depending upon the month.

Cranky: Wow. So you’re continuing this rapid growth path here, right?
David: Yeah, I mean whenever you have an opportunity and a market, to make sure you get established and have economies of scale. . . . There’s a wide open market in Brazil and we’re taking advantage of it.

And that’s it for part two. As I mentioned, come back tomorrow when we talk about what David thinks is wrong with JetBlue and what the airline needs to do to fix it.

Everything you’ve heard about David is true. He never stops working. In fact, our first call was supposed to be on Friday before his daughter’s wedding. Something else came up and we tried to connect on the Sunday after. Ultimately, he called me after walking off a redeye in New York on Monday morning. He thinks nothing of commuting down to Brazil. He is always thinking about a million things a minute. It’s impressive and, yes, tiring.

We had a wide-ranging discussion on everything from fleet decisions in Brazil to his departure from JetBlue. He’s still not happy about that and has a list of things that he thinks JetBlue needs to do. David doesn’t hold any punches, and that’s refreshing. But you’ll have to wait for part three for the JetBlue discussion. Today, we start with talk about Brazil’s fabled air traffic control system and the rapid growth and opportunity in the country. Tomorrow in part two, we’ll look at Azul’s fleet decisions.

Cranky: With Azul, you’re sort of following a similar path of rapid growth, low cost carrier [like JetBlue] – kind of filling a niche that hasn’t been filled before. I was reading an article recently saying some of the lessons you’ve learned. Every time you start with a new airline, you change things around a little bit. I’m curious with Azul, what are the things you’re doing differently, above and beyond what you’ve done in the past?
David Neeleman, CEO Azul Airlines: It’s much different in Brazil than in the US in a lot of ways. If you were to go down and fly Azul, you would not think there was any difference [compared to JetBlue]. But behind the scenes, there’s a lot of market stimulation, and a lot of different things that we do because the market is 1/3 the size of what it needs to be. When we started flying it was about 50 million; then it was 56. I think this year will be 65 but the number should be closer to 150 million.

Cranky: There’s clearly a lot of opportunity, but one of the issues in the past has been Brazil’s disorganized air trafic control system. Is that something that’s improving or are you just able to work with it the way it is?
David: It’s certainly improving. We’re used to seeing things move a lot quicker in the United States. Here it’s a learning process. They’ll get there. They’ve had, you know, the Gol crash . . . traumautized the country. But they’re very careful and they’re very proud of what they do have. We’ll work with it.

We’re not just concerned about the in-the-air stuff as we are the infrastructure on the ground. There’s plenty of infrastructure today in most cities, but as the market starts to grow, there’s going to need to be a lot of new construction of terminals, new tarmacs, parking, to handle the growth.

Cranky: Is the airport funding system similar to the US where they build and then the airlines end up paying or is government-funded with no reimbursement?
David: It’s an enplanement fee rate – they charge the equivalent of about $10 to $12 per domestic passenger depending on the airport. That goes to Infraero, and Infraero is the agency that governs most all the airports, so for one thing you have one group that does it all which is good. If you have a problem, you go to one source with local management. But they don’t have a lot of experience with temporary terminals and temporary facilities. . . .

We haven’t really had to do that before, because flying in Brazil was mainly for the elite, for the A and the B class. There’s A, B, C, D, and E in Brazil. And now that the C class is growing – there’s a hundred million people in the C class – and C class people are starting to get credit cards, half of them have credit cards. So we’re seeing a lot of new travel and a lot of people are traveling who have never traveled before. It’s easy to see it when you have flights between cities that have never had nonstop service before. Travel has been expensive and inconvenient.

Cranky: So the Azul target is the C class?
David: No, no. Our target is the A, B . . . [and more]. When I got down there, I was giving a speech, and one of the other airline guys came up to me and goes “look dude, you don’t really know what you’re talking about. We’re seeing more people travel but the people who always travel are just traveling more. We’re not seeing new travelers.”

But that’s what we’re seeing. We’re seeing both. We have one market, Viracopos to Salvador, which is kind of like São Paulo to Ft Lauderdale kind of thing. That used to have about 34 people a day. Today there’s over 500 a day. So, we’re seeing that growth in a lot of markets that just didn’t have air service before. It’s great to see.

Next up, we’ll dig in to Azul’s fleet choices and then we’ll touch on David bitterness with JetBlue.

If you haven’t been following the south-of-the-border saga, you can start with my earlier post from a couple weeks ago. In short, Mexicana is trying to play a shell game. There are three airlines under the Mexicana name. Mexicana Click is the low cost carrier that flies domestically. Mexicana Link buzzes around with 50 seat regional jets. And then there’s Compañía Mexicana de Aviación.

Compañía Mexicana de Aviación is the original Mexicana and because of that, it has a lot of baggage. The labor costs are very high and the debt is stifling, so the airline filed for bankruptcy. What’s the solution? It appears to be that the goal is to crush labor and wipe the debt from the existing company and transfer everything to the lower cost Mexicana Click. That airline will then come out of the ashes as the new Mexicana. At least, that’s how it looks to me.

That’s all fairly shady in its own right, but it’s what’s happened since the bankruptcy filing that has rocketed the airline into the stratosphere of suck. Mexicana has been trying to set up Click from an IT perspective so that it can handle many of the same functions that Mexicana handles today. It’s taking a long time. In the meantime, the airline has actually stopped taking bookings but continues to fly. Yep, that’s right. Airplanes are flying but no new bookings are coming in.

That is insane in its own right, but it causes additional problems as well. Mexicana has already had some aircraft repossessed, expects to return 40% of its fleet to lessors, and hasn’t been running a full schedule. Originally, the affected flights were canceled through August, but now they are canceled “until new notice.” What the heck? This includes flights to London, Madrid, São Paulo, Buenos Aires, San José (Costa Rica), Caracas, Bogotá, Montreal, Vancouver, San Antonio, Chicago and Fresno. This is where it gets absolutely insane. Though flights are canceled until new notice, they aren’t actually canceled yet. They’re sitting in limbo and that means passengers are in a terrible place.

I’ll give you the example of a Cranky Concierge client whose parents are taking their lifelong dream trip to Spain in September. They are booked on Mexicana and would like to change, but Mexicana hasn’t officially canceled the flights yet.

What’s the upshot here? Mexicana says that it will not issue a refund because the flights haven’t really been canceled, and they won’t put passengers on another airline for the same reason. They say that they will only put passengers on another airline within 7 days of travel. Could that be any more maddening?

If the airline would just admit that it doesn’t have the planes to fly this route and canceled further in the advance, then it would give the passengers time to find alternates. But saying that passengers will only be reaccommodated within a week means there will be very few if any options available.

If you’re booked on Mexicana, this is like watching a train come at you in slow motion and you can’t move out of the way. You know your flight will be canceled, but there’s absolutely nothing you can do about it because the airline is holding your money hostage.

Sure, you can buy a new ticket, but there’s no guarantee you’ll get your money back for the old one. If Mexicana does miraculously fly those flights, you’ll be out of luck. And you can’t dispute it with your credit card until the flight has canceled. It’s a no-win situation for passengers.

This kind of behavior from an airline is just like nothing I’ve ever seen before. Forget about being held hostage on the airplane. We need regulation preventing an airline from keeping your money and your travel plans hostage. I don’t think I’ve ever seen such blatant disregard for customers on a broad scale like this before. And unlike Alitalia, I’ve actually flown this airline and had an absolutely horrendous experience that simply adds to the case.

That is why Mexicana is the worst airline in the world. Even if the announced sale of the airline is actually true, there’s a lot of work to be done to get the airline out of this pit. I know Italians are cheering everywhere that their airline has climbed out of the cellar. But just remember, if Mexicana goes under, the title reverts back to you. So don’t get too cocky, Alitalia.

[Original photo via Flickr user lightmatter]