AvTalk Episode 230: Prigozhin’s plane plummets

AVT 230 Transcript
EPISODE 230
[0:00:08] IP: Hello, and welcome to episode 230 of AVTalk. I am Ian Petchenik. Here as all with
–
[0:00:17] JR: Jason Rabinowitz. Wow. That was quite the windup today, Ian.
[0:00:22] IP: It's been a day, Jason. It's been a day.
[0:00:24] JR: It has been a day. But you know what? We've got some good stuff. We've got a
really great interview coming up today. And that's me saying that. That's not even Ian teeing that
up. I'm genuinely excited to bring you the interview we have today. Ian, who did we talk to?
[0:00:38] IP: We talked with Charles Duncan, who is the president of long-haul low-cost
transatlantic airline, North Atlantic Airways. And I have to say, I don't want to build it up too much
because we'll talk about this on the back end about how I think we both came away with
different attitudes towards the airline. And so, I'm going to let our interview with Charles stand
for itself and then we can talk about that a little bit more later.
But I say it's been a day because we have a rare instance in which breaking aviation news
occurred prior to us hitting record. We interviewed Charles this morning or right about lunchtime
on the East Coast, Wednesday, the 23rd of August. And then I thought to myself, "Oh, I've got a
bit of a break in the day. The kids are back in school this week. So, the house is quiet again. I
will make myself some lunch. I'll sit down. Have a leisurely look through what has happened in
the world this week and then we'll talk about what else has happened in aviation when we
record the podcast this afternoon."
[0:01:34] JR: And then I messaged you.
[0:01:37] IP: No. This one came from – unfortunately, it came from – somebody sent me the
video of what happened and then got to work from there. Here's what happened. The initial
reports were an aircraft crash outside of Moscow. Tver, I think that's how you pronounce it. And
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then the reports started to roll out about who the aircraft was registered to and who may have
been on board the aircraft.
As of the moment, both Russian and international sources, including the BBC, New York Times
and CNN have confirmed that Wagner group leader Yevgeny Prigozhin was on board the
Legacy 600, which crashed today after departing Moscow. And that became my afternoon and
Jason's as well too. I think we've both been following this pretty closely.
[0:02:30] JR: Yeah. Yeah.
[0:02:33] IP: We've downloaded the initial data and then downloaded the raw data for this
aircraft. And it tells the data that's available on the website and the raw data tell slightly different
stories. Thanks to how we had to track the aircraft because of the situation in Moscow. Jason, I'll
let you decide where do we want to – do we want to talk about what happened or do we want to
talk about how we had to track the aircraft first?
[0:02:58] JR: Let's talk about what happened first.
[0:03:00] IP: Okay. Fair enough. What we know so far – and we have a very capable group of
people at Flightradar24 who are now interested in seeing if they can make this even more
granular as far as figuring out what happened. But here's what we know so far. The aircraft
departed shortly before 3pm UTC time and climbed for about 20 minutes in total.
And shortly after 3pm, so about 3:19 UTC, 15:19 UTC, the aircraft experienced some sort of
upset. News reporting has variously attributed it to missile or other type of explosive device. We
haven't confirmed that as of yet. That's not to say it won't be confirmed by the time you listen to
this podcast on Friday. But there was some sort of upset. The aircraft was cruising at 28,000
feet and then it wasn't. It climbed initially very quickly then descended back again to about
28,000 feet. Then it climbed again and then descended again very quickly falling from the time
that it experienced whatever upset it experienced to the time we stopped receiving data from the
aircraft. That was about 32 seconds. And the aircraft went from 28,000 feet to 19,725 feet. Not a
great situation.
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Visual evidence from the area including photos and video show the aircraft not in a controlled
descent. A spinning aircraft. And I've seen multiple videos that still as of yet unconfirmed at this
point, but multiple videos that show at least severe damage, if not a missing wing on one side of
the aircraft. That altitude information, the vertical speed information combined with the visual
evidence paints a picture of something very nasty happening to that aircraft.
[0:04:59] JR: And still, at this time, nothing is confirmed. But everyone, including official
sources, the BBC, kind of everyone is jumping straight to the obvious answer that this was
almost certainly not an accident. I mean, the BBC even has a quote here saying, "US President
Joe Biden said he was not surprised by news of the possible death."
I don't think anyone is really under the illusion that this was purely an accident. That would be
exceptionally unlikely in this case. And some background as well, the aircraft was traveling
Northwest out of Moscow. Maybe headed towards St. Petersburg. But I don't know if we actually
know the destination. But it was a little bit over the halfway mark between the two cities.
[0:05:39] IP: Yeah. We don't know. But this aircraft is frequently used to fly between Moscow
and St. Petersburg. Historically, that's what this aircraft does. It flies between Moscow and St.
Petersburg.
I mean, the statistical likelihood of this being an accident, of this being a mechanical failure or
something of that kind without outside influence, I think the statistical likelihood of that given
recent geopolitical events is about as close to zero as you can get.
[0:06:10] JR: Yeah. We never like jumping to assumptions and conclusions before
investigations have been at least initiated or concluded. But somehow, I don't feel like an
investigation is going to happen this time. And it's pretty safe to make the assumption that there
was some sort of explosion, or missile strike, or something to this aircraft. And this is the last
we'll ever hear of any investigation. I don't think we'll see the NTSB roped in to this one at any
point.
[0:06:38] IP: The Brazilians probably not. The NTSB, which Jason brings up the NTSB because
the engines are manufactured in the US. Is that right?
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[0:06:46] JR: I believe so. Yes, by Rolls-Royce North America.
[0:06:49] IP: They would be party to a proper ICAO Annex 13 investigation. We'll see if that is
undertaken in whole or in part. But one of the things here is that if you go to the website and you
look at the data that we have on the website, you'll notice that none of the data that I just talked
about is available. That's because, for a long time now, but since the Russian invasion of
Ukraine, it has really, really been a factor.
The denial or jamming of global navigation satellite systems or what we often just call GPS in
the Russian constellation of GLONASS, or the European constellation of Galileo, the BeiDou
constellation for the Chinese system, all of those. So, ADS-B. The D in ADS-B, Automatic
Dependent Surveillance-Broadcast. The D stands for dependent, and it's dependent upon an
outside position source telling the aircraft where it is. And then it passes along that information
to our receivers. And if we're not receiving that information, we have to use MLat to calculate the
position of the aircraft.
And so, MLat, as far as Flightradar24 is concerned, uses four receivers. At least four receivers
to use the time distance of arrival. How long does it take the signal from that aircraft to reach our
receivers? We know the position of the receivers. We don't know the position of the aircraft. If
we can calculate the time it takes to reach each receiver and then find the difference there, we
can calculate where the aircraft is.
[0:08:26] JR: What's interesting is that some people initially were saying maybe it's MLat
because the Russians are cutting off ADS-B receivers or they're just not getting any in. No.
Actually, it's the opposite in this case where you need to have multiple receivers for MLat to
work. You can't do it with just one or even two. I think you need at least three ADS-B receivers
for MLat to work.
[0:08:47] IP: We use four. We use four.
[0:08:49] JR: Four. Yeah. There you go. There was actually quite good coverage in this area.
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[0:08:53] IP: It just so happens that as you move away from any major city, the number of
receivers covering any flight is going to decrease. We calculated the positions as best we could.
And like I said, now when these things happen, they're learning opportunities. And so, the team
is working on calculating additional positions. Basically, looking at the data and seeing if we can
use the MLat algorithm to calculate additional positions based on all of the raw data that we
have to see if that yields any useful information.
By Friday, there could very well be an update on the flight path of this aircraft. Check out the
blog post for any updated information that we learn whether there's an investigation or not. We'll
post all the information that we have about this particular flight in that post.
[0:09:41] JR: Yeah. And there's a bit more to the whole ADS-B story in Moscow that, Ian, you
brought to my attention earlier today. It is not unusual. It's actually extremely common now for
aircraft in the greater Moscow region to not be transmitting ADS-B at all. It's very odd to watch
aircraft on the ground at Moscow's airports have ADS-B tracking on with very precise GPS.
They take off. And then, predictably, at about a thousand feet, ADS-B just disappears. And a few
seconds later the aircraft reappears with much less accurate MLat tracking.
And we don't know why that's happening. Whether that could be GPS jamming going on
triggering the aircraft to turn ADS-B off itself or whether the Russian authorities are mandating
that airlines have to turn off ADS-B. And it's not just Russian Airlines. It's other airlines coming
into the country like Qatar Airways, I noticed today. If you have any insight into why that might
be happening, we'd love to hear about it.
[0:10:41] IP: Yeah, especially now that the podcast email box is fixed. So email us at
podcast@fr24.com.
[0:10:45] JR: That's great. And someone will actually read it.
[0:10:48] IP: Yes. I'm slowly working my way through all of the emails that we received and I
think most people have received responses by now. But again, apologies for that.
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That's what we know so far. A lot of intersecting pieces as far as flight tracking and this
particular situation. As it evolves, I'm sure we'll learn more. Will we learn the whole story
eventually? Probably not given who's involved here. But an interesting lesson on how we have
multiple layers to track aircraft and what happens when one of those layers is proactively
denied. But we'll leave it there for now and I'm sure return it at some point in the future, if not in
the next episode.
Jason, I'm so excited to get to our interview with Charles Duncan. I think we should just do that
now. What do you think?
[0:11:34] JR: Let's do it.
[0:11:35] IP: All right. We'll be right back with Charles Duncan, the president of Norse Atlantic
Airways. Stay with us.
Welcome back. We are joined now by Charles Duncan, who is the president of Norse Atlantic
Airways. The low-cost long-haul transatlantic airline that recently started – just celebrated its
first anniversary of operations in June. And he's joining us to talk about where the airline has
been so far and where it's headed next. Charles, thank you so much for joining us.
[0:12:09] CD: It is a pleasure to be here. Thanks so much for having me.
[0:12:12] JR: Thanks, Charles. Really looking forward to our conversation.
[0:12:14] IP: As I mentioned, the airline is still pretty much in its startup phase. I mean, June 22
was the first revenue flight. The airline was announced in 2021. After a year, how are things
looking?
[0:12:28] CD: Well, they are looking fantastic and it truly is, I mean, a great time to be operating
an airline in the North Atlantic. If you take a step back and think about seasonality, and we're
recording this in late August, summers are always very strong. And this year in particular, we
have seen just tremendously strong demand across the Atlantic.
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And so, yeah. I mean, the summer's been great and we have – right now, from a full – I mean,
from an operations point of view, our teams still have a couple more weeks of intense work to do
just with high load factors and kind of getting the final flights with heavy loads and the demand
worked. And then we'll begin to have a bit of a lull as we work through the remainder of the IATA
summer season. And then we've turned our attention to the coming winter, which is always
more challenging from a commercial point of view. And then, also, we're reviewing the results
from the current summer to inform what we will do next summer. Hopefully, that's a good kind of
over – I'm happy to go into more detail on any of those things. But it's been a fantastic summer
for us commercially, financially. It's proving the business model and the business case, and that
you can be successful as a low-cost long-haul carrier and a new entrant. And, man. I mean, our
planes have been full. And it's been gratifying, I think for me personally, but for the entire Norse
team.
[0:13:50] IP: Let's set the stage a little bit. 2020, obviously, everything got turned upside down.
We had no idea what the future of the industry was looking like. And then in 2021, along comes
Norse Atlantic. People were obviously skeptical. 2022, you just start going. You operate as you
said you would. A very challenging year, let's say, for many airlines, especially in Europe. And
2023 turns out to be one of the best years for transatlantic travel in recent history.
Since the start of the airline in 2021, were a lot of the assumptions you made then, have you
found them to hold true or have you found that you're really having to change on a dime or
pivot? Or has really things – have they gone to plan?
[0:14:34] CD: That's a great question. I should first just preface, I joined the team at the very
start. I mean, literally, January 1st or 2nd. The first working day of 2023. I have studied and
learned the history and talked to my colleagues who are here for it. And I'll give you my sense of
that.
But, I mean, we have changed course, pivoted. The plan has adjusted quite a lot from the
announcement in 2021 for, I mean, a multitude of factors. And it's probably worth – stepping
back a little bit. We have two AOCs, two Air Operator Certificates in Norwegian and at UK. And
in 2021, I don't even think we had fully formed what the plan was with respect to AOCs.
Whether we would start in the UK first or do Norway first. As it turned out, we did Norway first.
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And that enabled us to fly from Norway to the US. And then we also flew from Norway to
Gatwick and then operated Freedom service from Gatwick to JFK that had to originate in
Norway.
And then late in the fall of 2022, we received our UK AOC. But we still had several more
months. It wasn't until early 2023 that we received the US recognition of the UK AOC. Due to
traffic rights and legalistic, I shouldn't say challenges, but just the process. These things are
time-consuming and quite involved. We had to change course and change tack I think a number
of times from the original sort of announcements of flying.
But I think from an overarching perspective, the original plan was we've got a fleet of 15
airplanes. All Dreamliners. We want to be low-cost long-haul transatlantic. I mean, all those
things have borne out. And ultimately, as we sit this summer, on July 1st, we launched our
seventh US destination, from Gatwick to San Francisco. And we're operating a fleet of 10
aircraft. And we have five – the remaining five are dry leased to another operator.
We like to sort of say that, on July 1st, we ended our startup phase and that we fully ramped up.
And all the people we'd spent the last year hiring, and training, recruiting, all the preparatory
work was behind us and we were fully, on July 1st of this year, focused on implementation and
execution.
[0:16:50] IP: This summer, we've seen a lot of domestic US airlines say we didn't have the load
factors we wanted to because everyone's traveling overseas. And especially the low-cost
carriers, domestic low-cost carriers like Frontier and Spirit. Having said that, are you the airline
that those passengers are now flying on? Or are you seeing more of a spread? Are they going,
"I was going to book a ticket with Spirit. So, I'm going to look for a similar low-cost model
transatlantically." Or is it not that direct in the progression?
[0:17:21] CD: Gosh. I'm sort of a mixed minds in my answer on that. It's a great question. I saw
those earnings call – I listened to those earnings calls and read the transcripts and the media
coverage coming out of it. And I think – I mean, we can't trace individual passengers and
haven't interviewed anyone who was maybe a Spirit loyalist in the last couple of years
[inaudible 0:17:40] Cancun or whatnot.
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I mean, our planes from seven cities in the US to five cities in Europe have been jam-packed
with Americans this summer. I can certainly confirm that there has been red-hot demand from
the US to Europe. And I think the reason for that is that, for all intents and purposes, this was
the first year since 2019 that there were no restrictions due to the pandemic in both directions.
The US vaccine requirement I think was lifted late in June of 2022. And so, people's summer
travel plans had already been made at that point. We've been the beneficiary of some
tremendous pent-up demand to come to Europe. And then in the same vein, Asia is largely
closed. You look at the lack of capacity certainly between North America and China and all the
overflight challenges and whatnot as well. And so, I think that has pushed – just further help to
drive more demand in North Atlantic.
[0:18:39] IP: You brought up a good point saying that, by June 22, many people had already
made their summer travel plans. How early do Norse customers book?
[0:18:49] CD: It is roughly – it varies by market and varies by direction, season, everything else.
But it's between six, and eight, ten weeks right now. But to give you an example – and we just
did a promotion, sales promotion, last week. And we were focused on that in generating traffic
and volume in the shoulder period for September and October. And that's where we had seats
in our most attractive prices. And it worked. It was effective. And then, also, people come to the
website and they book high fares for August as well that weren't on sale.
But what was interesting to me is we had a noticeable uptick in bookings for May of 2024 in our
promotion, which was targeting September and October of 2023. It's quite a distribution is I
guess what I'm trying to say.
And so, one of the things we're focused on is, right now, we have – I shouldn't say the entirety.
But what we'll call "our no-brainer markets". The markets were absolutely going to fly next
summer. We have out for sale right now through the end of June 24. And I've asked our pricing
and network team to get the rest of those markets out for sale, those same markets out through
the end of October 2024 just because we want to be out for sale for as long as we can. And
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there are people who do book that far in advance and not be booking up family trip to Disney in
Orlando, or cruise ship, or whatever it may be. We do get near walk-ups.
And one of the cool things that I think probably your listeners, if they're sort of av geeks, like I
suspect they are, and I am. Because of the challenges in getting slots across the board, we end
up having some of the last departures from JFK at night, which then also means we're some of
the last departures from Europe. And that allows us to get a quite a bit of walk-up traffic when
other people have cancellations and other irregular operations. We're the last guy flying.
And that's actually been a bit of a competitive. I mean, it's not massive. But it might be three, or
four, or ten tickets on a given flight. And we certainly saw that during the ATC meltdown at the
end of July and even – oh, gosh. I guess even in the end of June when Newark was having its
challenges. Our flights were still moving and we sold a lot of last-minute tickets.
[0:20:53] JR: That is an interesting aspect, which I guess, I mean, I personally feel like the near
midnight or after midnight departures are – for me personally, that is not for me. But if that's a
competitive advantage, that's an interesting twist I had never thought about.
[0:21:06] CD: Well, it's by necessity, guys, right? And I agree with you. And I'm one of these
people – now, again, the other – I mean, all Transatlantic flights. I say all. The vast, vast majority
that are going eastbound are red eyes. But whenever I'm on a domestic red-eye flight, I always
tell myself, it made sense on paper when I was booking it and then regret it [inaudible 0:21:27].
[0:21:27] JR: Yeah. And regret the moment you step on board. Yeah.
[0:21:29] CD: It's a time machine, right? You're able to do your work and make-up time. But the
end of the day, you're not able – it's a painful experience. In the same way – look, to somebody
with a jet lag and everything. I mean, I'll give my most – well, if you're leaving JFK and going to
Paris or Rome, rather than arriving at those really painful 6am, 8am hours, if you're arriving mid-
afternoon, 3pm, 4pm, it is better for jet lag and you're not waiting for the hotel to check-in. I
mean, there are some built-in advantages to it.
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But again, if you've got eye rubs, there's bad weather, people have probably never even heard
of Norse Atlantic. But they get the JFK, they look at the FIDS board. And you're going to Rome,
and we're the last flight departing and it's on time, yeah, they walk up and buy a ticket.
And so, it has, kind of in a sense, forced us to rethink about our strategy. And maybe these late-
night slots aren't so bad after all. But you take what you can get. And we're building a business
around it. And I can tell you – I mean, we've been absolutely profitable with the flying, right? No
regrets.
Now I'm not sure the midnight – the same rule carries over to 2am departures or something like
that. But you can get to JFK at that hour. And where it does hurt us admittedly is when you get
back, when you return to JFK at 10pm, it's a dead end. There aren't onward connections
available. And, yeah, there certainly it's public transportation available. In that sense, it's a bit of
a challenge in the return direction for connectivity and landing late.
[0:22:54] JR: Yeah. I want to talk a bit about the elephant in the room, of course. There have
been predecessors to Norse. There have been other attempts at long-haul low-cost transatlantic
travel. Many of them have not worked out. Some have. What makes Norse different? Because,
so far, it seems to be working. Why are you different?
[0:23:16] JR: Listen. It's early, and I would still say I think you're kind, Jason, to say – even the
way you framed it, I appreciate that. And look, I mean, I'm optimistic. I love our chances and
happy to kind of break them down. But man, I mean, it is a large graveyard.
I mean, I go back to sir Freddie Laker and Laker Airways. I mean, there's a long, long list of
people who've tried this. We start with a foundation. We talk about 2020. And our founder and
CEO is just an outstanding leader, and visionary and entrepreneur. He's a guy named that Bjorn
Tore Larsen. We call him BT.
BT has had a long history, a successful career in the shipping business. And he has bought and
sold more ships, container ships, oil, vessels than I can count. He saw an opportunity in aircraft
in COVID that mirrored what he's seen in the boom and bust, the cycles in shipping.
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And so, there were a large quantity of formerly Norwegian-operated aircraft that were available
from lessors and nobody wanted them. This is in the depths of COVID. The summer of 2020, fall
of 2020 into 2021. And he stepped up, raised some capital, used some of his own capital and
signed lease rates with two lessors that are less than half of what the going monthly rate is
today on the market for those aircraft.
These are 12-year leases, which is about – I mean, 12 years in this industry. We're now at 11.
11 years remaining. That is about as close to a durable permanent cost advantage that one can
get in this industry. And he was very opportunistic. He was willing to take a risk in a time when
no one else was. Now everybody's clamoring for these airplanes. They're paying top dollar for
them. He was quite visionary and forward-thinking in it.
And frankly, it's the same thing that Ryanair does with narrow bodies. I mean, IAG bought the
MAX in the middle of the grounding at the Paris Air Show, I think. If you're willing to be bold and
stick your neck out and take a risk, I mean, this is what we did as a team and it's sort of the
foundation of the business model.
And so, we have a fantastic airplane with the 787. I think everyone acknowledges that it is the
best wide body from a cost range performance customer. I mean, just on every dimension. And
then we build from there. But the foundation is the aircraft.
We are – and I'll rattle them off. But we're focused on being – I mean, we're going to be a single
aircraft type, which I think is really important. We are going to be a high utilization both aircraft
and crew. And so, that means really focusing on daily operations so that we can move our crew
in and out very efficiently and effectively. High utilization.
A good example, my team came to me last week where with a two-airplane package of Paris-
JFK and Paris-LA. And when you pair those things to – those two aircraft together in rotation,
you maximize a 24-hour day across two aircraft versus, I mean, flying either one singly.
And so, we're really focused on operating cost and operating efficiency. And then there are a
whole lot of other things too where it's the unbundled model. And so, we're pushing very hard on
ancillary. I can tell you right now we believe, from every survey we see in the world, that we are
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number one in ancillary per passenger. We're just over $120. And the next closest we're aware
of is Frontier at $82 or $83. Now that's a little bit of an unfair comparison, long-haul versus
short-haul. But we don't think anyone else is close based on all that we have seen in the
market.
And so, that's not easy to do, right? It means we have to be very, very tough on our enforcement
and very clear as we sell the ticket that you're just getting a seat. And if you want a seat
assignment, a bag, leg room, you pay for all the other elements. But we're able to offer really,
really attractive and appealing entry points to facilitate travel.
And then we're focused big on cargo and taking advantage of that. And many of our markets,
cargo is very important, very strong. You would be amazed at how many salmon we are moving
out of Oslo to JFK and LA. And chances are if you're eating salmon in the States, it may have
flown in a belly of a Norse aircraft. We're going after cargo.
We're not in the GDS systems. We're just selling through our website to keep costs low in that
sense. Again, we're just trying to really adapt the very best practices we see from ULCCs to
keep costs low, have a simple product and ultimately drive revenue and keep costs low.
And I'll tell you too, we believe – and we'll release our third quarter results the end of October.
From all that we have seen, we are by quite a large margin the lowest unit cost operator in the
transatlantic. And again, I don't think it's even close our next nearest competitor.
And so, by keeping our costs low, that becomes a really effective moat competitively. I mean,
others can try to match our fares. But we'll make money where others will lose money just by
keeping our costs as low as we possibly can.
[0:28:17] JR: Super interesting. I never would have thought there would be such a high cargo
component at this stage. That's really interesting. The next time I have salmon, I'll think of you
and Norse.
[0:28:25] CD: Think of it. Please do. We'll 30 tons. 30 tons out of Oslo to New York. We were
able to get on Rome. We've been carrying red wine, believe it or not. We've been getting fresh
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tomatoes from Netherlands or our truck down to Paris and on your shelves, in the grocery
shelves in New York. It's been interesting just the commodities we're carrying. And every little bit
helps just in terms of making the flight work. And we have the belly capacity. And so, let's take
every advantage of it.
[0:28:50] JR: That's great. I want to circle back to two topics that you mentioned. First, the
ancillary. It seems like you're knocking it out of the park on ancillaries. Congrats on that. You are
using the same aircraft as Norwegian, which comes with the same cabin, which has the
premium cabin on board. Which, personally I think it is probably better than the premium
economy cabin on any traditional airline. What are you seeing the take rate on that? Is that
something that people are booking initially when they first book the flight? Or are they taking an
upgrade? Or how are you ending up filling that cabin?
[0:29:25] CD: Yeah. Thanks for asking.
[0:29:26] JR: And this is not sponsored, by the way. That is an actual personal opinion. I think it
is the best premium cabin out there.
[0:29:32] IP: We've covered that on the podcast before.
[0:29:34] JR: We have.
[0:29:34] CD: That's awesome.
[0:29:35] IP: Jason's love for that cabin is no secret.
[0:29:38] CD: What I would say, guys, is that from a hardware point of view, the raw seat, and
the experience needs and everything else, it is the best premium product flying. And really, what
sets it apart, I mean, it's two 2-3-2, 43-inch pitch. And I think the standard with most of the
network carries is a 38-inch pitch. You're talking five extra inches of leg room.
We have – and I should have mentioned this earlier. Our cabin crew are phenomenal. And they
take pride in giving good service, and I'm just blown. And it's multinational. We have both US-
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based crews and European-based crews. And so, in a sense, it's a little bit like Cathay Pacific
does this very well. You jump on, you've got multiple nationalities. And it's a really good, warm
welcoming feeling and fantastic service while being low cost.
But what I would say is in the Norse premium, because we had to rush – and it is hard to get an
airplane up and running within a year. And so, we didn't have any of the – well, it's called
software. Like, the soft elements of the product ready.
And so, the food we serve, frankly, today is a bit embarrassing. We have a very thin, awful
blanket. And in fact, someone, some blogger picked up on it. We bought X-Norwegian blankets
and just snipped the logo off the tag off and we're using it. There were three. We bought them
from like a bankruptcy trustee or something." We're trying to be low-cost and doing all these
things right.
Listen. I mean, what's really exciting is, at the end of September, we're going to properly launch
what I'll just call the soft product. And so, right now, the food we deliver [inaudible 0:31:08]. It's
a traditional – I mean, kind of like an economy class casserole or entrée you used to. But it's
delivered in like this paper box. It is just bizarre. It's a poorly designed or conceived – it's a
rushed product, ultimately.
We're going to have a proper tray service where our cabin crew will deliver something they're
going to be really proud of. We've got a – I mean, a really nice thick fleece blanket that's
branded with our really cool Viking ship logo on it. We're going to have small amenities. You're
not going to get the Bvlgari fancy amenity kit. But we're going to have eye shades, and some
earplugs and two meals. A dinner and a pre-arrival breakfast type of a service. And it'll all be
built into the price.
Now what we're not going to do is throw in an airport lounge. Because if you want that, we'll sell
it to you separately. Because we want to still have a low entry price for it. But we have not been
marketing it very well. We've actually been a little bit cheapish because it isn't the level of
service that we want. But once we have all of these bells and whistles together, call it early
October, very end of September, we're going to make a bigger push for it.
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But even with all of those caveats sort of notwithstanding, people have discovered the product. I
would say, I mean, roughly – going into June, we actually had a higher load factor in premium
than we did in economy. They were neck and neck. In July and August, premium has been
about 10 points, 15 points behind the economy cabin. And so, we see a big opportunity.
About half the seats are sold on our website. And then we work with a company, and many
airlines used to call it Plusgrade, where we do the auction product. We email customers 10 days
before departure seeking auction bids. And then we sell them as upgrades, which most Airlines
don't. Network carriers certainly don't. We sell upgrades at check-in as well.
And we've created a contest among our airports every day. We get a scorecard. Which airport
has sold the most ancillary per passenger, [inaudible 0:33:03] passengers. And it's incredible –
we've had a Ryder Cup competition of the US versus the European airports. And who's going to
win the prize and the trophy? And it's been incredible with a little bit of competition and sort of
gamification does for the teams.
And on my flight over Dullas, or Washington Dulles Airport, I flew this week from Dulles to
Gatwick, they sold 25 upgrades at the airport. It's a 56-seat cabin. And I think it was booked to
25. In this instance, more than usual, we're sold as upgrades at the airport.
It's a big opportunity for us. I think we can actually charge higher fares than we are today when
people realize just how good it is. And maybe, Jason, I should pay you for some commercials,
or testimonial, or something. But it is fantastic and in terms of value for money.
And what you find, we're primarily in all cabins a leisure carrier. But for business travelers who
are paying for the travel themselves, we do have quite a number of just small business owners.
These kinds of people who are buying our premium class because they find the great value.
And I think we'll get even more as the word spreads.
[0:34:09] JR: There's one more topic I want to circle back to before I seed the microphone back
to Ian. You touched on fleet utilization, which was always a big issue at Norwegian, where we
saw – I again personally experienced that there was – one aircraft took a three-hour delay. And
it took days or weeks for that aircraft to make up that delay. Because fleet utilization was just so
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high that there was no slack in the schedule to make up that lost time. And then we ended up
with the infamous situation where they – at least the high fly A380 to JFK, when the damn thing
couldn't even go to JFK because the terminal wasn't prepared for it. That doesn't seem to be
happening with Norse. There seems to be – honestly, the operation seems to be running pretty
fluidly. What are you doing differently? Even if you have this high utilization, how are you making
it work?
[0:35:01] CD: I appreciate the question and I love it. At heart, I'm an operations guy. In my
career, I've done a lot of ops roles. The simple answer is that, this summer, we've got 10 -9
aircraft between the two AOCs. We're only flying nine. And so, we have held out a spare, one
full aircraft, intentionally to backstop the rest of the fleet. And we have had to use it. We've had
to use it.
Ultimately, I mean, that comes at a cost. But we think it's worth doing. And I've got to give a
shout out to our operations team. There's all the media attention around operational challenges
immediately last year and this year, strikes across Europe and so forth. And I always worry. I'm
going to jinx myself when I say things like this. But we've had 100% completion. Meaning we've
not canceled a single flight since April 24th of this year. We've gone through the entirety of the
summer without a single canceled flight. We've have had, in truth – because I'm sure a listener
go pull the Flightradar data and so forth.
And we have had a couple of linky delays and even longer than 17 hours where we put people
in hotels and so forth. But we did complete the flight. And I think even a technical. We may have
had to renumber a flight because it was following day, whatnot. But every single flight, it was
scheduled, we've run. And it's only been a handful over the whole summer of truly lengthy, more
than two-hour type delays. I'm really proud of that.
I wish our on-time performance and starting at D0, just departing on time, were better. Our goal
is 85, which was too ambitious. But we've been running about 40 or 50. About half of our flights
were departing on time. But they're getting to the destination within 30 minutes. Almost all of
them are.
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And so, again, I'm really proud of the execution. But it does come at the cost of the spare. And I
think, I mean, from a philosophical point of view, it is really important, I mean, to look at how the
network is built and to ensure you know what your recovery options are and you have backup
crews available in the right locations.
I was actually tickled. I was in Oslo. We had a technical issue two months ago. And I have to get
the exact details on this because it's been so long. But the airplane had a technical fault. We
were taking about a two-hour delay. The crew were about to duty out and we were able to
scramble a second officer, a relief. It was scheduled to fly the following day on a different flight.
They lived near the airport. He ran to the airport. He's still tying his tie as he's running to the
gate. But he got there in 30 minutes. And that bought the crew an extra three hours because of
the augmentation rules with duty limits.
And so, the team are really focused on execution. But we've got – you should always have
several plan B, plan C, plan D in your back pocket ready to go. And we've learned a lot. But,
again, I'm just super proud of team or what we've been able to deliver operationally, and
commercially and financially this summer.
[0:37:55] JR: So, the old joke of, "My flight's canceled. Why don't you just bring around the
spare plane?" is actually true in this case. And I know a bunch of airlines at least in the US were
doing that in the last couple years. But in this case, you're doing it even though 10% of your
fleet is a spare. That's a high number.
[0:38:12] CD: That's right. Well, it is an expensive number. But the reality too is – I mean, it's
parked in Gatwick, which is our biggest airport. And yet, I told the team, "Rest assured, it won't
be needed in Gatwick." Because, just Murphy's Law, is it'll happen somewhere else. And then
sure enough, the last time we tapped into it, it was needed to fly Oslo to JFK, I believe. And so,
we had to take a UK-based crew. And there's actually the wet lease between each other. This is
actually some lease documentation you have to do intra-company. Scramble a crew. They then
flat Oslo. And then Oslo to JFK. It means quite a lot of behind-the-scenes machinations that go
on. But if we were flying all 10 airplanes, we would be canceling flights and just having a
disaster in our hands just from accommodation, and costs and everything else. It's important,
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especially as a startup in particular. We need to get off on the right foot and not be known for
being a bad operator.
[0:39:07] IP: You mentioned the network. We'll close with kind of looking forward. You made
some news a few months ago when you announced some changes to the route network and the
way that you're structuring things. Because one of the criticisms of long-haul low-cost kind of
before these announcements was that, sure, summer's great. But then what are you going to do
for the rest of the year? And you seem to have answered that question with some really
interesting routes. The London-Gatwick to Barbados and Jamaica. That makes perfect sense.
But Jason and I both kind of flagged the Oslo-Bangkok flight as kind of the outlier in the route
network. I wanted to hear more of the perspective of what's the plan there?
[0:39:52] CD: Yeah. Well, you will both be surprised that, for the winter, that is the strongest-
performing route in our network both from a load factor and a revenue point of view. And it's not
even close. I mean, we have like by a factor of maybe two and a half or three relative to any
other market we're flying this winter at the same time.
And in fact, it's been so strong we announced it at two flights a week. I'm not sure what to make
of it. And it's been so strong we've actually added a third flight. And we're now even – it's so
good we're contemplating flying it next summer as well.
Look, what I would say is Scandinavians in general and Norwegians perhaps in particular have
a real affinity for Southeast Asia and Thailand. And so, there is a long history of that route being
flown – oh, gosh. Well, by Norwegian, by Thai on a non-stop basis. And the gulf carriers, of
course, have it. It is a well-trafficed route. And it was one that our team in Norway were
convinced was going to be strong. And, boy, have they been right.
It does stand out in our network. But at the end of the day, we're here to make money. And that
sort of route that we have no doubts about will be quite strong and do well for us. And now, it's
three flights a week. And one of the lessons – I mean, interestingly, another very strong route for
us this summer has been Oslo to Los Angeles and Oslo to Fort Lauderdale. Two flights a week
respectively for both of those.
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And so, in all of these cases, we do take a penalty on the crew utilization because the crew are
going to be in the hotel for more than one night just kind of by definition of the way the schedule
is structured. We have to command higher fares to kind of offset a bit of that extra cost that's
born. But we'll do it when we see margins that are strong enough to offset the higher cost.
We don't want to have too many of those. Because to be honest, we just – I mean, I much
prefer seven weekly, just in and out, very high utilization and so on. I mean, it helps in the
aircraft utilization that we do [inaudible 0:41:50] crew and so forth.
Yeah, I mean, it's interesting you picked up on that. Interestingly, the markets that I would have
thought would be stronger, like the Caribbean, we're having to put more effort into. More
marketing. I mean, more just sales calls and meeting with tour operators. We load Oslo-
Bangkok on our website and it sells like hotcakes. It really, really has been pretty fascinating.
[0:42:12] IP: Interesting. And I really want to thank you for your time. This has been a wonderful
conversation. What's next? Where does Norse go in the next – well, we've kind of talked about
the next six months to a year. What about two years? Three years? Where's Norse going?
[0:42:25] CD: Yeah. Listen. I mean, we have 15 aircraft, as I mentioned. 10 right now. And we're
going to gradually get up to that 15 level. And one of the other lessons – and again, we really
have tried our best. And I probably I didn't articulate all of the lessons of the previously failed
airlines. But we've studied. I mean, I think we're good students of history. And many of those
carriers have failed because they grew too fast and sort of lost control of costs, for example, and
complexity. Maybe multiple five AOCs in the case of one of these players.
We want to be slow, careful, deliberate in our growth. And we've also – and our mantra for next
summer is to be boring. And by that, I mean, we kind of prefer [inaudible 0:43:09] if we can get
slots and so forth, we'd rather be boring and not add new cities and just connect dots and just
do what we've been doing this summer with more frequency in the same markets than to open
up new stations, bring the costs and have the challenges of marketing a new city and explaining
who we are and so forth.
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And so, I mean, in a sense, boring is good. Because we want to be profitable. And that's what's
going to drive us. And what's also interesting is that BT, our CEO, and I are big believers in
being opportunistic aircraft acquirers whether buying or leasing. And so, we're not going to add
more than 15 aircraft until we can get a smoking deal like we did on our current fleet. That might
be in two years or it might be in 10 years when the next downturn comes and the OEMs or
lessors are desperate to move an unloved asset, if you will. It makes it hard to predict a little bit.
But just know that we're going to be focused on financial results and not growth for growth's
sake.
[0:43:09] IP: That's different than some predecessors. That's really interesting.
[0:44:11] CD: Which why I want to call that out.
[0:44:12] IP: I like the be boring mantra.
[0:44:15] CD: And I'll tell you, the other thing for us – and I mentioned we're going to make
money in the third quarter, right? This summer's going to make money. We set for ourselves the
goal that for the second half of this year, it's the third and fourth quarter, let's make a buck,
right? We're going to lose money in October through December. We know it. The winter is
always a challenge as we talked about. We think we've got some good strategies to fly to
warmer destination. Less New York. No Boston. More Florida. More LA, Caribbean. That sort of
thinking.
We think that's good. But we're likely to still lose money in the winter. In fact, I mean, I'd be
delighted if we've even just broke even. But we've got to make money in the summer and have
the summer profits more than offset any winter losses. And so, that's kind of the name of the
game, how we're managing things. And we just want to do it slow, careful, quite analytical on
how we're doing things. And we got to be nimble. And we'll chase opportunities like Oslo-
Bangkok when we see them. Yeah. I mean, there may be another one like that. I don't know. If
any listeners have ideas, send them our way.
[0:45:16] IP: Route network suggestion. I like it.
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[0:45:19] CD: Absolutely. And the other piece that is complicated is traffic rights. And I think not
all. In fact, I suspect most listeners, unless you're in the business and really know that space, it
is quite complex. You can't just fly places you would like to fly. I mean, you keep digging into
where you have the legal rights as a UK operator, as a Norwegian operator across the different
treaties. It's quite complex.
As an example, with our Norwegian AOC, Norway is not part of the EU. But it has sort of – I
forget the acronym. But it's a sort of an affiliated country and a NATO member, of course, as
well. The EU-US Open Skies agreement allows Norway to follow in as part of that agreement.
But other bilaterals don't allow that, for example. So our ability to fly between various countries
is hampered by the traffic rights that are assigned or awarded by each, in our case, Norway and
the UK.
[0:46:15] IP: You bring up the AOC. And I was going to let you go. But you brought it up. How
much did Brexit complicate?
[0:46:21] CD: Oh, my gosh. So much. So much. Yeah. Listen. I mean, it may bore your – I
mean, we can talk all night.
[0:46:29] IP: Maybe we'll do a whole another episode.
[0:46:30] CD: No problem. Yes, I would love that. But the short answer – and you would know
off the top of my head. I mean, Ryanair has had to go grab multiple AOC's. EasyJet. Austria
seems to be popular. Malta. Countries of choice. I'll tell you what. I mean, if Norse were being
formed pre-Brexit or without a Brexit agenda, all we would need is one AOC and it really ought
to be a UK AOC would give us the rights to fly all that we'd want to fly. It's unfortunate because, I
mean, we have to have two to do the flying that we want to do and it helps diversify our risk.
And so, again, where we're happy with the two we have. We don't want three, four or five. But
each AOC brings with it incremental costs and complexity. As two different regulators, you have
to have nominated roles. Ahead of safety for each AOC and different training standards. And so,
our US flight attendants, for example, are either assigned to the UK AOC or the Norwegian
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AOC. And today, they can't fly for both. And it is possible if the regulators may allow us to do
that, we have to put them then through double the training even though it's almost equivalent.
And so, they're just hurdles that we have to overcome that bring complexity that we only had
one AOC. Of course, there would – I mean, back to – I guess, Jason, you asked the question. I
can't remember. And sorry for the long-winded answer. But, boy. I mean, if there had not been a
Brexit, Norse would be an even lower-cost operator and my life would be a lot simpler.
[0:47:58] JR: There's that. Okay.
[0:48:00] IP: I think that's a great – I think that's a great place to leave it. That's perfect. We've
been speaking with Charles Duncan, who is the president of Norse Atlantic Airways. The, thus
far, quite successful long-haul low-cost transatlantic carrier. And, Charles, thank you so much for
joining us today. We took up more of your time than we intended. But a very enjoyable
conversation. And I really hope that our listeners have enjoyed this particular episode. Thank
you for joining us.
[0:48:26] CD: Thank you. I've enjoyed it a ton too. And, I mean, I use the Flightradar app
multiple times a day. I feel like it's the least I can do to repay the favor of the great technology
that you and all the ADS-B antenna providers globally provide for all of our benefits.
[0:48:44] IP: Thank you so much.
Welcome back. Jason, I mentioned at the top of the show that we came away, or at least I came
away, and I think you did too, from our interview with Charles. I don't know whether it's a
different opinion. But at least a newfound appreciation for what they're trying to do. And perhaps
a new belief that they may be on the right track.
[0:49:13] JR: They may be not Norwegian for real.
[0:49:16] IP: They may be not Norwegian. Yeah.
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[0:49:17] JR: We've been joking about that for years how we bring up Norse. And we say
definitely not Norwegian. But I think they've done a really great job of proving that they are in
fact not Norwegian. They're bringing the same base core concept to the market. But
operationally and, seemingly, financially, they are definitely not Norwegian.
[0:49:38] IP: And Charles mentioned this I think a few times, that the real proof is going to be
can they make enough money in the new Northern summer season to carry them through each
year the winter? And if they can make a ton of money in the summer and then make just enough
in the winter, seems like a good model to me.
[0:50:00] JR: Yeah. It's tricky. Just find out how many Nordic holiday makers they can bring out
to Bangkok. Because, apparently, it's a bottomless pit of demand.
[0:50:10] IP: Apparently. Yeah. I mean, at some point, maybe the winter schedule is just Oslo-
Bangkok.
[0:50:14] JR: All 10 aircraft. No spares. Just all 10 aircraft for Bangkok.
[0:50:18] IP: No spares. Just run them. Well, if they're all going to the same place.
[0:50:22] JR: That too I think was one of the most interesting takeaways that 10% of their
current fleet, which is one aircraft, it's a spare. That's probably among the highest percentage of
any airline out there at least with wide bodies. It shows the dedication, I guess, to they want to
get the operation right. Because once you have a really sideways operation, be it for a day, or a
week, or two and a passenger experience is it, they're gone. They're never coming back.
To have even just that one aircraft in reserve probably is going a long way in having passengers
confident that they can re-book with Norse as they could not do with Norwegian. However much
I wanted to fly on the high-fly A380, that just was never a good sign.
[0:51:08] IP: I think we've pulled the data on Norwegian once. And the sheer number of random
wet lease operators flying from Norwegian at various points in time, it was just a clear sign of
too much, too fast.
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[0:51:23] JR: Yeah. To be fair, not all of that was Norwegian's fault. That was mostly Boeing
and/or Rolls-Royce having defective engines, late deliveries, seven, eight groundings, all that
kind of nonsense. But at the core of it, it was just not a solid business pun.
[0:51:40] IP: Well, this one seems pretty solid. And it'll be interesting to see how they do over
the winter. And, hopefully, we can have Charles back to talk about that.
Other things happened last week, I think much to my chagrin. One of which was an Alaska
Airlines 737-800 landing at Santa Ana landed hard enough to display the top of the landing gear
to the passengers, shall we say.
[0:52:08] JR: Not great. Because it has to go through the wing to do that. And we actually have
some pretty good photos and even video of the landing on the incident side of the aircraft. And,
yeah, it was in the middle of tropical storm Hillary or hurricane Hillary, whatever. The hurricane
that's not supposed to be on the West Coast impacting Southern California shouldn't be there,
but it was.
The landing didn't look all that hard. Not unusually hard. And we're going to have to wait for
investigation to go through. Find out what all the g-forces were and all that. But it really did not
look like an excessively hard landing and certainly shouldn't have resulted in quite the extent of
the damage.
But what amused me the most about this incident was, after it happened, they only realized
when they tried to taxi into the gate off the runway and couldn't because your landing gear went
through the wing. That's a problem.
[0:53:01] IP: Well, I mean, at least they realized –
[0:53:02] JR: It'll slow you down a bit.
[0:53:04] IP: Yeah. Yeah. Why do we have to apply full power to taxi?
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[0:53:08] JR: Yeah. But no injuries. The aircraft, they didn't even go out the slides. I think they
just went down the air stairs. Yeah, it's going to be quite interesting to see if this aircraft gets
repaired. We always have this back and forth of will they? Won't they? And the aircraft, Boeing
and Airbus, have managed to bring back from the arms of death is quite remarkable. But in this
case, it's one of Alaska's oldest 738s. One of their oldest aircraft in general. I think it was over
17 years. Might not be financially feasible to repair it. But we'll find out.
[0:53:42] IP: If it was Delta, I'd say 100%, the aircraft would be back in service within two
weeks. If it was United, I'd give it a 50-50. Alaska, I'm not sure.
[0:53:49] JR: Yeah. We'll see.
[0:53:51] IP: If it was American, I'd say they'd probably just push it into the ocean.
[0:53:54] JR: Yeah. Yeah.
[0:53:55] IP: Jason, you seem pretty excited about ANAs new domestic, 787-10.
[0:54:01] JR: Yeah. ANA is going to be pushing its 787-10s into domestic service. This is of
course the longest, highest capacity variant of the 787, which is not currently in domestic
service. But they will jam pack this thing full with 429 passengers says Flight Global. 28 in some
sort of premium class. And 401 in economy.
And I found this noteworthy because these would be replacing ANAs domestic 777-300s. And
notice how I didn't say 777-300ER, because these are I believe the non-ER version of the
777-300, which is quite a rare breed these days. But those have 514 seats while this will have
429. That's a pretty dramatic drop in capacity.
But just super interesting to see a 787 of that size dedicated catered to domestic operations.
And the Japanese Airlines have already had other 787s. I think both the 8 and 9 and various
domestic configurations. But a -10 only doing domestic flights, that's not exactly what Boeing
had in mind for the aircraft. But it'll sure fit the bill.
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[0:55:13] IP: Yeah. I mean, same with the 747s. I mean, they had the domestic 747. I mean,
why not?
[0:55:21] JR: The 747-400D. The 400 that didn't have winglets. It was operating system short
flights. They didn't even bother putting winglets on it, which is just weird. Weird looking.
[0:55:32] JR: I'm looking at ANAs fleet history. And ANA calls the 747-400 the Techno Jumbo.
And I've never heard it called that before. And that's interesting to me.
[0:55:43] JR: Well, Japanese Airlines and especially trained companies, they love naming their
rolling stock in fleets. They just can't get enough –
[0:55:51] IP: I'm all for it.
[0:55:51] JR: I love it. I am here for it. I wish United or, really, American would start calling its
aircraft like luxury liners again because that's just – well, probably false advertising. Because
the economy is not exactly a luxury liner status anymore. But it would be great if we could have
the Astrojet name back or something along those lines. But the Japanese Airlines and rail
companies never stopped naming their vehicles.
[0:56:16] IP: ANAs 747SR, which was the model developed for the Japanese domestic market
originally, was the Super Jumbo. So then, when they brought the 400 in, they called it the
Techno Jumbo.
[0:56:28] JR: Oh, of course. Yeah. Yeah. Yeah.
[0:56:31] IP: Today, I learned. See? We're a full-service podcast here.
[0:56:34] JR: Yeah. Not all of their aircraft their special names, unfortunately. The 747 domestic
really seemed to have a special place in their heart because nothing else in recent history had
any sort of fancy name like the 763, A320, A777-200. They just call them as they are. But the
7400 Techno Jumbo, that's a name.
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[0:56:56] IP: I know. Okay. Let's talk about an aircraft that no one really particularly cares for,
and especially not the German government these days. What's going on with their A340s?
[0:57:06] JR: Nothing good in particular. The German government had a pair, or at least these
days had a pair of A340-300s. I believe were brought on after being retired from Lufthansa, they
were state-owned aircraft for VIP movements. And these days, they are getting along in the
tooth. And there was a pair of incidents where one had repeated issue that resulted in
diversions back to the origin, which is really kind of just embarrassing for a global powerhouse
such as Germany.
And as we speak, they are replacing these aircraft with the much newer Airbus A350. But they
said, because of these recent issues, they are accelerating the timeline to retire the stately
A340-300 within the next couple weeks actually.
[0:57:54] IP: We're done with this aircraft. Get them out.
[0:57:56] JR: We're done with it. We can't rely on these anymore. And I get it. You can't have
head-of-state aircraft that don't work. You'd never ever hear of something like that with Air Force
One or the aircraft operating primarily as Air Force One. Because they always have at least one
ready to go. I believe both of them should be ready to go at any point. But, of course, you have
to do maintenance on one while the other one operates.
But, yeah. Looking back at the history, the A340 in general, especially the 300, enjoyed quite a
bit of use as head-of-state aircraft not just in Germany, but in a number of governments
operated the A340 series simply because of its excellent range and redundancy of four engines.
[0:58:41] IP: And still do. I mean, the A340-500 is still in service with multiple heads of state.
[0:58:47] JR: I think Kuwait is the most recent one that they put theirs into service only probably
five or six years ago. That thing is brand-new. It is still quite a popular aircraft. But not the 300
variant. That one is on its last legs.
[0:59:01] IP: No one loves the A340-300.
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[0:59:03] JR: Bring back the 200.
[0:59:06] IP: Speaking of airlines that have the A340 in, they bring back the 200. I used to set –
I could set a clock, a late clock, but a clock nonetheless, by the Royal Jordanian A340-200
departing O'Hare each night. I mean, the sound that that thing make.
[0:59:25] JR: It didn't look right. But I enjoyed it because of how much it did not look right.
[0:59:30] IP: Airlines that have the 340 that are still doing things and who might again do things
with the A340. South African Airways is bringing back some code shares on the road to
recovery. I'm confused at the – why?
[0:59:47] JR: I mean, why not? Mostly because South Africa Airways stopped flying long-haul
entirely. Only recently resumed not even leaving the continent just yet. I believe they'll be flying
to South America rather soon. But they were a major player in Star Alliance. If you wanted to get
two or from the African continent, there was a good chance you were – and if you were a Star
Alliance partner, that you were going to end up on South African Airways. But through its
bankruptcy and through its major, major issues, most of their code share agreements were
suspended.
But the Lufthansa group is back on the table. And it's just good to see some connectivity
brought back to a continent and really the country of South Africa that just really, really lost its
conductivity especially through COVID with the collapse of its one major airline. But this is good
because it brings connectivity back through the Frankfurt and, sooner or later, the Zurich hub for
Swiss. And it'll be much easier to not just get to South Africa, but connect onward within the
country. Not having those code shares makes booking those flights quite annoying, let's say.
[1:00:52] IP: Fair enough. Fair enough.
[1:00:54] JR: Yeah. It's a rebound with a once very prosperous airline.
[1:00:56] IP: Yeah. I love a good rebound. You know who's feeling good right now though?
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[1:01:00] JR: Who.
[1:01:01] IP: American Airlines pilots.
[1:01:03] JR: Oh, man. They are happy. I mean, they were very angry up until recently. But
that's how Union negotiations go. They always seem like it will matter and more dramatic than
they actually are or need to be. But American Air and its pilot Union, APA, agreed to a massive
pay boost of more than, Americans says, 9 billion of compensation and quality of life benefits.
Well, the union, it says is an average range of more than 21%. But when you average in annual
raises and 401K increases, more like 46% by the end of the 48-month contract. That is a lot of
extra cash.
[1:01:44] IP: That is absolutely a lot of extra cash.
[1:01:47] JR: And it's only a four-year contract. We're going to be doing all this over again in
four years where the Union's going to act all angry and mad that Americans – American is the
worst. That its CEO is an evil genius. And I don't know. They're real happy right now. But that's
going to be an industry trendsetter, I think? I mean, didn't we just talk about this recently where
America are –
[1:02:06] IP: No. I mean, American is part of the agreement. American had – I forget exactly
what they termed it. But it's basically when Delta ratified their contract, American Pilots got that
bump up to what the Delta pilots got. And I think United has a similar thing. I mean, the three
majorist majors have done well for themselves as far as the pilots' unions are concerned. We'll
see how that goes with the flight attendant unions as they continue to work through their labor
negotiations. On the flip side of things, although this doesn't really affect the actual airline, the
virtual airline, Redway, is done. They called it quits.
[1:02:47] JR: It didn't take long.
[1:02:49] IP: It did not take long at all. I mean, when we talked about this initially, this was the
airline. Redway was the virtual airline operated by GlobalX that was going to be based or was
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based for 38 seconds in Lincoln, Nebraska and was going to fly to warm weather destinations
and other regional destinations.
And it just – they did some initial calculations and thought they had a market there. And as it
turns out, no. You don't have enough market in Lincoln, Nebraska to base an airline.
[1:03:22] JR: Yeah, that's not terribly surprising. But I guess it's surprising that this all came
tumbling down rather quickly. Much quicker than I would have expected it to.
[1:03:31] IP: Yeah, especially in a summer that's been the summer of summers for airlines.
[1:03:39] JR: As we talked about, not domestically.
[1:03:41] IP: Yeah. That's true. That's true.
[1:03:42] JR: Maybe if they flew to London or Paris, they would have been successful.
[1:03:47] IP: Oh, maybe. Maybe. And Jason, we closed the show with news this week that
speaking, I guess, of international travel. North Korea's Air Koryo has resumed international
flights for the first time since March of 2020. One of their Tupolev Tu-204 aircraft flew to and
from Beijing this week.
[1:04:15] JR: Wow. I mean, I'm not going to say COVID is over because I'm not sure that's ever
going to be a thing. But this certainly is an indication that we are done pretending that COVID is
hampering in any way international travel. Because North Korea has been totally shut off from
the outside world for the better part of three years now. And this is its first international flight.
Looking back at the data, there's actually been some flights dating back in 2022 of the two
Tupolev Tu-204s at least domestically inside North Korea. Not sure what they were doing. But
this is the first time that they've resumed flights to Beijing, which was really I think the only
destination that the North Korean Airline ever really flew to in recent history.
[1:05:01] IP: Yeah. For a while in 2019 and early 2020, they were flying to Vladivostok.
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[1:05:06] JR: Ah, interesting.
[1:05:08] IP: Because, as you do. But Beijing was really the one place that they could reliably
send their passenger aircraft.
[1:05:17] JR: Yep. We'll see if this becomes a regular thing. Because they did have a fight
schedule in the past. This was almost certainly a one-off operation this time. But we'll keep an
eye on it and see if this becomes a more regular thing. Because, man, if that's not an indication
that the world is returning to normal, I don't know what is.
[1:05:38] IP: Which is in and of itself a statement of such oddness and strange ways that I think
we would need an entire episode to parse that.
[1:05:46] JR: Oh, yes.
[1:05:47] IP: But I think Jason's right. I hope everyone enjoyed this episode. I mean, we started
with some breaking news that happened before we recorded, which is unusual. But it happens
from time to time. And our interview with Charles Duncan, I hope everyone very much enjoyed,
because we very much enjoyed talking with him. And we always – the best interviews are the
ones where, one, people are interested in what they're talking about. And, two, you can tell that
they want to share that with other people. And I think he ticked both boxes. I'm really glad that
we got to speak with him.
This has been episode 230 of AvTalk. I am Ian Petchenik. Here as always with –
[1:06:24] JR: Jason Rabinowitz. Thanks for listening.
[END]
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