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Reading the Fine Print: Southwest Taking a Page from the AirTran Playbook

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Wanna get Southwest to begin service to your city? Wanna write a check?

If some of you are scratching your heads over the news that Southwest Airlines is going to start service from “Northwest Florida’s New International Airport near Panama City, Florida” in May 2010, all one needs to do is take a look at the fine print in an SEC filing from the St. Joe Company — a major land developer in the Florida panhandle.

According to St. Joe’s SEC filing dated today, $14 million in revenue guarantees, profit sharing, and a no-compete agreement are just some of the “enticements” being put on the table for Southwest.

Is this AirTran or Southwest we’re talking about?

“St. Joe has agreed, to the extent that Southwest operates at a loss, to make quarterly cash payments to Southwest to cover shortfalls in the results of Southwest’s operations at the new airport during the first three years of service. For purposes of the break even calculation, the agreement establishes fixed amounts for Southwest’s non-fuel expenses and the minimum revenues that will be attributable to the air service. It also provides that Southwest’s profits from the air service during the term of the agreement will be shared with St. Joe up to the maximum amount of St. Joe’s prior break even payments.

The term of the agreement extends for a period of three years after the commencement of Southwest’s air service at the new airport. The agreement may be terminated by St. Joe if the payments to Southwest exceed $14 million in the first year of air service, or $12 million in the second year of air service. St. Joe may also terminate the agreement if Southwest has not commenced air service to the new airport within 90 days of its opening. Southwest may terminate the agreement if its actual annual revenues attributable to the air service at the new airport are less than certain minimum annual amounts established in the agreement.
Southwest’s obligation to commence air service to the new airport is conditioned upon: (1) the certification of the new airport by the Federal Aviation Administration and the Transportation Security Administration on or before April 15, 2010; (2) receipt by the local Airport Authority of a certificate of occupancy for the new airport on or before April 15, 2010; (3) the execution of satisfactory agreements between Southwest and the Airport Authority authorizing Southwest to use and lease space at the new airport and to receive any cost mitigation measures that may be available from the Airport Authority; (4) the execution of an agreement between Southwest, the Bay County Tourist Development Council, the Panama City Beach Convention and Visitors Bureau and the Beaches of South Walton Tourist Development Council, no later than 30 days from the date of the agreement, regarding the coordination of marketing resources and efforts for the air service; (5) the execution of an agreement between Southwest and Coastal Vision 3000, no later than 60 days from the date of the agreement, regarding the establishment of a program through which Southwest would receive available room nights free of charge at various rental properties in Northwest Florida for use in the marketing efforts for the air service; and (6) the execution of any other agreement that Southwest deems necessary or appropriate prior to the commencement of the air service.

Southwest has agreed that it will not commence air service to any airport within 80 statute miles of the new airport during the term of the agreement. In the event Southwest starts service to any airport that is more than 80 statute miles but within 120 statute miles from the new airport during the term, Southwest and St. Joe will either negotiate a modification to the terms of the agreement to accommodate the impact of such service or the minimum revenues used in the annual break even calculations under the agreement will automatically be increased by 10%. In such event, Southwest has agreed that the air service to the new airport in Bay County would not be diminished.”

Coyotes, Jessica Simpson and Me

I didn’t really plan on not posting any other posts this week.

It’s just that I couldn’t write for a couple of days.

During a two day span earlier this week, my little family at the PlaneBusiness Worldwide Headquarters was pretty much decimated.

I’ll spare you the gory and painful details.

But on Sunday morning I lost the love of my life.

His name was Max.

And he was the most handsome cat you ever saw. Not only that — but Max had one great friggin’ attitude. He actually bounced when he walked. Some might have called it a swagger. He had muscles, he was strong. He was sleek. I often considered writing a children’s book about Max and how he conquered Manhattan.

I could just see him with a top hat, striding down Fifth Avenue.

Max had style.

It didn’t matter how he sat. Or how he lay on the ground. He always had the perfect look. The perfect pose.

All black, with just a little slight white patch on his tummy, his eyes were gold, and he had one heck of a vertical leap.

But aside from his outstanding physical characteristics, Max and I were hopelessly in love. We had been, ever since his mother had brought him up from under the house I had just moved into back in 2001, dropped him on the front porch, and then looked up at me as if to say, “Okay, here you go. I trust you to take it from here.”

And I did. From the time he, all of him, including his tail, could fit curled in one hand.

Over the years Max brought me an assortment of presents. Some alive. Some already dead. Some in-between and in need of rescue. And every time he did, he would do so with tail straight up in the air, with that little hook at the top. All with that same bounce in his step. Only more so. And a different voice. It was his, “Hey Mom, look what I have for you!” voice.

He especially liked to bring me snakes.

Two weeks ago, it was a rat.

Thankfully the rat was smart enough to play dead long enough so I could grab him in a towel and get him back out the door, while at the same time I had to make sure Max was locked up in the office so he couldn’t go back out and repeat the process. Thankfully, said rat, who apparently understood the process, came to his senses out on the back deck and got the hell out of dodge.

When he wasn’t bringing me presents, he was curled up next to my head. Or licking my ears and purring. When I underwent surgery a few years ago and was bed-bound for weeks, he would curl up next to me every day — and never leave.

Then there were the business trips. Every time I traveled, Max got depressed.

I mean seriously depressed.

His most manipulative (and effective) trick was to simply lay out fully on the bed, with his head hanging down off the side of it. He would be, of course, next to the suitcase. The overall effect was nothing short of devastating.

He wouldn’t even pick his head up to acknowledge my presence.

This would go on for hours while I packed.

That night, he would then sleep on the suitcase.

The next morning, when I left, he would get under the bed and refuse to say goodbye.

Every trip, it was always the same routine.

Unfortunately, last Sunday morning, Max was taken. Violently. And neither of us got to say goodbye.

I can’t write about it except to say that because of where I live, no animal stays outside after dark. I know that there are too many predators in my environs. Coyotes are only one possible threat.

That’s okay. My cats spend every night inside. Actually Mom spends most of her time inside anyway, Ernesto would spend his time either in the house or in the back yard. Max was the only one that would go out, check his territory and then come back for a snack and a nap before repeating the process in the afternoon.

Sunday morning I was up early, as I wanted to get PlaneBusiness Banter finished and posted on Sunday.

The days are getting shorter.

Because I was up about 6:20 or so, it was still not fully light outside. That fact never even registered in my mind.

All cats and dogs were fed.

Meanwhile, I went out and got the Sunday paper, put on the water for coffee, and Max was, by this time, done with his breakfast. I open the door and let him out.

That was the last time I saw him alive.

I know what happened. I know what did it.

All day Sunday I was on edge. I kept going out and calling for Max. I knew something was terribly wrong. Max was a cat with a schedule. He never just “wandered off.”

As the day wore on, it became harder and harder to write. I became more and more upset.

Monday afternoon I found out what had happened. After I had posted PBB.

But it gets worse.

Monday night, the house was, no surprise, in lock-down mode.

All animals were inside by 6.

I was a basket case.

Tuesday morning, I feed my two remaining kitties. Momma Kitty, who has now lost the love of her life, and Ernesto. That morning it was not dark outside. It was about 8:30. The dog had already been out. The kids were waiting for the bus down the street. People were walking their dogs outside.

Ernesto had finished his marinated tuna and was sitting at the door. I went outside and looked around. I looked behind the little storage hut in the back yard. I looked down the private drive that runs behind our house. The one that shoots over to the lake.

I didn’t see anything.

I let Ernesto out.

I put the water on for some coffee. I go outside and get the paper. (Creature of habit, aren’t I?)

I go into the bathroom.

I am not in there but 2 or 3 minutes before I hear the dog start going crazy. She comes banging into the bathroom, whining.

I say something to the effect of, “What is YOUR problem?” She just won’t stop.

I walk out into the kitchen, let her out the door, and she makes a frantic dash to the back corner of the yard.

I then, in a split second before I even looked, knew what I was going to see.

Ernesto was gone.

While Ernesto was not the love of my life, I felt a particular closeness to him. He had the most perfectly beautiful blue eyes. His coat was magnificent as well — a kind of buff color with little ginger color points on his ears. He also had little freckles on his nose. Little brownish color points on an all-pink background.

Ernesto showed up at the back door one night, years ago. He was skinny, dirty, full of fleas, and was licking the bar b-q grill on the patio. He was also very scared of humans.

Over about a six month period Ernesto bit me about 6-7 times. But I kept working with him, because it was clear he was a very good cat. He had just been abused.

Little did I know — those humans lived right across the street.

Yes, I guess you could say that Ernesto just decided that he had gone through enough, and he finally decided to leave home because of it. This prompted a little “child custody” tiff that erupted one afternoon with the drunken boyfriend of the young lady who supposedly “owned” the cat. But the tensions eventually died down and Ernesto was, once and for all, a formal member of the household.

Ernesto’s funniest trait was that he drooled. The happier he was, the more he would drool. And purr. And drool. And purr.

Like I said, I can’t go into the details. I also don’t want to talk about how the coyote’s turf is being intruded upon. I don’t want to talk about how this is just Mother Nature in action either.

I don’t want to talk about how it just feels so empty. How it feels like somebody grabbed a piece of my insides and threw it away.

I don’t want to talk about how Momma Kitty is grieving. She goes to where Max used to sleep and just sits and looks at me. She goes outside to where he liked to lay in the sun. And she just sits. And waits. She threw up her food for three days.

I sure as hell don’t want to talk about how guilty I feel.

If only I hadn’t…if only I hadn’t gotten up so early, if only I hadn’t moved into this house, if only ….

Wednesday I did think about teaching myself how to shoot a shotgun.

I figured I could stay up all night, about 25 feet from a piece of fresh meat, suspended from the tree in the backyard.

And when this animal, which is larger than a large german shepherd, decided to jump into my backyard again — that would be the last time he jumped anywhere.

Nah, I’d probably miss him and shoot out my neighbor’s windows instead. Or my neighbor.

It just hurts.

A lot.

I miss them terribly. They were my family.

The weirdest thing about this week? I never thought I’d ever be accused of having anything in common with the Tony Romo-less Jessica Simpson.

But yesterday, as I stood at the grocery store and read the tabloid headlines about how she had just lost her dog to a coyote, I could certainly relate. Perhaps I need to write her a note.

Having said that, I wish I didn’t know how she felt at all.

And that instead, I could have just glanced at the headlines in passing — as I pulled out my Tom Thumb card, paid for my groceries, come home, and once again been able to ask Max about his day, watched as he and Momma Kitty staged one of their “mock boxing” matches, marveled at how Ernesto’s coat was already bulking up for cooler temperatures, and enjoyed a quiet normal night.

Never again.

Glenn Tilton Just Lost His Next Job

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It was not much of a secret that United Airlines Chairman and CEO Glenn Tilton had been treading water for much of the last year, while he awaited the opportunity to be handed his next dream job — the CEO of the 2016 Summer Olympics in Chicago.

That is, if the city were awarded the Summer Olympics.

Too bad for Glenn.

It was just announced that the International Olympic Committee has chose Rio de Janeiro for the site of the 2016 Summer games.

By popular demand, I repost what has to be one our favorite shots of Mr. Tilton from the archives, as he explains, well, I’m not sure what he is trying to explain. Make up your own caption.

PlaneBusiness Banter Now Posted

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Subscribers can access the latest issue of PlaneBusiness Banter here.

This week I talk a lot about The BeatLive Conference that I attended last week. No, not about what I talked about during the luncheon presentation – no, more about what everybody else talked about.

I’ll follow-up with another column in next week’s issue with more topics from the conference.

So what were some of those things we were talking about in Austin that those of us in the industry need to think about?

Well, I’m not giving all my secrets away. For that you can pay for a subscription!

But this week I concentrate on the industry problem that nobody likes to talk about — the aging mainframe IT structures that most of the major carriers are will working with, around, or in spite of.

It is ironic that this industry, which actually led the way in terms of computer technology in the ’80s, has now, for the most part, fallen hopelessly behind.

Speaking of — in regard to those airlines out there which are charging bag fees — can your internal system tell you how much in bag fees each flight on each route is generating?

Yeah, I thought so.

Other things we’re talking about this week are Morgan Stanley analyst’s Bill Greene’s research note of last week. In it, Bill explains how the ugly process of stock dilution takes place and how it distorts any “historical” analysis of airline stocks prices today.

But having said that, UBS analyst Kevin Crissey upgraded all the major airline stocks last week.

Meanwhile Fitch Ratings came out with their usual quarterly review of the industry. We talk about what they had to say about the usual suspects as well.

Former American Airlines CEO Bob Crandall was on Capitol Hill this last week — testifying on behalf of the proposed passenger rights bill. Yes, you read that correctly.

JAL/AMR? The nightmare continues. For both airlines. For different reasons.

All of this, including my latest trip report in which I experience something special in the air, and more, in this week’s issue of PlaneBusiness Banter.

I Now Remember Why I Hate MD-80s…

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It’s those damn seats.

I just flew on American this week to Austin and back. Short flights. Really short flights.

But even so, I was reminded of how positively uncomfortable those seats are on an MD-80. At least for someone who has had hip surgery. And hey, probably for everybody else as well.

Crowded, cramped, and a rather low seat placement with funky back support. That’s what it was like.

Ugh.

Of course the flight down to Austin was not helped at all by the fact that the airline refused to hook up the APU and the inside temperature of the aircraft had to be close to 90 degrees. Or more. My ability to put up with a hot aircraft at the gate is very limited to begin with, but this experience was brutal. Especially since, because no one wants to pay to check their bag on American, it seems that everyone drags aboard bags the size of small refrigerators and then tries to cram them in the overheads. This takes time. Lots and lots of time.

Made me think of that goofball Richard Simmons. Here I was, “Sweatin’ on an Oldie.”

Okay. I’ve re-upped my American AAdvantage miles account. Paltry as it is.

But you know what? It’s going to be a long time before I get on another one of those airplanes.

What can I say? Ever since I had that great education in “passenger space” and what makes a good airline seat and what doesn’t when I visited the Boeing Customer Experience Center with David Longridge and Kent Craver showing me the ropes (or rather all the different types of seating configurations) — I now know it’s not just seat pitch.

And boy — did that lesson come back to bite me in the butt yesterday.

Literally.

And TheBeat Goes On…

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Hello earthlings. How is everyone today?

I myself am just peachy. I returned yesterday from a nice two day jaunt to Austin, TX., where I was honored to have been asked to give the luncheon keynote presentation at TheBeat Live Conference.

If you are involved in corporate travel, if you need to interact with a GDS system on a regular basis, if corporate airline contracts make you dizzy with frustration, if the thought of migrating your airline’s computer system to a new version keeps you up at night — or any combination of the above — TheBeat should be required reading for you. (This link takes you to their blog, the publication is subscription only, just like PlaneBusiness Banter.

TheBeat was begun several years ago by Jay Campbell, who was a reporter for years with Business Travel News. Jay and I go way back. Waaaaay back.

The cool thing about Jay and David Jonas and Mary Ann McNulty and the rest of the gang who now work under the Promedia umbrella is that they have the same irreverent attitude towards this lovely and oh-so-entertaining industry as I do.

As a result, a gathering of Beat subscribers is very much like what a gathering of the PlaneBusiness Banter subscriber base would be. Lots of opinions, lots of in-your-face discussions, and a really worthwhile way to spend a couple of days.

So — what was the topic of my presentation this year? “Liquidity, Leverage and Labor.” I think that is pretty much self-explanatory.

What is one thing that I learned from attending this year’s conference? Amadeus is not sparing any expense as they greatly expand their presence in the United States. On a number of different levels.

Needless to say, the question of whether the GDS systems are worth it, are becoming irrelevant, or need to change into something completely different was a major topic both officially and unofficially.

The state of corporate contracts with airlines — a hot topic. The issue of just who is going to pay for the ever-escalating cost of “look to book” ratios in terms of accessing travel information online — a hot topic. The effect of individuals now being able to control their entire travel experience in the palm of their hand, thanks to the iPhone and more than 2000 travel-related applications available for that iPhone?

The general consensus is that we really haven’t even scratched the surface on how this is going to massively change the way travel is both managed and consumed.

Oh yes, which leads to another big area of change — control of travel and its expenses from a corporation perspective. Who has it, who is losing it, and who is taking it.

Oh and the procurement method of purchasing travel? If your company is still doing it — you need a new CFO. And if your CFO is the one in charge of authorizing travel, you need a new CEO.

More in this week’s PlaneBusiness Banter on the conference.

PlaneBusiness Banter Now Posted

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This week’s issue of PlaneBusiness Banter is now posted. Subscribers can access this week’s issue here.

What are we talking about this week?

Obviously we’re talking about the huge financial deal that American Airlines announced last week. We have all the details of the liquidity boost — but in my column this week I ask the question — why did the airline wait so long to go public with the deal? I think the answer is obvious — union/management politics.

And that is not a good thing for shareholders.

Southwest CEO Gary Kelly said Friday that it now looks like Southwest may post a profit for the year. 60 days ago that was not the case.

Oh, and all those headlines last week about Southwest targeting international destinations? Take a deep breath and a huge dose of reality.

Airline stocks had another good week last week, led by AMR, which picked up almost 30% on its liquidity news.

On the not-so-good news front, jet fuel prices were up last week as the crack spread jumped up almost 70%. Yikes.

Spirit got whacked by a record-breaking DOT fine last week. Just exactly did the airline do? Or not do?

And the der Fuhrer is back! This week’s Hitler YouTube parody takes on American Airlines’ management. Who’s next? United?

All this and more — in this week’s issue of PBB.

Dave Carroll’s “Truly Inspired” ‘United Breaks Guitars’ Sequel

As one of our readers said in a note to me today, “A truly inspired sequel, with higher production values!”

Yes, Dave Carroll is back.

You know Dave. The man who grabbed more than five million sets of eyeballs to YouTube with his original hit, “United Breaks Guitars.”

Yes, well, Dave’s back.

This time with the promised part two of this his three part trilogy thrashing United Airlines for first, damaging his beloved guitar, 2) the airline’s subsequent refusal to pay for the damage.

This second effort takes a pot shot directly at the United Airlines employee who Dave dealt directly with as he tried to get the airline to do the right thing — Ms. Irlweg.

He serenades the caustic United supervisor who denied his claim back in 2008 by singing, “Oh, Ms. Irlweg, we don’t need to fight. We could be best buddies, but our relationship has been muddied by a flawed United Airlines policy.”

Dave’s second effort is not as catchy as the first, but as our reader noted, “Be sure to watch for special guests Glenn Tilton, Miss Almighty Dollar and their body guards. Also, watch to the very end (after the song ends)!”

I think the tuba is the best part.

Here you go!