Saturday, April 12, 2008

Airlines in trouble 2: American

American's troubles right now are more of a "oops, we'd better take all these planes out the sky and check they work properly before gravity does it for us" nature. This is the "sorry" they sent round after grounding thousands of flights last week:

As one of our most valued customers, please accept my apology on behalf of American Airlines® to you, your family and your fellow AAdvantage® customers for disrupting so many peoples' lives with the recent flight cancellations related to the inspection of our MD-80 aircraft fleet.

As you can imagine, American's decision to cancel thousands of flights this week was difficult, and it undoubtedly created concern among our best customers – even those who had no travel plans during the period.

If in your travels you were among the many who have been personally affected, I sincerely regret the inconvenience you have experienced. Our employees will continue to work around the clock to accommodate all who still need to reach their desired destinations. We anticipate returning to a full schedule by Monday.

While the media reports have documented the reasons why American took this action and the steps we're taking to re-accommodate and compensate affected customers, I've also attached an explanation of the events for your understanding. It's a bit complex, but at the end of it all, please know this:

First, your safety and the safety of our employees remains our number one priority.

Second, we will learn from this experience, and we will get better.

Finally, we wholeheartedly appreciate your loyalty to American Airlines, and we remain committed to earning your business each and every day.

Respectfully,

Dan Garton
Executive Vice President
Marketing

P.S. You may have already contacted us via AA.com® or by writing directly to Customer Relations. Let me reassure you that we will respond directly to your contact just as quickly as practical.


American Airlines MD-80 Fleet Inspections

Background: : In 2004, American Airlines was the lead airline working with Boeing to develop a Service Bulletin to correct wiring exposure and chafing in the MD-80 auxiliary hydraulic pump wire bundle. The concern was that exposure and chafing could cause fire in the wheel well. An Airworthiness Directive (AD) was issued in September 2006, giving MD-80 operators, including American, 18 months to address this issue. American completed the Service Bulletin in November 2006, followed by adjustments deemed necessary by American's structural engineers to comply with the AD well ahead of a March 2008 deadline.

In recent weeks the Federal Aviation Administration significantly increased its emphasis on monitoring the adherence to Airworthiness Directives that apply to various U.S. airlines. With respect to American Airlines' MD-80 fleet, we had a detailed issue that we believed had to be addressed immediately to remain compliant with the FAA; if found in non-compliance, we would have been instructed to stop flying our airplanes.

What is the specific nature of the issue?
The issue surrounds questions raised by the FAA about the way American implemented the Engineering Change Order (ECO) addressing the MD-80 auxiliary pump wiring Airworthiness Directive (AD). American fixed the item well within the specified AD timeframe. The work being done now centers on a need to change the way in which American complied with the AD regarding such items as the spacing of the ties on the wiring bundles and the direction of the retention clips and lacing cords. We are highly confident that this is not a safety of flight issue because the wire bundle is secure. It is a matter of how the work was done, not whether aircraft were protected from the threat of wire exposure and chafing that could cause fire.

Why ground the entire MD-80 fleet?
It became clear based on the number of questions the FAA raised that there would be a high percentage of aircraft that would not be found to be in full compliance of the Airworthiness Directive. Working with the FAA we were unable to find an alternative solution to regaining compliance – for example, a multi-day period to rectify the issues – so we had no choice but to ground the aircraft. While it has been a major disruption to AA's operation, everyone recognizes the need to ensure that the MD-80 fleet is in complete compliance and is working to restore the MD-80s back to service as quickly as possible.

Who is completing the work and why is it taking longer than the previous MD-80 inspections?
There are three levels of American employees accomplishing the work. American has assigned a team of employees – aviation maintenance technicians, quality assurance inspectors, and engineers – to inspect the aircraft and ensure full technical compliance, as well as to make any additional adjustments. As our aircraft return to service, the FAA is inspecting those aircraft to ensure compliance.

What is the airline doing for customers?
We are doing everything possible to take care of our customers as expeditiously as possible while facing the fact that our resources have been stretched to their limits. We are extremely sorry for the inconvenience and know that this kind of interruption of travel plans is unacceptable. While customers are dislocated we are providing meals, hotels and ground transportation; for those stranded overnight, we will offer vouchers for future travel on American Airlines. Customers who were inconvenienced with overnight stays can go to AA.com where a link will guide them to instructions on how to receive compensation.

What is the company doing to make sure it doesn't happen again?
American plans to contract with an independent third party to review American's compliance processes. This work will help ensure that all procedures strictly adhere to the technical elements of every directive so American can avoid this type of schedule disruption in the future.

Airlines in trouble 1: Frontier

It's not been a good week for airlines, what with a couple giving up together, and Frontier filing Chapter 11.

Oddly, the filing was prompted because their main credit card processing company had started to withhold funds from customers; presumably, with the airline's share price tanking and the selling-off of planes the credit card business was looking to stock up some dollars to refund anyone caught if the airline went down. Yes, of course, the withholding of funds made it more likely the airline would fall out of business in the first place, but I think we've all learned that banks don't quite know what they're doing any more.

This is the "don't panic" letter Frontier have sent to frequent flying customers:

ear EarlyReturns® Member,

As you may know, Frontier Airlines voluntarily filed to reorganize under Chapter 11 of the U.S. Bankruptcy Code. Frontier is committed to delivering exceptional customer service and we intend to continue delivering on that promise with normal operations throughout our reorganization process. Our 6,000 employees look forward to serving you.

Your travel plans are secure - We are operating our existing schedule of flights - today and in the future - honoring tickets and reservations as usual, and making normal refunds and exchanges. You can count on Frontier, along with our codeshare partners, as we connect you through our Denver hub to 66 destinations in the U.S., Canada, Mexico and Costa Rica.

Your EarlyReturns® miles are secure - Our EarlyReturns® program is unaffected, and you can continue to enjoy the program's benefits, including the opportunity to earn and redeem miles on Frontier and AirTran flights. You can also continue to earn miles using the Frontier World MasterCard®, our new Frontier BusinessCard, or through our many other EarlyReturns® partners. All of our other award-winning customer service programs remain in place.

Frontier took this action following an unexpected attempt by our principal credit card processor to substantially increase a "hold-back" of customer receipts, which threatened to severely impact our liquidity. Frontier will now have the time and legal protection necessary to obtain additional financing and enhance our liquidity. We currently have adequate cash on hand to meet our operating needs while we take steps to further strengthen our company. You can learn more about our reorganization by visiting www.frontierairlines.com/restructure.

We are very proud of Frontier's focus on customer service and safety. Our mainline operation has one of the youngest Airbus fleets in North America and offers 24 channels of DIRECTV® service in every seatback along with a comfortable all coach configuration. Our commitment to safety is proven by our maintenance team's receipt of its unprecedented 9th FAA Diamond Award for safety training of 100% of our maintenance employees. We look forward to providing you with great service in the safest environment for years to come.

All of us on the Frontier team of aviation professionals appreciate your loyalty to our airline and the opportunity to serve you. Thank you for choosing Frontier Airlines.
Sincerely,

Sean Menke
President and CEO

We're only a little alarmed to discover that training all of your engineers in safety is considered worth an award.