USA TODAY: Today in the Sky with Ben Mutzabaugh

What changes will we see as a result of Continental's decision to partner with United and the Star Alliance? That's the subject of a question-and-answer page run by the Houston Chronicle this weekend. In the Q&A, the paper answers questions posed by its readers. The first question: "When is the earliest you foresee this new alliance going into effect, in terms of frequent-flier mileage accrual?"

The Chronicle's answer: "Probably at least a year. As it stands now, Continental is still a member of SkyTeam and, until further notice, OnePass frequent flier members can continue to earn and redeem miles on SkyTeam carriers. Continental says the precise timing is out of its control because it relies on regulatory approvals and the termination of some contractual relationships, including its existing agreements with SkyTeam members that restrict its participation in another alliance."

Another question from the Chronicle's Q&A provides an interesting look not only at the potential Continental-United tie-up, but also at how two other airlines handle some of the details of their partnership. That answer comes from readers' questions about how United and Continental, which currently have different baggage-fee policies (United charges for a first checked bag, Continental does not), might address such a difference.

The Chronicle says "even in an alliance, partners remain competitors and often have different prices and different fees." But the Chronicle also looks at American's partnership with Alaska Air as an example, noting that American charges a fee for a first checked bag while Alaska does not. The paper writes Alaska Air "spokesman Paul McElroy said in cases in which a flight involves both carriers, the fee is charged based on which plane the passengers board first. In other words, flying from Austin to Seattle using both carriers, a passenger would pay the fee on the initial American leg before switching to Alaska in Los Angeles. Coming back, the passenger would not pay the fee boarding Alaska, even though the homebound leg would be on American."

Check out the full Houston Chronicle Q&A to see what other questions were addressed.

A day after Continental announced its intention to partner with United and defect from the SkyTeam frequent-flier group to the Star Alliance, the story remains a hot topic in the airline industry. Here's what the newspapers in each of the airlines hometown have to say about the news:

The Chicago Tribune (free registration) says "the alliance is an important victory for United Chief Executive Glenn Tilton, whose reputation as a dealmaker appeared tarnished after merger discussions with three carriers, one of them Continental, didn't result in a deal. It also signals that the Chicago-based carrier is positioned to be a survivor in the shakeout that lies ahead for U.S. carriers if oil prices remain at current levels, analysts said." The paper adds the deal "will bring most of the benefits of a merger, analysts said, without the mess and high costs of merging disparate workforces."

Robert Mann, president of aviation consulting firm R.W. Mann & Co., tells the Tribune: "Importantly, this gets (the airlines) an even more attractive end-to-end global network." The paper also notes that if Continental and United are successful in a bid for antitrust immunity, they could begin to work more closely with fellow Star Alliance partners Lufthansa and Air Canada on trans-Atlantic routes. The Tribune says: "If they receive the blessings from U.S. and European regulators, the four carriers could closely collaborate on scheduling, marketing and even the type of aircraft used on a given route. Such arrangements typically involving sharing expenses among partners and divvying up the profits that accrue from linking carriers as well as new markets."

Still, the Tribune says the United-Continental alliance could take some time to consummate, writing that it 'isn't likely to take effect for at least a year. Continental must wait for Delta and Northwest to complete their merger, triggering a provision that will free Continental from its SkyTeam contract. Continental must also give nine months notice before it exits."

The Houston Chronicle adds: "Nothing changes for the time being … . It could take at least a year for Houston-based Continental to get regulatory approvals and extricate itself from existing alliances with Sky-Team and Delta and Northwest airlines, which are prospective merger partners." Carl Tobias, a professor at the University of Richmond School of Law, tells the Chronicle: "I don't think it is going to be terribly difficult compared to a merger. It seems conceivable they may be able to get some agreement in principle out of the antitrust folks before the Bush administration leaves office."

And, one sign of good news for the airlines' management teams, the Chronicle notes "Continental's pilots union was cautiously optimistic. Capt. Jay Pierce, head of the local, said the deal could allow the company to receive the benefit of a merger without the hassle." Pierce tells the Chronicle: "To that extent, we are pleased."

As for US Airways' continued role in Star Alliance, the Chronicle suggests that could become unclear. "US Airways, which has its own code-share ticketing arrangement with United, was not mentioned in Thursday's news release other than being listed as a Star Alliance member," the Chronicle notes. Consultant Mann tells the paper: "There will be a question as Continental and United try to get a full network code-share domestically whether the DOT will still permit the existing US Airways and United code-share to stay in place."

For more perspective from United's hometown, check out the full version of the Chicago Tribune (free registration) story. And for the view from Continental's hometown of Houston, check out the full Houston Chronicle story.

Continental is set to shake up the frequent-flier world with news that it will defect from the SkyTeam frequent-flier alliance in favor of a partnership with United and the Star Alliance group. Still, any change could take some time to complete. In a filing with the Securities and Exchange Commission, Continental says: "We expect that this transition period will last at least a year, although it could last longer." Read below for more details from the carrier's press release.

(RELATED: See reaction from US Airway | FROM AP: Continental,United join to fight rising fuel costs).

In a press release Continental says it and "United Airlines today announced a framework agreement to cooperate extensively, linking their networks and services worldwide to the benefit of customers, and creating revenue opportunities and cost savings and other efficiencies. In addition, Continental plans to join United in the Star Alliance, the most comprehensive airline alliance in the world."

" 'Continental's plan to partner with United and join the Star Alliance will provide substantial new opportunities for all of our customers,' said Larry Kellner, chairman and CEO of Continental. 'In a network business, there is significant value gained from linking with larger networks to provide truly national coverage and expanded global reach, and exploring new ways to reduce costs and improve efficiencies. As we experience some of the most challenging conditions airlines have ever faced, we look forward to the benefits of a new relationship with United and the other Star Alliance members.' "

"Teams from the two organizations worked intensively over the last several weeks exploring creative solutions for how the two companies could achieve efficiencies and synergies that expand beyond the well-established benefits of codesharing. Their work focused on plans for significant cooperation on frequent flier programs, lounges, facility utilization, information technology and procurement. This work was assisted by the efficiency opportunities identified and relationships developed during the parties' earlier merger discussions."

Continental says the CEOs of both Continental and United "are meeting in Chicago this afternoon to sign a framework agreement outlining the systemwide alliance and cooperation principles between their carriers."

Stay tuned for more details ...

A firestorm of protest erupted from many fliers last month after American announced it would begin charging non-elite customers $15 to check their first bag for most coach-class tickets within North America. Quickly, industry observers began wondering out loud if other airlines would match the fee. Finally, about three weeks after AA, United and US Airways both matched the fee. With that, three legacy carriers and one low-cost carrier -– Spirit, which was the first to add such a fee –- had moved to charge a fee for even one checked bag. But, conversely, that also left most discount airlines and three legacy carriers –- Continental, Delta and Northwest -– still allowing fliers to check their first bag for free.

That's unusual says TheStreet.com's Ted Reed, who writes airlines "typically … act in concert when imposing new charges or higher ticket prices, fearing the competitive impact if one carrier charges more than another." And, he adds that "with the industry so clearly split, it remains questionable whether the charge will stick." Aviation consultant Robert Mann tells Reed: "Some of the carriers may have decided this is the one thing that drives customers over the edge, towards choosing someone else."

Reed adds carriers that have not yet adopted the fee may also fear that doing so would lead to the "unintended consequences" of turning flight attendants into luggage enforcers while creating a surge of carry-on bags that could cause both delays and exasperation for customers. Of course, there could be other reasons airlines are not adopting the fees. Delta and Northwest, for example, "may be reluctant to implement an unpopular charge at a time when they are seeking regulatory approval for a merger," Reed writes. And AirTran CEO Bob Fornaro says adding a first-checked bag fee at his airline would put it in the "uncomfortable" position of competing with Atlanta rival Delta, which so far does not charge for that.

Still, with oil costs pushing airlines closer to the financial brink, all revenue-generating options are being considered. Mike Flores, president of the US Airways chapter of the Association of Flight Attendants, tells Reed: "US Airways thinks fewer people will book away if we charge a $15 fee for the first bag than if we raise our fare by $15." While it may be too early to tell if that's the case or not, many passengers are airing their frustrations over the new fees.

"It would be better to charge more for the ticket than to make us start paying for everything else," AA customer Tim Artz is quoted as telling The Tennessean while waiting for a flight at Nashville International Airport earlier this week . "The way they're doing it, we feel like we're being taken for a ride," he adds. Still, the airlines say the rapid run-up in fuel costs makes such fees necessary. "Our fuel expense is going to be about $2 billion higher for 2008 than it was last year," Derrick Proffitt, AA's Nashville station manager, tells the Tennessean. "We're providing a service for less than it costs us, and not many businesses can afford to do that for very long." Still, even AA CEO Gerard Arpey acknowledges "we've certainly taken a little bit of flack about the $15 for the first bag."

J.D. Power released its latest airline quality survey today, and it showed fliers' opinion of airline customer-service has taken a nosedive. Citing the results, CNN/Dow Jones writes that "deteriorating airline customer service has helped drive flier satisfaction to its lowest level in three years, … and for many it has become an even bigger concern than higher airfares and additional fees. … The study found that customer dissatisfaction with the helpfulness and courtesy of flight staff, gate agents and crew was twice as large as dissatisfaction with pricing."

"Across the airline experience, from check-in, to the flight, to deplaning, passengers are being affected by the ramifications of carriers making staff cutbacks and have expressed that performance and attitudes of airline staff are suffering," Sam Thanawalla, director of the global hospitality and travel practice at J.D. Power and Associates, says in a statement. The survey looked at fliers' satisfaction levels for both "traditional network" and "low-cost" airlines. CNN/Money says the airlines were evaluated on the following criteria: In-flight services; aircraft; boarding, deplaning and baggage claim; and the reservation and check-in process.

As for the top airlines in the survey, JetBlue was named the top carrier -– both overall and in the low-cost category. Continental and Alaska Airlines tied for the top spot among traditional network carriers. "While nearly all of the carriers in both segments experience declines in satisfaction since 2007, Alaska Airlines has managed to improve, particularly in satisfaction with the overall check-in experience," says J.D. Powers' Thanawalla. "Alaska Airlines and Air Canada are the only two carriers that improve overall in 2008, which is a particularly impressive feat in the current volatile industry environment."

At the opposite end of the spectrum, United and Northwest tied for the bottom spot, both overall and among traditional carriers. AirTran was tabbed with the lowest satisfaction rate of the four low-cost carriers examined. Still, AirTran's score of 707 (out of a possible 1,000) in the J.D. Power survey would have placed it at the top of the traditional carrier category, where Continental and Alaska each earned top scores of 684. The Rocky Mountain News notes "the study includes opinions from nearly 20,000 passengers who flew over a 12-month period ending in March."

Today's talker: What do you think of airline surveys like this one? Are the results reliable? Do they reflect your recent experiences with the airlines? Tell us what you think.

Some airline industry union officials are calling for the government to consider at least partially re-regulating the industry. Speaking about Continental Airlines' just-detailed capacity cuts, "the International Association of Machinists and Aerospace Workers said Continental's cuts are indicative of a broken air travel system," the Houston Chronicle writes.

"The cities that are going to be losing service as a result of Continental's cuts are casualties of an unregulated airline industry," union spokesman Joe Tiberi tells the Chronicle. "Airlines cannot be profitable and competitive without government regulation. And until the government intervenes, additional communities will lose service as our air transportation system becomes dismantled." He says his union has been pushing for limited regulation of the industry "for some time," the Chronicle writes. That union represents about 11,000 flight attendants at Continental.

Meanwhile, the International Brotherhood of Teamsters that represents Continental's mechanics says it is trying to work with Congress to tame oil speculation. Union spokeswoman Leslie Miller tells the Chronicle her union believes speculation has helped spark the dramatic run up in fuel costs. "These cuts (by Continental) are difficult, but we understand that airlines just can't operate successfully with the price of oil being so high," Miller says to the paper.

"If you were planning a fall trip to Reno on Continental Airlines, you might want to consider an earlier flight. Like July or August." That's how Continental's hometown newspaper -– the Houston Chronicle –-leads off its story about the airline's hefty flight cutbacks, which includes the end of service to 15 of the airline's destination. The paper notes that many of the dropped flights by Continental involve those operated by regional jets. "Between the end of 2007 and now, the cost of flying the 50-seaters has gone up almost 50%," aviation analyst Michael Boyd tells the paper.

USA TODAY uses numbers to put Continental's cuts at its hubs in perspective, saying the airline's "number of daily departures will slip to about 170 a day from the current 200" at Cleveland. Its "large hub in Houston, the carrier's hometown, will see capacity drop almost 8% and the number of departures fall to about 560 from the current 640 a day," USA TODAY adds. "But capacity at its hub at Newark's Liberty Airport, where it is increasing service on routes to Europe where the chance of earning profits is much greater, will decline just 3.2%."

"They (Continental) can't afford to be competing for passengers right now, so if it's not a profitable route, it needs to be dropped,'' CreditSights analyst Roger King tells Bloomberg News. "There's a lot of overhead just to have a presence in a city.''

The Cleveland Plain Dealer says that "to make the decision (about cuts), Continental sorted its U.S. flights by profitability and whether destinations could be reached through connecting service. Airlines use sophisticated mapping systems that calculate to the penny what they make on routes. The flights to be cut were as little as 31% full. Carriers may take into account the potential for profitability if a flight isn't making money yet. But with today's fuel situation, the patience for developing young routes -- like those Continental announced in September -- may be thin," the paper writes.

INTERACTIVE MAP: Airline cutbacks ripple across the USA
MORE ON AIRLINE CUTS: The USA's air-travel map is shrinking fast

Oakland, Reno, Palm Springs and Cologne will be among the 15 cities that Continental is ending service to as part of its recently announced capacity cuts. The other stations that Continental will be closing are: Denpasar (Bali) Indonesia; Cali, Colombia; Chattanooga; Green Bay, Wis.; Guayaquil, Ecuador; Monclova, Mexico; Montgomery, Ala.; Santiago, Dominican Republic; Sarasota, Fla.; Tallahassee and Toledo, Ohio.

Continental also says in a press release that it "will be reducing frequencies in certain markets and will also discontinue service" on a number of routes from its hubs. Below are the routes being dropped by Continental.

From Houston Intercontinental: Cali; Chattanooga; Guayaquil; Hartford, Conn.; Monclova; Montgomery; Oakland; Palm Springs; Reno; Sarasota; Tallahassee and Washington Dulles.

From Newark Liberty: Albuquerque, N.M.; Cologne; Santiago, Dominican Republic; Sarasota; Salt Lake City;, San Jose, Calif.; and Tucson.

From Cleveland: Austin, Texas; Birmingham, Ala.; Charleston, S.C.; Charleston, W. Va.; Cincinnati; Des Moines; Detroit; Green Bay; Greensboro; Lexington, Ky.; Little Rock; Memphis; Nashville; Norfolk, Va.; Oklahoma City; Omaha, Neb.; Ottawa, Canada; San Antonio; San Diego;    Sarasota; Savannah, Ga.; Toledo; Tulsa and Washington Dulles.

From Guam: Denpasar (Bali) Indonesia.

Continental announced this morning the details of capacity reductions that the company announced last week. Guam will be Continental's hub hit with the biggest reduction -- a 21.5% decrease in available seat miles (ASMs, a common industry measure of capacity) between the fourth quarter of 2008 as compared to the same quarter in 2007. Cleveland will see the second-biggest cut, with a 13.1% decrease in ASMs. Continental will trim ASMs at Houston Bush Intercontinental by 7.9% and at Newark Liberty by 3.2%.

Stay tuned for specific information on discontinued routes.

Twelve of the nation’s 15 most-chronically delayed flights were operated by American Airlines or its regional subsidiary in April, the latest month for what data is available from the Department of Transportation's Air Travel Consumer Report (page 14). AA Flight 1555 from Miami to San Juan arrived late 96.7% of the time it flew in April, arriving late by an average of 84 minutes. The second- and third-most-frequently delayed flights were operated by Delta regional partner SkyWest. Flight 3678 (Salt Lake City to Hailey/Sun Valley, Idaho) was late 95%. SkyWest Flight 3732 (Hailey/Sun Valley  to Salt Lake City) also was late 95% of the time.

The next 10 flights on most-frequently delayed list all were operated by American. Rounding out the top five: AA Flight 1212 (Seattle to Dallas/Fort Worth), late 90% of the time by an average of 55 minutes; AA Flight 1147 (Dallas/Fort Worth to Seattle), late 87.5% of the time by an average of 37 minutes; and AA Flight 1639 (New York JFK to San Juan), late 83.3% of the time by an average of 37 minutes.

April, of course, was a month in which American was dogged by an MD-80 inspection snafu that ultimately forced the airline to cancel more than 3,000 flights.

Read below for a list of the 25 most-frequently delayed flights for April.

Rank-flight info
1. AA Flight 1555 (Miami to San Juan, late 96.7% of the time by an average of 84 minutes)
2. Delta partner SkyWest Flight 3678 (Salt Lake City to Hailey/Sun Valley, Idaho; 95%; NA)
3. Delta partner SkyWest Flight (Hailey/Sun Valley to Salt Lake City; 95%; NA)
4. AA Flight 1212 (Dallas/Fort Worth to Seattle; late 90%; 55 minutes)
5. AA Flight 1147 (Seattle to Dallas/Fort Worth; late 87.5%; 37 minutes)
6. AA Flight 1212 (New York JFK to San Juan; late 83.3%; 106 minutes)
7. AA Flight 1148 (Miami to New York JFK; late 83.3%; 41 minutes)
8. AA Flight 1236 (Miami to Orlando; late 83.3%; 39 minutes)
9. AA Flight 350 (Chicago O’Hare to LaGuardia; late 83.3%; 36 minutes)
10. AA Flight 1551 (LaGuardia to Nashville; late 80.8%; 56 minutes)
11. AA Flight 791 (LaGuardia to Dallas/Fort Worth; late 80.8%; 47 minutes)
12. AA Flight 742 (Dallas/Fort Worth to LaGuardia; late 80.8%; 42 minutes)
13. AA Flight 618 (Dallas/Fort Worth to LaGuardia; late 80%; 61 minutes)
14. Continental partner ExpressJet Flight 2465 (Newark to Norfolk; late 80%; 38 minutes)
15. AA affiliate Flight 4649 (Newark to Raleigh/Durham; late 80%; 33 minutes)

Continental has become the latest big airline to announce sweeping cutbacks, saying it will eliminate 3,000 jobs and reduce flight capacity by 11% during the fourth quarter of this year. The company cited record fuel costs and a "crisis" in the industry, according to USA TODAY. The carrier said it will take 67 aircraft out of mainline service. Continental will provide details of the cuts by the end of next week.

As part of the cuts, Continental CEO Larry Kellner and president Jeff Smisek "have declined their salaries for the remainder of the year and have declined any payment under the annual incentive program for 2008," the airline says in a press release. Continental says Kellner and Smisek are doing so "in recognition of the crisis and its effect on their co-workers."

"The airline industry is in a crisis. Its business model doesn't work with the current price of fuel and the existing level of capacity in the marketplace," Kellner and Smisek write in a letter to employees that the airline released publicly today. "We need to make changes in response."

With the airline's moves the Houston Chronicle notes that Continental will "eliminate the 737-300 from its lineup. As of now, the carrier said it continues to take delivery of 16 more-efficient next-generation Boeing 737-800s and 737-900ERs this year and 18 more next year."As for the shake-up, Continental joins other big U.S. airlines that have announced dramatic changes as fuel costs continue to soar. Reuters notes that "on Tuesday, UAL's United Airlines announced plans to slash jobs and flights, following a similar move by AMR's American Airlines last month."

RELATED ITEM: The full text of Continental's letter to employees

Continental has expanded its "paperless boarding pass" system, The Associated Press reports. "Boarding passes that Continental e-mails to passengers' cell phones and other handheld devices will display an encrypted bar code along with passenger and flight information. Transportation Security Administration officials will use handheld scanners to validate the passes," AP writes. Continental's program, which began last year in Houston, is now also available at Newark Liberty, Boston and Washington National. Customers using the system must being traveling to a domestic destination, AP says.

Meanwhile, the Atlanta Business Chronicle writes that "Northwest Airlines is testing a paperless boarding pass that will let fliers use mobile phones to board their plane." The publication says NWA was scheduled to debut the service, called the E-Boarding Pass, yesterday in Indianapolis."

Federal officials are investigating after a Continental pilot told air traffic controllers he saw an object he described as a rocket fly past his cockpit window while his flight was about eight miles away from Houston's George Bush Intercontinental Airport, the Houston Chronicle reports. The paper says both the Federal Aviation Administration and the Federal Bureau of Investigation are looking into the incident, which happened around 11:30 a.m. ET on Monday.

"We don't know for sure what the object was. But we think it might be somebody doing model rocketing," FAA spokesman Roland Herwig tells the Chronicle. "The pilot saw the rocket and some people saw the rocket's trail (of smoke)." The Associated Press writes the Houston-to-Cleveland flight "was never in danger and landed safely, said Scott Wilson, a spokesman for the FBI's Cleveland office."

Continental today launches what it says is the first-ever nonstop flight between Cleveland and Paris' Charles de Gaulle Airport. The seasonal service is scheduled to operate through Sept. 1. Continental will fly the route using Boeing 757 jets with 16 seats in business class and 159 in coach. Continental also flies one other trans-Atlantic route from its Cleveland hub, offering seasonal service to London Gatwick.

The Plain Dealer of Cleveland writes "the Paris flight has the potential to be much more successful than the London flight, primarily because of the many connections available at Charles de Gaulle International Airport, the primary hub for Air France, a Continental partner, said Dallas-based airline analyst John La Costa." The paper adds the new Cleveland-Paris flight could also "attract a following from trans-Atlantic travelers in cities other than Cleveland."  La Costa tells the Plain Dealer that "this could be an exceptional European connection for people in the Midwest. If I lived in Louisville or Indianapolis or Kansas City, I don't know why I'd want to fly to Detroit or New York" for connections to Paris.

United CEO Glenn Tilton has offered US Airways chief Doug Parker the opportunity to be "a top contender to succeed him" if the carriers merge, the Financial Times  writes. The paper cites "people familiar with the matter." During the preliminary merger talks between Tilton and Parker, the Times says Tilton "has drawn parallels with JPMorgan Chase’s 2004 acquisition of Bank One." In that deal, JPMorgan Chase's CEO stayed, but the younger "deal-savvy" Bank One CEO was appointed "as his top lieutenant and presumed successor." The Bank One executive was then "ceded the job" in 2006, the Times says. 

Could such a set-up work at a combined United-US Airways? The Times says it's unclear if US Airways' Parker would be willing "to be cast as Mr. Tilton's apprentice." Citing its unnamed sources, the Times writes Parker "would not receive any contractual promises on succession," though Tilton would "give him a senior operating role and add him to the short list of potential chief executive candidates should he meet certain performance goals."

The Times also points out that although Parker is younger than Tilton, he has spent more time in aviation. The paper says United's board will meet today and is expected hear presentations from management on the possibilities for both a merger with US Airways and a possible marketing alliance with Continental (see below), which last month pulled out of its own merger talks with United.

As for a possible United-Continental alliance (see above), The Associated Press says the airlines "are talking about forming an alliance to gain some benefits of working together without going through a merger." United's talks with Continental are in addition to merger talks with US Airways, but Bloomberg News says "United will pick one of those choices or stay independent." Both AP and Bloomberg cite unnamed sources. In addition to United, Continental has conducted at least preliminary alliance talks with oneworld frequent-flier alliance members American Airlines and British Airways. United is in the Star Alliance frequent-flier group, which counts Lufthansa, US Airways and Singapore Airlines among its 20 members.

Bloomberg writes that "an alliance with U.S. antitrust immunity to collaborate on fares would provide most of the benefits of a merger while skirting regulatory challenges and the need to mesh workforces. Continental has been evaluating options since Delta Air Lines and Northwest Airlines, its partners in the SkyTeam alliance, agreed on April 14 to merge." The Houston Chronicle writes "analysts say Continental is coveted as an alliance partner in part because it is the dominant carrier in the New York City area, with about 25%market share. Continental's hub in its Houston headquarters also is viewed as a strong asset because it acts as a gateway to Latin America."

Whichever direction United decides to go –- a US Airways merger, a Continental alliance or something entirely different –- a decision may not be imminent. Bloomberg writes that while "UAL directors will discuss the options at a board meeting today," they "aren't likely to take a vote," according to Bloomberg's sources. Bloomberg adds: "All the possibilities remain under study, and the carriers aren't close to a decision, two people said." Stay tuned …

From USA TODAY's Airport Check-in column: "Jacksonville International, which is spending $170 million to renovate its 40-year-old facilities, has completed the project's first phase. Its new Concourse A, unveiled last week, is a 100-foot-wide, 570-foot-long wing that will serve some of its largest tenants, including Delta, Northwest and AirTran."

"The new concourse features 10 gates (vs. eight in the old Concourse A), a 160-foot moving walkway and new restaurants and shops, including Brooks Bros., a Budweiser-themed bar and Starbucks. 'The old Concourse A was boxy and dark. The (new building) has high, curved ceilings and a lot more natural light,' says spokeswoman Debbie Jones."

"In six months, the airport will also replace Concourse C with a new building. Current C tenants, including Southwest, Continental and American, will occupy the replacement, which will have two more gates (for a total of 10). With the two new concourses, the airport's capacity will grow to 7.2 million passengers annually, compared with 6 million prior to the latest upgrades."

The Federal Aviation Administration has skipped more than 100 recommended safety reviews at big U.S. carriers during the past few years, a recent assessment of the agency shows. The Wall Street Journal (subscription) breaks the story, writing: "The reviews in question are top-to-bottom examinations of dozens of different airline safety systems -- ranging from flight-crew training to deicing programs -- that are supposed to be completed at least once every five years. The goal is to ensure that airlines have the right systems in place to identify potential hazards and deal appropriately with any they find."

The Journal adds that "the importance of those examinations became clear earlier this year amid revelations that FAA managers allowed Southwest Airlines to fly planes that hadn't undergone mandatory structural-safety inspections."

The Journal says the lapses came to light after Sen. Patty Murray (D-Wash.), chairwoman of the Senate subcommittee overseeing FAA funding, asked acting FAA administrator Robert Sturgell last month if he knew of any other airlines that were overdue for five-year reviews. Sturgell told the Senator he was not aware of any, but promised to look into it and get back to her. He responded with his findings in a letter, which the Journal obtained a copy of. According to the Journal, Sturgell indicated that in addition to Southwest, the FAA had skipped "dozens" of five-year reviews at seven other major carriers. The paper adds that Sturgell cited "inadequate resources" in his letter.

The latest news comes as the FAA faces increasing criticism that it has been too slack in its role of monitoring and enforcing safety. Still, the Journal says "the reviews, some overdue by nine years, don't suggest imminent safety hazards are being overlooked. The focus is on whether carriers properly collect, analyze and act on operational safety data aimed at preventing accidents." US Airways, American, United, Alaska Air, Southwest, Delta, Continental and Northwest all had overdue five-year safety system checks as of April 21, according to the Journal.

British Airways acknowledged Wednesday that it is looking into "opportunities for co-operation" with U.S. carriers American and Continental, according to The Times of London. BA already has a partnership with American, though a new tie-up between those two carriers and Continental could foretell a shake-up within the global frequent-flier alliances. BA and AA are both members of the oneworld alliance, while Continental is part of SkyTeam, a rival frequent-flier group.

The Houston Chronicle says "the pending merger of Delta and Northwest airlines, which like Continental are in the SkyTeam alliance, has prompted Continental to consider going elsewhere out of concern it would be marginalized by what would become the world's largest carrier." Alternatively, Continental could consider a seat in the Star Alliance, suggests The Wall Street Journal (subscription required).

Continental announced over the weekend that it would end merger talks with United in favor of remaining a stand-alone carrier. The Associated Press says that "instead of pursuing a merger, Continental is (now) in talks with American to work together in an alliance that would not involve merging fleets and workforces." Roger King, an analyst with CreditSights, tells the Chronicle the prospect of Continental switching alliances "is a great idea. It is going to offset the Delta-Northwest-Air France deal and affords British Airways much greater distribution into the United States."

If Continental switched to oneworld, it would bring that group a greatly expanded New York-area presence. The Chronicle adds "Continental would add quite a bit to Oneworld in the Far East because it has a hub in Guam, in the South Pacific, where its Air Micronesia operation is located, (aviation consultant Bob) Mann said." Still, a proposed three-way alliance between AA, BA and Continental would likely "still require regulatory approval," AP writes. Regulators currently restrict AA and BA from full cooperation, with the Times saying that the pair "have sought antitrust immunity twice, in 1997 and 2001, but were hindered by regulators that would approve their application only if the two airlines disposed of some of their valuable landing slots at Heathrow."

However, AP suggests the March start of the "Open Skies" pact between the USA and European Union "could ease regulatory objections to a new BA-American agreement." Michael Derchin, an analyst at FTN Midwest Research Securities, tells Bloomberg News "a joint venture (between the three airlines) with antitrust immunity on a cross-border basis would be like a merger without the headaches."

Forbes.com notes Delta, Northwest and Air France-KLM already have won anti-trust exemptions on their trans-Atlantic services, but adds an AA-BA-Continental combo could find "regulatory approval harder" since the three airlines could "dominate" several key overseas routes. "Together British Airways, Continental Airlines and American Airlines accounted for 60.0% of total flight capacity from London to the United States in 2006," Forbes.com says. Still, Journal says that "for now," Continental's "hands are tied" because "existing contracts bind it to current SkyTeam partners Delta Air Lines and Northwest Airlines … until next year, said a person familiar with the matter."

Regardless, at least one airline group has already pledged to oppose any potential alliance between AA, BA and Continental. The Times writes "Sir Richard Branson, president of (BA rival) Virgin Atlantic, said that his company would 'fight tooth and nail to ensure that regulators say no way' to a three-way tie-up." Virgin Atlantic spokesman Paul Charles takes it one step farther, telling Forbes.com: "It is clear that this is the first step towards British Airways' long-term ambition of creating a merger with American Airlines." Continental currently has a frequent-flier and codeshare alliance with Virgin Atlantic. "Observers say that this would almost certainly be in jeopardy" if Continental aligned with Virgin rival BA, says the BBC.

Ricky Smith, director of Cleveland Hopkins International, predicted Continental's recently affirmed stand-alone course will bode well for the airline's service at his airport. But he also admitted concern that soaring fuel costs could force Continental to scale back its previously announced expansion plans for Cleveland. "That's what Continental's evaluating right now, how aggressively they will announce new routes out of Cleveland," Smith tells The Cleveland Plain Dealer. The paper adds that "Continental last week confirmed it is going ahead with plans for a May 22 launch of a Cleveland-Paris flight."

While Continental officially has nixed a long-rumored merger with United, the airline is acknowledging that it could bolt the SkyTeam frequent-flier group in favor of a new alliance. The New York Times (free registration) says "Continental is expected to press ahead with preliminary talks to create a three-way alliance — short of a full merger — with American Airlines and British Airways." Both AA and BA are part of the oneworld frequent-flier alliance. Reuters echoes that sentiment, quoting "a source briefed on the matter." Bloomberg News adds that Continental -- after spurning United -- "said it now will focus on a possible shift to a new global airline alliance."

"We are considering alternatives to SkyTeam as we carefully evaluate which major global alliance will be best for Continental over the long term," Continental said in Sunday's letter to employees. Meanwhile, The Wall Street Journal (subscription required) writes "Continental is seen as a prize by many in the industry. It has a powerful hub in Newark, N.J., serving Europe and the domestic market, a strong network to Latin America from its hub in Houston, a seasoned management team, good labor relations, a young, fuel-efficient fleet, and a reputation for better service than some of its peers." The Journal adds "those same qualities also make Continental an attractive partner for global airline alliances."

Continental's next steps are unclear, the Times says. Speaking about a potential pact involving AA, the paper notes "the corporate cultures of Continental and American differ significantly. American, as the nation's biggest airline until the Delta-Northwest deal is completed, is likely to want to dictate the terms under which the much-smaller Continental comes on board. At the same time, Continental's membership in the SkyTeam alliance could offer much greater reach than a deal with American and British Airways," the Times says. The Journal adds "Delta and Northwest would like to keep an independent Continental as a member of their SkyTeam global alliance, said two people familiar with the matter. But Delta and Northwest hadn't yet made a formal presentation to Continental."

Continental frequent fliers and officials in Continental's hub cities reacted positively to Sunday's news (see below) that the airline had opted pull out of merger talks and stick to a stand-alone strategy. "Oh, thank God," frequent flier Tim Connolly says to the Houston Chronicle. Connolly, a Houston-based merchant banker, tells the paper he takes more than 200 flights a year. "I fly both airlines. Continental usually has a better flying experience, and Continental's equipment is maintained better," he says.

Readers at frequent-flier website Flyertalk.com echoed that sentiment in a forum on Continental frequent-flier topics. "Best news I've heard all day," one Flyertalk member posts in the forum. Another Flyertalk member adds: "I also think this is a smart move. Things are going well for (Continental) but not so well for other airlines. Best to let those airlines die and then cherry pick the profitable assets and routes." Comments on forums at airline website airliners.net also seemed greet the news similarly. Many others at airliners.net went on to speculate on what impact Continental's decision would have on other possible mergers. 

Meanwhile, in Texas, the Chronicle writes that Continental's decision "was met with support Sunday by many Houstonians, including frequent fliers who said they are loyal to Continental." Houston Mayor Bill White was among those welcoming the news. "Houston supports the decision of Continental, one of our largest local employers," White tells the Chronicle. "We ... look forward to continuing the city's strong partnership with Continental."

That sentiment also appeared to be the case in Cleveland, where Continental has its Midwest hub, according to The Cleveland Plain Dealer. Ricky Smith, the director of Cleveland Hopkins International Airport, tells the paper the announcement "is good news, obviously. But it also reflects Continental's commitment to and success of their current business model," he adds.

Many of Continental's workers also appeared to be pleased with Continental's decision. "We are somewhat relieved," Mark Adams, a spokesman for Continental's pilots union, says to The Associated Press. "We look around at the first-quarter financials from the other legacy carriers. Do you really want to swim out to a drowning man and just get pulled down with them?" For example, AP notes that United -- Continental's presumed merger partner -- "lost $537 million in the first quarter and announced it would cut 1,100 jobs."

Today's talker: Do you think Continental made the right decision? Share your thoughts with other readers.

Photo credit: Continental planes at Houston Bush Intercontinental Airport. By David J. Phillip, AP.

"Continental Airlines' directors on Sunday opted to stick with a go-it-alone strategy at least for now, rejecting merger overtures from United Airlines to create an even larger carrier than the one that would result from the pending merger of Delta and Northwest." That's from USA TODAY, one of numerous media outlets to run stories today on the subject. Continental's top management went public with the news Sunday afternoon in a message to employees. In the message, USA TODAY says Continental CEO Larry Kellner "made it clear in his comments that Continental's management believes that it is stronger as an independent company than it would be if it merged."

"We have significant cultural, operational and financial strengths compared to the rest of the industry, and we want to protect and enhance those strengths — which we believe would be placed at risk in a merger with another carrier in today's environment," Kellner says. The Associated Press calls Continental's decision a "surprising move after weeks of growing speculation that it would join with United Airlines to create the world's biggest airline."

The New York Times (free registration) notes "Continental decided to drop the discussions after UAL announced worse-than-expected earnings, which sent shares falling last week." The Wall Street Journal (subscription required) went so far as to say that the “move was seen as a rebuke to Chicago-based UAL, which has been trying to interest Continental in a marriage for years.”

This just in this evening from The Associated Press: "Continental Airlines said Sunday it would not pursue a combination with another carrier right away, a surprising move after weeks of growing speculation that it would join with United Airlines to create the world's biggest airline. Continental Chairman and Chief Executive Lawrence Kellner said in a message to employees that the Houston-based airline was better off alone than merging. 'We have significant cultural, operational and financial strengths compared to the rest of the industry, and we want to protect and enhance those strengths — which we believe would be placed at risk in a merger with another carrier in today's environment,' Kellner told employees."

Click below on "read more" to see Continental's full press release on the letter to employees written by CEO Larry Kellner and President Jeff Smisek. And come back Monday for more details in Today in the Sky.

Continental has rolled out a new website that it says "is designed specifically to provide Continental's perspective on airline industry consolidation."

On the website -– www.co-industryconsolidation.com –- Continental says: "The proposed business combination announced by Delta and Northwest Airlines on April 14, 2008, if approved by their shareholders and government regulators, will change the competitive landscape for Continental and the entire airline industry. As we've said repeatedly for more than a year and a half, our preference has been to remain independent as long as the competitive landscape remained the same. However, the landscape is changing. We will review our strategic alternatives and make sure we remain a strong long-term competitor."

Continental closes by saying: "In this section of our website, you will find information on industry consolidation, including news releases and answers to frequently asked questions. We will add new information to this section as it arises. Please check back here regularly for more information."

Travelers flying from Houston's George Bush Intercontinental Airport will soon begin paying a $3 "passenger facility charge" (PFC) to help pay for the airport's planned $1.1 billion expansion of Terminal B. The Houston Chronicle writes "the City Council approved the 'passenger facility charge' unanimously on Wednesday. The total amount raised could be almost $400 million by 2015, according to Houston airport officials."

The $3 charge –- which will apply only to outbound flights –- could start showing up on tickets as soon as Dec. 1. The Chronicle says "more than 330 airports collect such fees, including 95 of the top 100 airports, according to the Federal Aviation Administration." Among the items included in the Terminal B project are a new central terminal, a new customs area and new concourses that could hold as many as 65 gates. Currently there are 40, the Chronicle says.

The Guardian of London writes that some Continental Airlines flights between Europe and the USA "are under scrutiny by U.S. pilots, politicians and regulators over figures showing the airline's planes ran low on fuel while approaching New York on 96 occasions last year." The paper says "the number of 'minimum fuel' declarations by Continental pilots leapt five-fold at Newark airport over the past two years, prompting criticism over the carrier's use of relatively small planes for transatlantic routes. Continental has carved out a lucrative niche in services from smaller regional airports" by using its Boeing 757 jets, the Guardian writes.

The Guardian says attention to the minimum fuel declarations were highlighted by a U.S. DOT report last week in which a federal inspector with oversight of 757s had indicated "some concern with using that aircraft type on long overseas flights because of its limited range." According to the Guardian, the report claims "these concerns were shared by air traffic controllers and by the safety chairman of the Continental Airlines' pilots union."

The Guardian writes Continental's 757s have a range of about 3,900 miles -- "which, in normal conditions, is comfortably above the 3,014 nautical miles for an average flight between London and New York." But, the paper adds "holding patterns at airports add to fuel burn and certain European destinations are more of a stretch," such as the roughly 3,300-nautical-mile flight between Barcelona and Newark. The Guardian says the DOT report shows "Continental's pilots on this route declared minimum fuel 23 times last year."

For its part, Continental points out there's a difference between a "minimum fuel" declaration and a "fuel emergency," which the Guardian says "means the pilot needs to land immediately." The paper says that, "on average, the flights that ran low had 64 minutes' fuel left -- exceeding the statutory reserve level of 45 minutes." Continental says safety was never compromised. An airline spokesman tells the Guardian: "Continental doesn't cut corners on ensuring aircraft have enough fuel. We put on ample fuel at the start of each flight, and there is a significant reserve. Safety is our top priority and flights can stop for extra fuel en route if it is necessary."

Continental Airlines will pull out of Chicago's Midway Airport as of May 31, according to The Associated Press. Continental's Continental Express affiliates offer five daily round-trip flights at Midway –- three to Cleveland and two to Newark Liberty. Both Newark and Cleveland are hubs for Continental. Continental spokeswoman Julie King tells AP soaring fuel costs had made the too unprofitable to maintain. Continental passengers with tickets on Midway flights after May 31 will be offered a refund or seats on Continental flights out of Chicago O'Hare. Continental has its biggest Chicago-area presence at O'Hare.

Continental this morning reported a loss of $80 million (81 cents a share) for the first quarter. The carrier addied it would take some older planes out of service as it said soaring fuel costs dented its earnings, The Associated Press reports. During the same quarter in 2007, Continental reported a $22 million (21 cents a share) profit. For Continental's first quarter result in 2008, Reuters says "excluding special items, the loss was 86 cents a share. Analysts on average had expected a loss of 94 cents, according to Reuters Estimates."

AP adds "the airline says it will take 14 older 737-300 planes out of service between September and April, on top of planes it has said before it would take out of service." In a press release, Continental says it "also expects to reduce regional jet capacity beginning in the fall 2008; however, its plans are fluid as it is attempting to negotiate better economics with ExpressJet, and as the CRJs (Canadair regional jets) flown for Continental by Chautauqua come off lease."

The Air Line Pilots Association (ALPA) released a statement this morning on behalf of the pilots it represents at both United and Continental. Acknowledging that many believe United and Continental will be the next airlines to announce a merger, ALPA threatens to attempt to derail plans for a merger if demands for its pilots are not met. In the statement, ALPA says: "The management teams of United and Continental must understand one hard fact: the pilots of our respective airlines will not allow any merger unless management meets or exceeds our demands to be treated fairly and equitably. Our concerns will be addressed before we ever agree to allow our airlines to merge."

"If a merger benefits airline executives, Wall Street financial groups and legal firms at the expense of pilots, other airline employees and the flying public, we will use all lawful means necessary to ensure the transaction is unsuccessful. We are not going to stand by and watch as our futures are controlled by others. Pilots on both sides of a merger must be fully involved and will play a significant role in the acceptance or rejection of an attempted merger."

Click on "read more" to see the full text of the statement.

Delta and Northwest may soon have company at the merger altar, with most of the speculation centered on a possible pairing between United and Continental. Reuters writes those two airlines "have laid most of the groundwork for a merger, two people briefed on the matter said, and could have a deal ready 'pretty quickly' if Delta Air Lines and Northwest Airlines announce a tie-up, one of them said." The Houston Chronicle echoed that sentiment with a story it posted on its website shortly after the Delta-NWA merger was announced.

The Chronicle says "it wasn't clear Monday night whether or how fast Continental would answer with a merger of its own. Continental declined comment, but noted earlier this year it had not signed a confidentiality agreement with United, a required step before any financial documents could be shared." Continental's top officials have previously said they prefer to remain a stand-alone carrier, but added they would be forced to consider merging if combinations by rivals altered the competitive landscape. CreditSights analyst Roger King tells the Chronicle that a United-Continental announcement could come "pretty quick, because they have already talked to each other." 

"Delta Air Lines and its pilots have agreed in principle on a contract that would clear the way for a merger with Northwest Airlines to create the world's largest carrier, people familiar with the talks said Thursday." That’s from Bloomberg News (via the Houston Chronicle), which says the "accord would raise pilots' pay and give them an equity stake in the combined airline, which would keep Delta's name and Atlanta headquarters, said the people, who didn't want to be identified because the plan is still private. Some terms are still being negotiated, two of the people said." Bloomberg's sources say a merger could be announced as early as next week.

The Detroit Free Press notes Delta's new contract "would cover Delta's pilots at a combined Northwest-Delta but would not include Northwest pilots. That would force Northwest pilots' union to negotiate their own agreement with the merged airline later on, after the announcement of a deal." Douglas Marshall, director of the Aviation Graduate Program at the University of North Dakota, tells the Free Press: "It's sort of a backhanded slap at the Northwest pilots. Delta's pilots are going to have more leverage. They will be in a stronger position."

Meanwhile, the report in the Chronicle says if Delta and NWA do seal a merger deal next week, "Continental Airlines and United Airlines are widely expected to announce a merger of their own to match the size of the new Delta-Northwest and American Airlines. American would slip from the world's largest carrier to No. 3." Stay tuned ...

USA TODAY's Airport Check-in column previewed a big Texas airport yesterday, writing: "Houston airport officials said they will announce Monday that the city and Continental Airlines will spend $1.2 billion in the next seven to 10 years to nearly quintuple the size of Terminal B. Terminal B, which mostly handles Continental's domestic flights, will grow to 1.7 million square feet from the current 360,000. Continental, the airport's largest tenant, is partly funding the project and will occupy most of the enlarged space for domestic and international flights."

"As part of the project, the airport's rail system will also be lengthened to cover all five terminals, and parking will be expanded.  Buoyed by Houston's burgeoning oil and gas industries, a record 52 million passengers used the airport last year. It has added seven new international destinations since the beginning of 2007."

The Houston Chronicle reports on the news following yesterday's announcement, writing: "Continental Airlines and the city of Houston will roughly split the financing of $1.2 billion in improvements to Terminal B at Bush Intercontinental Airport, officials said Monday. And passengers will pick up part of the bill. Plans call for the project, which will expand the facility from 360,000 to 1.7 million square feet and is expected to take seven to 10 years to complete, to reshape the north and south concourses and modernize the entire terminal."

Continental has joined the list of carriers that will begin charging $25 to customers checking a second bag. Continental will not charge the fee to its elite-level frequent fliers or to customers purchasing first- or business-class tickets. Customers buying full-fare coach-class tickes will also be exempt. Continental's policy -- which is similar to ones already announced by Delta, Northwest, United and US Airways -- goes into effect immediately and will apply to flights beginning May 5 for travel within USA and Canada.

Of the six traditional hub-and-spoke carriers, only American has not yet instituted a fee for a second checked bag. Regardless, the Houston Chronicle writes "experts expect it to fall in line" with its rivals. Some customers grumbled about Continental's new fee, but others took it in stride. "I can't remember the last time I checked two bags," Continental customer John Korcsmar tells The Cleveland Plain Dealer.

Continental will begin four new routes from its Cleveland hub Sunday. The new routes –- all previously announced -– will be operated by Continental Express affiliates on 50-seat regional jets. Continental will add two daily round-trip flights between Cleveland and Birmingham, Ala.; Green Bay, Wis.; and Tulsa, Okla. One daily round-trip flight will be added between Cleveland and Charleston, S.C. "The new cities are part of Continental's expansion program underway at Cleveland that adds new domestic nonstop destinations, in addition to previously announced new service to Paris, France," the carrier says in a press release. "New service from Cleveland to Greensboro, N.C., Omaha, Neb. and Savannah, Ga. began in March," the airline adds.

The president of the Pacific island nation of Palau was left stranded at Manila's airport "when he refused to be frisked before boarding a Continental Airlines flight," Reuters reports. "There must be some room for the exercise of common sense in all decisions, and there must be respect for the dignity for the highest level of government," Palau President Tommy Remengasau said in a statement following the incident. "I would have expected that the airline would honor internationally recognized protocols regarding heads of state as well as show some courtesy to our Pacific culture." Remengasau was in the Philippines on an official state visit.

Taking things a step further, The Associated Press writes the incident took "a bizarre twist" when the Continental flight that Remengasau was supposed to have boarded ended up becoming the target of a bomb threat that forced the flight to return to Manila. "Police would not say whether the two incidents might be linked," AP adds. The flight, operated by Continental subsidiary Continental Micronesia, had been scheduled to fly from Manila to the U.S. territory of Guam before continuing on to Palau. Reuters says the frisking request came "much to the dismay of the VIP party, including Philippine vice-president Noli de Castro." The Philippine government opted to pay for a private plane to ferry the president and his party back to Palau.

For those wondering, AP says Palau is "an island chain of about 200 islands, only eight of which are permanently inhabited with a total of about 20,000 people." It is about 800 miles southwest of Guam and about 500 miles east of the Philippines, according to AP.

Four tires on a Continental Boeing 737 blew out as the flight landed at Houston Bush Intercontinental Airport last night, according the Houston Chronicle. Despite reports of a fire after the landing, Continental spokeswoman Susannah Thurston tells the Chronicle: "There was no fire. It was a normal landing, no emergency evacuation." KHOU TV of Houston has video from the scene, adding that the flight from Oklahoma City was carrying 113 passengers.

"It was pretty unnerving," passenger Dabny Van Hook tells the KHOU. Another passenger, James Lester, adds: "The plane caught a crosswind or something, it came down pretty hard and everything started falling out of the ceilings." The Houston incident comes four days after "an Australia-bound jetliner carrying hundreds of passengers blew four tires while aborting takeoff late Monday night and got stranded on the runway at Los Angeles International Airport," according to The Associated Press.

Ominous statements are coming from U.S. airline CEOs as record-high jet-fuel prices begin to make a noticeable impact on operations at the nation's carriers. Delta, for example, announced last week that it would pull out of three separate markets -– Islip, N.Y.; Bellingham, Wash.; and Fargo, N.D. –- because of soaring fuel costs. Comments coming out of Atlanta from Delta CEO Richard Anderson make flight cuts sound like just the tip of the iceberg. Anderson told employees Friday that the carrier will announce changes to its business plan this week in an effort to combat the surge in fuel costs, according to The Salt Lake Tribune.

The Atlanta Journal-Constitution (free registration) writes Anderson said Delta will push ahead with previous plans to hike fares and ax unprofitable flights in an effort to remain vigilant against rising fuel costs. "However, he also indicated that the airline needs to ramp up changes to its operations to deal with rising costs," the Journal-Constitution writes, though it adds Anderson "did not specifically mention any plans for job cuts." Anderson said Delta is "working hard within the revenue environment to right size the airline to the marketplace."

But Delta's Anderson wasn't alone in striking a dour tone. Similar comments came from Northwest CEO Doug Steenland, whose airline is thought to be in stalled merger talks with Delta. Steenland is quoted in a Bloomberg News (free registration) story as saying it may be time to "rethink the size of the airline" as fuel costs begin to affect demand. Bloomberg also quotes Steenland as saying: "Higher fuel costs drive higher prices, which results in fewer passengers. We need to make sure that the size of the airline we fly reflects the lower number of passengers we expect to carry because of higher fuel costs."

Bleak comments coming out of Houston, too, where the Houston Chronicle writes
"Continental Airlines CEO Larry Kellner strongly hinted Friday that some big changes in the way the airline is operating may have to be made soon if high oil prices persist." The Chronicle quotes a recorded message to employees in which Kellner says: "We can absorb these extraordinary high fuel prices for a little while, (maybe a few months). But if these prices continue, we will have to make some tough decisions to make sure the size of our network is right for a world with fuel at such astronomical rates."

What's next? David Field, Americas editor at Airline Business magazine writes in his Left Field blog that "we'll be listening carefully" for comments tomorrow from a New York investors conference where a number of top airline executives will be speaking. Stay tuned …

Read on for today's "bonus bundle," which are quick quotes from the media involving recent aviation stories.

Airlines blast plan to fingerprint foreign fliers
From USA TODAY: "Airlines are protesting a government plan that would require them to take fingerprints of foreign travelers as they fly out of the USA, saying it could create massive lines at airport check-in counters. Congress has required that the 33 million foreigners a year coming into U.S. airports be fingerprinted when they arrive and leave the country but did not specify who should take the prints. The Homeland Security Department, which currently fingerprints foreigners coming into U.S. airports, wants airlines to be responsible for taking fingerprints as these travelers leave. The International Air Transport Association (IATA) urged the White House to kill the plan. 'This is a government function, not to be outsourced to the private sector,' said Ken Dunlap, security chief for IATA North America. Full story.

Fare hike of up to $50 appears to hold
From Bloomberg News via the St. Paul Pioneer Press (free registration): "Northwest Airlines matched United Airlines' round-trip fare increase of as much as $50, joining carriers in the fourth increase in as many weeks to cover fuel costs. Jet-fuel prices reached a record $3.47 a gallon Saturday and have surged 86% in the past year, becoming the biggest expense at many airlines." NWA became the last of the "big six" carriers to match the fare hike, initiated late last week by United." Full story.

Southwest, AA pace record year for air travel
From BusinessWeek: "U.S. airlines carried a record number of passengers in 2007 on mostly full planes, according to government data released Thursday. The airlines, which also suffered the second-worst year ever for flight delays, carried 769.4 million domestic and international passengers in 2007, a 3.3% increase from the previous year, the Transportation Department's Bureau of Transportation Statistics said. Domestic and international flights were nearly 80% full, on average. Last year also marked the first time that Southwest Airlines carried more passengers than any other U.S. airline."

The Airlines Biz blog by The Dallas Morning News (free registration) adds: "American Airlines still has the most revenue passenger miles, or paying passengers times the number of miles they flew. But Southwest Airlines carries the most actual bodies. The Bureau of Transportation Statistics says that Southwest passed American in 2007 to carry the most passengers. Delta Air Lines stayed No. 3, as did United Airlines at fourth, Northwest at fifth and Continental at sixth."

More problems for safety-plagued Indonesian carrier
From Reuters: "Indonesian budget carrier Adam Air, which has been warned about its safety standards, said on Monday that a leasing firm seized more than half its fleet after the airline defaulted on its payments. Adam Air, which like all other Indonesian airlines has been banned by the European Union because of safety concerns, was forced to cut back several scheduled flights on Monday because it did not have enough aircraft, causing delays for some passengers. 'Out of 22 planes, now we only have 10 because 12 of them have been declared in default. The other 10 have been declared in default as well, but I'm still trying to work out a way to restructure the payments,' Adam Suherman, the airline's president director, told Reuters." Full story.

While a Delta-Northwest merger remains on hold (see below), The Atlanta Journal-Constitution (free registration) says Delta "and most other carriers' shares plunged Wednesday after a Wall Street analyst predicted that soaring fuel costs will overwhelm cost savings from recent bankruptcy restructurings." JP Morgan analyst Jamie Baker issued that outlook in downgrading his ratings on several airlines, saying airlines could quickly return to the financial brink amid a recession coupled with soaring fuel costs.

"Even a best-ever recessionary demand scenario results in a $4 billion industry loss," Baker says in a report quoted by the Journal-Constitution. That outlook could increase the urgency for Delta and NWA –- and others –- to merge, says consultant Julius Maldutis of Aviation Dynamics. "These higher energy prices will make mergers even more critical at this stage, because the alternative will be revisiting Chapter 11 bankruptcies," he tells the Minneapolis Star Tribune (free registration).

On that note, the St. Paul Pioneer Press (free registration) adds it "remains unclear if the deteriorating economic conditions are putting additional pressure on the pilots to get a deal done" at Delta and NWA. The paper points out that NWA CEO Doug Steenland wrote in a memo to employees earlier this week that rising fuel prices are "a serious budget breaker. Every $1 increase in fuel equates to $42 million per year in added costs," Steenland pointed out to employees.

Baker, the author of the JP Morgan report, tells the Journal-Constitution he still expects a Delta-NWA merger to move ahead. He calculates pilots will get about $350 million in annual pay raises and other incentives if the merger is consummated. "For Northwest pilots in particular, [the merger deal] would be positive, in our view," he says. "Although labor has acted self-destructively before, we see no reason for deal derailment at this late hour."

But not everyone agrees. Minneapolis attorney Ralph Strangis represented US Airways in its proposed (but unsuccessful) merger attempt with United in 2001. He tells the Star Tribune he gives a Delta-NWA merger "no better than 50-50 odds." He adds: "In a perfect world, everybody would understand this is the right thing to do and get it done. But I'm not going to be optimistic that it will be done."

A French public prosecutor has asked court officials there to bring manslaughter charges against Continental as a result of the 2000 Concorde crash near Paris that killed 113, Reuters/Airwise reports. The prosecutor also recommended charges be filed against "a French engineer involved in the development of the now-grounded supersonic jet, the former head of France's civil aviation authority and two Continental Airlines staff," Reuters adds.

In that 2000 accident, a French inquiry had previously concluded that the Concorde crash came after the supersonic jet ran over a metal strip left on the runway by a Continental flight. The Independent of London says the inquiry found that the metal strip caused the Concorde's tire "to burst on take-off, catapulting debris through the wing." The BBC writes that among those recommended for charges is "John Taylor, the Continental mechanic who allegedly fitted the metal strip to the (Continental) DC-10, and Stanley Ford, a maintenance official from the airline." AFP says "the airline itself (also) would stand trial for involuntarily causing death and injuries." A decision on the request to bring charges is expected in the "coming weeks."

In case you missed this story from last week, the Department of Transportation has granted four airlines the rights to new routes between the USA and Colombia. The airlines getting the new flight rights: Continental (from Houston Intercontinental), Delta (New York JFK), JetBlue (Orlando) and Spirit (Fort Lauderdale). All four routes will be to the Colombian capital of Bogota. The Miami Herald (free registration) says Spirit and JetBlue will offer "the first U.S. low-cost carrier service" to Bogota. Three of the routes became available when the USA and Colombia amended their bilateral aviation agreement to add 21 weekly flights –- or the equivalent of one daily round-trip flight on three routes.

So, where did the fourth route come from? In what the South Florida Sun-Sentinel calls a "controversial move, the DOT took away from American Airlines the rights to seven of its 42 weekly flights" -- or the equivalent of one daily round-trip flight. The paper says that move came after Fort Lauderdale-based Spirit "had argued in a filing with the agency last year that some of the rights granted to American (from Miami) had gone unused for long stretches." AA is appealing the DOT's decision, though DOT decisions on new routes are rarely reversed.

The DOT also rejected US Airways' request to add service as a "new entrant" to Colombia from its Charlotte hub. The agency said demand "from the markets that would be served by the other new entrants JetBlue and Spirit is substantially greater than that from Charlotte," according to Aviation Daily. If the DOT's "tentative" decision on the routes stands, Delta would be permitted to begin service immediately while JetBlue and Spirit could begin their routes April 1. Continental would be able to begin its service Oct. 1.

Continental announced last week it is in the process of relocating all of its Continental Express regional flights at Newark Liberty Airport to Terminal A and is consolidating all of its Continental domestic mainline flights at Newark to Terminal C.

In a statement, Continental says: "During a transition period that will last until June 2008, Continental Express flights may arrive/depart at either terminal. Travelers may be required to transfer between Terminals C and A if they are making a connection at Liberty. Also, a traveler departing Liberty may need to change terminals if the flight departure gate is reassigned from one terminal to another, which can occur in the course of ordinary operations." Continental notes fliers who have not cleared security can change terminals for free on the airport's AirTrain. Those who have already cleared security can change terminals for free on shuttle buses that run between gates C-71 and A-28.

Continental on Monday begins three new routes out of its Cleveland hub, adding daily flights to Greensboro, N.C.; Omaha, Neb.; and Savannah, Ga. Service on the new routes will be operated by Continental's regional affiliates on 50-seat regional jets. In a press release, the airline says "the new cities are part of Continental's expansion program underway at Cleveland that will add 12 new domestic nonstop destinations this year, in addition to previously announced new trans-Atlantic service to Paris. Other new destinations from Cleveland will include Birmingham, Ala.; Charleston, S.C.; Green Bay, Wis.; Tulsa, Okla.; Little Rock, Ark.; Memphis, Tenn.; Lansing, Mich.; Des Moines, Iowa and Kalamazoo, Mich."

Read on for today's "bonus bundle," which are quick quotes from the media involving recent aviation stories.

Fares to Europe skyrocket
From last week's USA TODAY: "Americans flying to Europe in spring will be paying more — in some cases, a lot more — largely because of skyrocketing fuel costs. An analysis for USA TODAY of ticket sales through Sabre, the world's largest distribution system, shows that the average price paid through Jan. 31 for U.S.-Europe air travel in April or May was 6.9% higher than during the comparable periods in 2007. The analysis looked at round-trip sales regardless of fare categories. Travelers are paying those higher prices despite a 10.3% expansion of trans-Atlantic flying capacity by the airlines. Typically, when the supply of a product rises, prices rise little, if at all." For example, the lowest available fare between Minneapolis/St. Paul and Madrid is 87% higher this year than last. The full story is a good read for anyone hoping to cross the Atlantic this year.

San Francisco tackles congestion
From the San Francisco Business Times (registration required): "With San Francisco air traffic expected to hit new highs next year, SFO officials are considering plans to (shift) flights to smaller airports, charge airlines extra during busy times and increase of use fog-busting technology to land more flights in bad weather. One proposal not under consideration: additional runways. ... (As for new ideas,) the most controversial involves varying landing fees at SFO depending on the time of day. ... (Shifting) some flights to smaller Northern California airports might be another way to alleviate congestion. Officials from SFO, as part of a regional airport planning committee, are studying whether some smaller passenger planes can be redirected to airports in cities like Santa Rosa, Monterey and Stockton, said Doug Kimsey, a planning director with the Metropolitan Transportation Commission, which is coordinating the study." Full story.

AirTran CFO stepping down
From The Atlanta Journal-Constitution (free registration): "Stan Gadek, the chief financial officer for AirTran Airways, will step down April 30. A successor is being sought by the management and directors of AirTran, a low-cost carrier with a hub at Atlanta's Hartsfield-Jackson International Airport. Gadek, 56, is exploring other opportunities, AirTran spokesman Tad Hutcheson said Wednesday. Gadek is the second top-level executive to leave since Chairman and CEO Bob Fornaro took the helm from longtime CEO Joe Leonard on Nov. 1. Leonard has remained chairman of AirTran's board." Full story.

Lufthansa considers stake in possible United-Continental merger
From last week's Chicago Tribune (free registration): "Lufthansa is mulling investing in a merger between United Airlines and Continental Airlines and has discussed taking an equity stake with officials of Chicago-based United, sources said. It's a sign that the consolidation pursued by U.S. carriers is sending ripples across the Atlantic. Europe's largest airlines, enjoying stable finances and the strong euro, are seeking closer ties with their American partners as both sides prepare for a loosening this spring of trade restrictions on trans-Atlantic travel. Air France-KLM Group, a Lufthansa rival, already has indicated it would invest in a merger between Delta Air Lines and Northwest Airlines… ." Full story.

That's the headline from Fortune, where the publication's Barney Gimbel says the idea that consolidation "will solve all of the industry's woes" is far-fetched. Speaking of Delta-NWA, Gimbel writes a closer look at "the likely deal terms suggests this merger won't overcome the many problems facing airlines. In the end, we might just have a bigger company plagued by the same problems, including sky-high oil prices and powerful labor unions. Ditto for United and Continental if they too, as has been widely reported, tie the knot."

Gimbel notes "cost-cutting by flying the same amount of passengers on fewer airplanes" is one of the presumed benefits of pursuing a merger. "Delta, for instance, has nine daily flights between Nashville and its Atlanta hub. Northwest flies three times a day from Nashville to its Memphis hub. But the passengers often aren't going to either city; they're connecting to Los Angeles or Dallas or Boise. By merging, the combined carrier could, say, cut three flights and still meet demand," he writes. Gimbel says that's what motivated US Airways bid for Delta last year, with US Airways saying it could save as much as $1 billion by keeping passenger levels steady with 10% fewer flights on its schedule.

But Gimbel is concerned that that type of "belt-tightening isn't driving the Delta-Northwest talks." He cites media reports that say a merged Delta doesn't plan significant reductions to capacity, frontline jobs or even hubs. "If that remains the plan, then the combined carrier won't be able to generate more revenue through higher fares," Gimbel writes. Instead, Gimbel says the combined carrier would have to leverage its size to boost market share – both in the USA and abroad. "The problem is, size alone won't stimulate demand," Gimbel writes. "The new Delta would have to use its larger footprint to steal customers from competitors -- a tough proposition if other airlines merge too," he adds.

Gimbel says would leave the merged airline only fringe areas to reduce costs, such as cutting corporate jobs in Minnesota or combining call centers. Another wrinkle could be a deal with pilots. While such a pact may keep pilots happy and smooth the way to a merger, it could also guarantee no job cuts -– meaning the merged carrier could have a tough time reducing its fleet size or flight schedule. Gimbel's conclusion: "None of this bodes well for the airline industry." If a Delta-NWA merger comes through and sparks a wave of similar mergers, Gimbel says all we'd have left are "bigger companies flying the same routes with the same airplanes -- only now with higher labor costs. For some reason, in the airline business, people always forget that bigger doesn't mean better."

Check out the full Fortune analysis, which offers one of the better recent reads for anyone tracking the current spate merger scenarios.

Profitable and well-regarded by most industry observers, why would Continental participate in a merger instead of sticking to its present stand-alone course? "There are potential consolidations that could adversely affect our competitive position, and that could cause us to respond by attempting to engage in a separate transaction," the airline said in Securities and Exchange Commission filing, according to the Houston Chronicle. Continental pointed out that "several of our domestic competitors are continuing to increase their international capacity, including service to those destinations that we currently serve." The Chronicle says that with the filing, "Continental formally disclosed for the first time this year that it has had discussions with other airlines about mergers and strategic alternatives."

Continental announced this morning that it is adding 27 jets to an existing order with Boeing, saying it would purchase eight additional 777 and 19 new Next-Generation 737 (737NG) aircraft. In a press release, Continental says the aircraft orders give it "the flexibility to replace less efficient airplanes and to pursue growth opportunities. This new order brings Continental's total firm commitments to 111 new Boeing aircraft (25 Boeing 787s, eight Boeing 777s and 78 Boeing 737s) for delivery over the next six years." Continental says it has already taken delivery of five 737NG aircraft this year and with plans for 27 additional 737NG deliveries by the end of 2008.

Continental says it "will use the eight additional (777) aircraft announced today for long-haul international routes, such as the Newark Liberty-Shanghai route that is scheduled to start in 2009. The need for international widebodies is also driven by Continental's commencement of service to London Heathrow next month, which represents the company's largest-ever expansion into a single airport in one day." The airline will begin Heathrow service with two daily flights from both Newark Liberty and Houston Bush Intercontinental. As for the new 737s, Continental says they will provide "the flexibility to continue to grow while replacing less efficient 737 Classic aircraft, such as the company's 737-300 and 737-500 aircraft."

Cleveland's status as a hub city would likely be secure even if Continental merges with United, former Continental CEO Gordon Bethune tells The Associated Press. He points to Continental's current $50 million expansion plan for the airport as one reason why. "Cleveland must be profitable, or Continental wouldn't be expanding there," says Bethune, who led Continental from 1994 to 2004. "Why would you stop doing things that are profitable? Cleveland's probably going to be OK." Besides, he says, if a merged United-Continental wanted to streamline operations, consolidating flights and moving excess capacity to United's congested O'Hare hub may not be an option. "There might be some rationalization, but I don't see a huge shift," Bethune tells AP. "Where would you move the Cleveland traffic to? I don't see how Chicago could take much more."

Still, some suggest it's not clear just how much insight Bethune may still have about his former employer. Plus, the Houston Chronicle previews a Q&A session with Bethune by pointing out Bethune "remains involved in the industry as chairman of Aloha Airlines and a consultant who most recently advised a New York hedge fund that wants Delta Air Lines to merge with either Northwest Airlines or United Airlines." As for the Chronicle's Q&A with Bethune, the paper runs a fairly lengthy session. One of the paper's questions to Bethune is: "What company would be the dominant partner in a merger between Continental and United?" Bethune answers: "I think in fairness, nobody is going to beat (current Continental CEO) Larry Kellner. I think employees on both sides would want Kellner, and Wall Street would want Kellner."

Another interesting answer from Bethune comes when the Chronicle asks "wouldn't there also be people who get hurt by any mergers?" Bethune's response: "I think if one or two go away it would be good because there are too many. There are going to be plenty of ways to get to where you want to go. I read where some congressmen were thumping their chests over this, but where were all those people when all the companies were in bankruptcy and the creditors got screwed and the shareholders lost money? Things need to change, and sometimes that might mean canceling the second flight to International Falls, Minn. Look at the employees and shareholders and creditors who have been screwed in this industry." Check out the rest of the lively Q&A for the rest of Bethune's answers.

Earlier this year, House Transportation and Infrastructure Committee Chairman James Oberstar promised a "hell no" vote to any proposed merger between two big airlines. That, says The Wall Street Journal's Deal Journal blog (subscription required), is the sentiment that could be one of the big motivators for airlines to act fast ahead of the 2008 elections, which could change the political climate in Washington. Saying Oberstar's comments have been "ricocheting through the airline industry with menacing effect," the Journal points out "airlines also only have until Jan. 20, 2009, before the ostensibly merger-friendly Bush Administration is out the door. And the race is clearly, desperately, and somewhat capriciously on."

Indeed, now American Airlines is officially in on merger talks, if various media reports surfacing since Friday are to be believed. The Wall Street Journal (subscription required) writes that in addition to talking with United, Continental has "also discussed a potential tie-up with American Airlines parent AMR." Like nearly all merger stories so far in 2008, the Journal cites unnamed sources that it says are "familiar with the situation." Bloomberg News also cites "a person with knowledge of the matter" in saying Continental has held talks with American. Even the Financial Times (subscription required) reports on talks involving AA, though it too cites (you guessed it) "people familiar with the matter."

If true, though, "the talks mean that the five biggest U.S. airlines have all discussed consolidation as they struggle with rising fuel prices and a possible drop in travel demand," Bloomberg writes. American, meanwhile, is keeping quiet. The Dallas Morning News (free registration) says "that's typical of American –- it has remained close-mouthed about what it's thinking during the recent merger talk, although the airline has assured Wall Street that it is busily examining its options so it can be ready when and if the time comes."

Meanwhile, regarding the one airline merger that's thought to be the farthest along, The Atlanta Journal-Constitution (free registration) writes the "long-awaited merger between Delta and Northwest airlines could be announced this week." But the paper cautions even if that happens, "the marriage will be far from consummated. … Any deal would need to win the approval of the U.S. Department of Justice, which enforces antitrust law, and it must survive a political minefield. Congress and unions could apply considerable political pressure to block or shape the deal. Competitors and consumers could weigh in, too." Stay tuned ...

Continental wasn't the only carrier handing out profit-sharing checks on Valentine's Day. Delta did the same, distributing about $158 million in profit-sharing payouts to its employees, according to The Atlanta Journal-Constitution (free registration). Delta says the payouts equal about 5.5% of a typical employee's annual pay for 2007 pay. "It's the culmination of a year of really hard work," Joanne Smith, a Delta senior vice-president, tells WSB-TV of Atlanta.

The profit-sharing program was part of an incentive program established by Delta before it exited bankruptcy. The Salt Lake Tribune says Delta's payments this year are "the first profit-sharing payments in its history to 48,000 rank-and-file employees." Continental also distributed profit-sharing checks Thursday, splitting $158 million among its 45,000 workers.

Read on for today's "bonus bundle," which are quick quotes from the media involving recent aviation stories.

'Mergers could throw airlines out of formation'
That's the headline from the Houston Chronicle, which writes: "A merger between Delta Air Lines and Northwest Airlines could affect the alliance they share with Continental Airlines, the Houston company's second-in-command said Thursday. All three belong to the SkyTeam alliance, but things could change if Delta and Northwest wed, Continental President Jeff Smisek acknowledged. Smisek, who made a public appearance Thursday to help hand out some of the $158 million in profit-sharing proceeds to Continental employees, would not discuss it further. He also declined to comment on merger prospects with United Airlines. 'I am not going to comment on rumors and speculation,' he said." Full story.

Long Beach airport expansion moves ahead
From the Long Beach Press-Telegram: "An Orange County judge ruled Friday that the city of Long Beach did not violate state law when it approved an environmental report for an expansion of the Long Beach Airport terminal. (The Long Beach school district) had alleged that the report didn't fully consider the noise and air pollution impacts on area schools that could result from a possible increase in the number of flights at the airport. … In his written ruling released Friday, (Superior Court Judge Thierry Patrick) Colaw said the airport project's environmental impact report was sufficient, the terminal expansion won't affect noise and air quality, the project complies with the California Environmental Quality Act, and that no new flights will result from the expansion. ... City officials have said construction on the parking garage is expected to begin in the summer and will be finished 12 to 18 months later. Then, the two-year process of expanding the terminal would begin." Full story.

Does that voice on the airport PA system sound familiar?
From USA TODAY: "Some airports are customizing their public address messages to make themselves stand out against the general sameness of air travel and to improve communications with travelers. To accomplish the goals, airports are finding distinctive voices for the routine announcements, injecting some fun into those announcements and using celebrities for specialized messages." Noted voices include Sen. Edward Kennedy, D-Mass., at Boston Logan, Wynonna Judd at Nashville, and West Virginia Gov. Joe Manchin at Charleston’s Yeager Airport. See the full story to see what other voices you might recognize.

Meet Alaska Air's 'virtual assistant'
From earlier this month in The Seattle Times: "Tired of slogging through an airline Web site to get information? Alaska Airlines has a solution — a new virtual assistant called Jenn. Type in your question on her section of the Alaska/Horizon Air Web site and Jenn will answer immediately in a friendly voice and link you to the relevant Web page. It's much faster and more fun than searching through the Alaska/Horizon site to get your questions answered." See the full story. Or check out a review of Jenn by in John Cook's Venture Blog in the Seattle Post-Intelligencer. His review is mixed.

Photo: Country music's Lee Ann Womack is among celebs lending their voices in airport announcements. She can be heard at Nashville International Airport. 2005 photo by Robert Deutsch, USA TODAY.

That's the headline from the Chicago Tribune (free registration), which writes United "is in advanced negotiations to combine with Houston-based Continental Airlines and is poised to quickly seal a deal if Delta Air Lines and Northwest Airlines merge, a person close to the airlines said Thursday." Despite that, however, the Tribune's source says United could still opt to pursue a deal with Delta if Delta's efforts to merge with Northwest are unsuccessful. But, if United does end up with Continental, the Tribune says current Continental CEO Larry Kellner is expected to run the company and that current United CEO Glenn Tilton would likely become chairman of the new airline's board. The location of the merged airline's headquarters is undecided, but that's not expected to be a potential deal-breaker.

The Tribune adds if Continental did merger with United, it "likely would join the Star Alliance, a global marketing venture whose founders included United and Lufthansa, a source said. Continental's hub at Newark would provide the New York gateway craved by Lufthansa and other Star members, as well a sizable network of flights across the Southern United States." Tilton has been advocating a merger for United for more than a year now. But aviation consultant Michael Boyd tells The Associated Press he thinks United's interest in becoming a bigger company may have overtaken its focus on actually running its operations. "This is the airline industry, not the junior prom," he says, making a reference to United's apparent eagerness to react to a Delta deal. "Everybody doesn't need a date."

Continental announced Monday it would pay a "record" $158 million in profit sharing to its employees. Continental's 2007 payout comes after it distributed $111 million in profit sharing in 2006. "Continental said it puts into profit sharing 30% of the first $250 million of pretax income, 25% of the next $250 million, and 20% of pretax income over $500 million," The Associated Press writes. Continental said its pretax earnings totaled $566 million for 2007.

AP adds "profit-sharing formulas vary in the airline industry. The leading U.S. carrier, American Airlines, did not pay profit sharing for 2007, while others ranged from $49 million to $158 million, according to Continental." In a press release, Continental says its "profit-sharing plan is the most generous in the industry." Workers will get their profit-sharing checks this Thursday, which is Valentine's Day.

But the profit sharing isn't the only bonus for Continental workers. The Houston Business Journal (registration required) says "employees also receive cash payments for reaching on-time performance goals. In 2007, the company handed out $33 million, or about $755 per employee, for finishing near the top of carriers for on-time arrivals."

Continental "ushered in a new era for regional flying" earlier this week at its Newark Liberty hub, The Star-Ledger of Newark writes. On Monday, Continental inaugurated its new Bombardier Q400 turboprop service at Newark,  putting two of the planes into operations there. Continental's Q400 presence there will grow. The Star-Ledger says Continental's "new fleet of 15 twin turboprops are superior than regional jets because they are 33% more fuel efficient and generate less noise when they fly. They also are able to land on shorter runways because of their engine design, which enables them to land and take off on a little-used crosswind runway at Newark."

The newspaper notes the turboprop aircraft are "designated 'Q' for quiet because of a noise vibration and reduction system that makes the sound of the engines inside the cabin comparable to that of a similar-sized jet plane." The 74-seat planes will replace many of Continental's 35- and 50-seat regional jets that are now flying from Newark. The bigger seating capacity will allow Continental -- which the Star-Ledger says is the first airline in the region to order the Q400 -- to fly more passengers out of Newark without adding more aircraft. Plus, the Q400's operational flexibility will give air traffic control more options in less-than-ideal conditions at congested Newark.

Still, the Star-Ledger says the Q400 start-up "triggered a demonstration by airline pilots from Northwest Airlines, Continental, United Airlines and other carriers. The protest was organized by the Air Line Pilots Association. The pilots came out to support their colleagues, who are in difficult negotiations with Pinnacle Air Lines, the owner of Colgan Air, which is operating the new Q400 flights for Continental, said an ALPA spokeswoman." Despite the negotiation difficulties, some Colgan pilots seemed more excited about the new routes. "I've been based in Charleston, W.Va., and I can't tell you how excited I am to be moving to the big city," Sam Omair, a Colgan pilot for nearly nine years, says to the Star-Ledger.

Merger talk is again the topic du jour in aviation news. The latest news that has everyone buzzing comes from The Wall Street Journal (subscription required), which writes "merger discussions between Delta Air Lines and Northwest Airlines have picked up steam, and a deal could be announced in the next two weeks, according to people who have been briefed on the negotiations." Interestingly, a similar report a day earlier from The Atlanta Journal-Constitution (free registration) did not seem to ignite the same buzz as the report in the Journal, which picked up the story on its website yesterday afternoon. Like the Journal, the Journal-Constitution also cites only unnamed sources. The Associated Press also cites unnamed sources in saying a deal could come as early as next week.

But the merger story did seem to advance yesterday. The Houston Chronicle says a Delta-NWA merger may end up "triggering a similar response by Houston-based Continental Airlines and United Airlines." Indeed, the Journal cites "a person familiar with the situation" in writing that "preliminary talks between United Airlines parent UAL and Continental Airlines have grown more serious" as the talks between Delta and NWA press on. "It appears unlikely, however, that Continental will pursue a deal until it is fairly certain that Delta and Northwest are going to merge," The New York Times (free registration) adds.

But, if there is a Delta-NWA deal, the Journal says "the hope" at United and Continental would be to cement their deal "very near a Northwest-Delta announcement, so the two potential combinations would undergo regulatory scrutiny at the same time," the Journal's source says. "Another person with knowledge of the situation said United and Continental are poised to act quickly once another airline merger is announced," the Journal writes.

As for a Delta-NWA merger, talks were thought to have gotten hung up on how power would be shared among each side's management following a combination. But the Journal-Constitution says its sources tell it that  "talks moved forward after Northwest's board of directors pressured (NWA CEO Doug) Steenland." The Journal's Wednesday report echoed that development, saying "Mr. Steenland and the board reached agreement on his management team's potential role in the combined carrier."

Meanwhile, over at United and Continental, the Chicago Tribune (free registration) writes "egos are less of a concern in the current negotiations, sources say. (United CEO Glenn) Tilton appears more open to ceding power. And some leaders within United's powerful labor unions privately say they would welcome the chance to work with Continental managers, known for fostering healthy employee relations." Still, while all the merger talk has dominated airline news in 2008, there's still a possibility for a very anticlimactic outcome. The Journal notes Delta CEO Richard Anderson ultimately "could still tell his board he thinks Delta should remain independent," perhaps scuttling all of the latest merger maneuvering. Stay tuned …

While US Airways finished with December's top on-time rating of major carriers (see above), it finished third overall out of the 20 carriers that report data to Department of Transportation. December is the latest month for which data is available (page 4) from the DOT. Aloha Airlines finished the month as the USA's most punctual carrier, with 93% of its flights arriving on time. Hawaiian was No. 2 (92%) while US Airways (74.5%) placed third. Southwest led low-cost carriers with an on-time rating of  72.5%, placing it fourth overall. Rounding out the top ten were Delta (71.4%), Alaska Air (71.1%), AirTran (67.2%), Continental (66.4%), JetBlue (65.4%) and Delta affiliate Atlantic Southeast (64.1%).

American affiliate American Eagle had the worst mark of the 20 reporting carriers, with 53.6% of that airline's flights arriving on time for December. Northwest affiliate Pinnacle (54.6% on time) had the second-worst mark in December, followed by United (54.8%), Delta subsidiary Comair (56.2%), Frontier (57.3%) and Northwest 57.44%).

For the full-year 2007, Hawaiian Airlines turned in top rating among all 20 carriers that report data (page 5) to the Department of Transportation. Hawaiian led the pack with a 93.3% on-time rating. Rounding out the year's ten most punctual carriers were Aloha (92.3%), Southwest (80.1%), Frontier (77.6%), Delta (76.9%), AirTran (76.8%), Northwest affiliate Pinnacle (76.3%), Delta and United affiliate SkyWest (75.7%), Continental (74.3%) and ExpressJet (73.8%).

Delta affiliate Atlantic Southeast had the worst on-time rating of the 20 carriers, with 64.7% of its flights arriving within 15 minutes of schedule in 2007. Rounding out the bottom ten were Delta affiliate Comair (67.9% on time), US Airways (68.71%), American (68.74%), American affiliate American Eagle (69.1%), Northwest (69.6%), JetBlue (70.1%), United (70.3%), Alaska Air (72.4%) and regional carrier Mesa (73.1%). 

It's not just Northwest and United. Delta is also talking about a potential merger with Continental Airlines, according to TheStreet.com. Delta's talks with Continental have -- so far -- been preliminary in nature, not advancing to the same level as talks between Delta and Northwest, according to TheStreet.com, which cites "a person familiar with the situation." But for NWA, Delta's talks with that carrier reportedly have hit snags over how management would be set up if the carriers combined. If Delta is determined to seek out a merger, that could open the door for other potential partners. TheStreet.com notes "Delta bid unsuccessfully for Continental in 1998, then acknowledged it was again studying a merger effort in 2000." Other reports in the past week have speculated Delta could be talking to a handful of potential merger partners. 

Today is the last day United will give bonus miles to customers for booking flights on its website. With that, American becomes the last of the six big traditional airlines to still offer bonus miles as an incentive for fliers booking on its website. Two other big carriers -– Continental and US Airways –- also ended their online booking bonuses late last year, according to officials from those airlines. Delta ended its booking bonus this past summer while Northwest's ended more than a year ago. Officials at AA would not commit to keeping its bonus going indefinitely, but spokeswoman Marcy Letourneau tells Today in the Sky "we are the only major carrier still offering the bonus and we do currently promote it."

And it's not only traditional carriers that have cut back on their online bonuses. Discount giant Southwest previously had one of the most generous online booking bonuses, offering customers double-credit for every flight booked on its website. That essentially meant customers got one free flight for every four booked on the carrier's website. That promotion ended in 2005, though that move was eventually followed with one to extend the lifespan of Southwest frequent-flier credits to two years, up from the previous one year. There are some exceptions. JetBlue, for example, continues to offer double points for flights booked at jetblue.com.

Airlines had used the bonuses to entice customers to use their own websites instead of sites such as Orbitz or Travelocity. The costs for an airline to sell tickets on its own website are less than selling fares through other channels. But as the percentage of customers booking on the airlines' own websites has risen over the past years -- and as online travel agents have added booking fees --most airlines now say online mileage bonuses are no longer needed to draw customers to their websites.

If you thought the airlines' unpopular Saturday-night stay rules were a thing of the past, think again. They're being resuscitated by airlines looking for new ways to squeeze higher fares out of their customers, writes Ted Reed of TheStreet.com. He says American, Continental, Delta, Northwest and United have each acknowledged they've reinstated Saturday-night stay rules on at least some fares in some markets. Simply put, the rules generally require customers to stay over a Saturday night for certain fares -– usually those that are among an airline's cheapest offerings. "Airlines view the Saturday-night stay rule a method to segregate leisure travelers from business travelers, who are willing to pay more to travel because their work demands it," Reed writes.

But the move comes with a risk, some experts say. Many fliers have gotten used to less-restrictive rules. The looser rules have become more widespread over the past five years as big airlines were forced to respond to increasing competition from low-cost rivals like Southwest and JetBlue, which rarely have round-trip or minimum-stay requirements -- even for their best fares. Kevin Mitchell of the Business Travel Coalition (BTC) warns that bringing back the rule could prove to be "exhibit A in how to turn off your best customers." He tells Reed "this and some other onerous charges are what got carriers in trouble with corporate travelers in the past. Hopefully, it's a short-term act of desperation."

Not all airlines are onboard. US Airways has not re-instituted any Saturday-night stay restrictions, with company president Scott Kirby saying "I don't really see that happening across the industry." But the move is catching picking up at least some momentum at other carriers. United senior vice president John Tague is quoted by Reed as saying United is "working very hard to segment the market where we can with minimum stays, Saturday-night stays, differential pricing between airports and a number of other tactics." Reed writes "carriers who have added the restriction suggest that when applied discreetly, it's part of a move toward more sophisticated yield-management efforts." The BTC's Mitchell says he thinks airlines are adding the rule mostly "in nonstop markets where demand is stiff and there are not a lot of other choices."

Continental will add live television programming and onboard e-mail and instant messaging capabilities on some of its aircraft beginning next year, the airline announced today. The airline says it's offerings will include 36 channels of live television, The Associated Press reports. The Houston Chronicle says "first-class customers will get free access to the entertainment system, while other passengers will have to pay a $6 fee. … The service will be installed aboard Continental's new Boeing 737s and Boeing 757-300s."

Continental's service will be provided by LiveTV, "a wholly owned subsidiary of JetBlue Airways" that "has provided live television programming and other services to JetBlue since its inception," according to FLORIDA TODAY. Reuters says LiveTV will begin installing the service on about 225 Continental jets in January 2009, a process expected to take about 18 months to complete. Once done, the effort will cover "the majority of the carrier's domestic fleet," Reuters says. The news agency adds "the service will cost Continental next to nothing to start, but it will also get little in return." LiveTV CEO Nate Quigley says: "We're providing most of the capital and we're retaining most of the revenue."

Pilots at Continental say they’re planning for a merger, a move that comes as consolidation speculation heats up throughout the U.S. airline industry. Continental's pilots union leaders "say they're taking steps to look out for workers' interest in case the carrier merges with another airline," The Associated Press writes. The union says it would be happy if Continental remained a stand-alone carrier, but adds it must be prepared to look out for its members' interests if the industry experiences a shakeup.

"We will not stand idly by and allow a change in the airline landscape without taking steps to protect the interests of our pilots," says Continental pilots union chief Tom Donaldson. "The pilots of Continental must be key in the decision to welcome or reject any merger candidate." Reuters says the union is "activating its Strategic Merger and Acquisition Response Team, or 'SMART,' to take steps to protect the pilots' position in the airline. The union didn't define what those steps were." Continental and United have been the subject merger of speculation lately, a marriage seen by some to be increasingly likely if rivals Delta and Northwest reach their own deal to consolidate.

Merger speculation again appears to be the topic of the week in aviation news. The latest talk is of increased interest in a United-Continental merger, especially if talks between Delta and Northwest culminate in a combination of those two carriers. Citing "people familiar with the company's plans," the Financial Times says United "is considering a new round of talks" with Continental. Delta is currently in merger discussions with both Northwest and United, but at least one Wall Street aviation analyst expects Delta and Northwest to ultimately pursue a deal. "I think both carriers are on board,'' Ray Neidl of Calyon Securities tells Bloomberg News. "The only thing that could stop it at this point is Washington and regulators.''

A Delta-Northwest effort to merge would come despite several years of pro-consolidation talk from United CEO Glenn Tilton. Given that, the Chicago Tribune (free registration) writes "it must've been baffling for … Tilton to see Delta Air Lines CEO Richard Anderson in the spotlight as merger mania finally took hold in earnest last week." The Tribune adds if a Delta-Northwest merger does come to fruition, "analysts expect Continental Airlines and United to link up."

A deal involving Northwest would also clear up a potential merger hurdle for Continental. "Right now, Northwest Airlines has a so-called 'golden share' of … Continental, giving it power to nix virtually any merger deal involving the carrier," the Houston Chronicle writes. But, the Chronicle writes, if Northwest participates in its own deal first, then "Continental has the right to buy back the golden share for a crisp $100 bill and be free to chart its own course." Continental CEO Larry Kellner has previously said Continental is content to remain a stand-alone carrier, but that it would react if other carriers engaged in mergers that would leave Continental dwarfed by its main rivals.

Still, United and Continental have been reported to have held at least preliminary merger discussions previously during the past few years. So, what would be different now? Soaring fuel costs and the prospects of an economic downturn and a slump in air-travel demand could increase the motivation for a tie-up. But the Tribune adds previous talks may have made little progress thanks to "ego concerns, like which team would run the company." Now, the Tribune says "that's less of an obstacle this go-round, since Tilton appears more open to ceding control, say people close to United."

Photo credit: By Scott Olson, Getty Images.

Qantas apparently will seek compensation from Boeing after U.S. planemaker announced its latest delay to its 787 Dreamliner program. "Qantas said it could claim for damages in certain circumstances and would discuss the issue with Boeing in coming weeks," Reuters writes. Qantas also sought damages from Airbus as compensation for delays with the A380. Reuters writes Japanese carrier ANA –- the launch customer for the 787 –- will not seek compensation, though Air Transport World says ANA "is assessing the delay's effect on its expansion plans and will speak with Boeing regarding late fees once that analysis is completed."

The Wall Street Journal (subscription required) writes that "in a terse statement Thursday, a spokesman for All Nippon Airways (ANA) … described the delay as 'deeply regrettable.' The spokesman said All Nippon was only formally informed overnight that it will have to wait until early 2009 for the aircraft." Boeing's delays are also causing consternation among U.S. carriers. Northwest and Continental had both hoped to use the 787 on key routes to Asia, including on lucrative China flights. Continental CEO Larry Kellner says the airline will now have to pull planes of other routes to start its newest China route in 2009. Northwest had expected to receive its first 787 in August, but now will not fly one until at least mid-2009.

Continental Airlines posted a pre-tax profit of $71 million during the fourth quarter. The airline had "better-than-expected revenue of $3.52 billion," according to The Associated Press. Continental cited higher fares and profits from more international flights for helping it offset quickly rising fuel costs. Reuters writes "Continental did not report a net profit figure because it said it had not yet finalized a special non-cash charge it expected to take in the fourth quarter. The company said Wednesday it expects that charge — related mainly to changes in pension plan calculations — to be between $70 million and $140 million."

"Excluding previously disclosed one-time items, the company said the pretax profit was $24 million versus a loss of $4 million in the 2006 period," AP writes. Reuters writes "Continental said fourth-quarter operating revenue rose 12% to $3.52 billion, boosted by a 27.5% jump in trans-Atlantic passenger revenue. Wall Street analysts, on average, expected Continental to post revenue of $3.51 billion, according to Reuters Estimates."

Reuters adds Continental's result comes as "U.S. carriers are trying to rescue a fledgling recovery, which is threatened by record fuel prices and a slowing economy." AA parent AMR announced a fourth-quarter loss yesterday, noting its fuel costs surged 29%. But Reuters says "Continental is benefiting from aggressive expansion into lucrative international markets and said demand is still robust enough to allow it to raise fares to offset its higher fuel bill, which jumped 32% in the fourth quarter." In a regulatory filing from Thursday, Continental says "the company has been able to recapture a portion of the rising cost of fuel through increased fares."

Merger speculation is swirling again today, and Delta's back in the middle of the rumor mill. The Wall Street Journal (subscription required) writes on its website today that Delta's directors "on Friday will be asked to permit the airline's new chief executive, Richard Anderson, to begin formal merger discussions with both Northwest Airlines and UAL, parent of United Airlines, with the idea that Delta ultimately will choose between the two, according to people familiar with the matter." The publication claims Delta already has had "exploratory conversations" with both airlines and with Continental. For the latter, the Journal cites another unnamed source that it says has "knowledge of the situation."

The Journal says Delta's board's options are to approve the request, approve talks with only one carrier, defer while more information is gathered, or decline the request altogether. The Journal says "if Delta does embark on a two-track evaluation process with United and Northwest, that could force Continental onto the merger dance floor to avoid being left behind, according to several people familiar with the situation. Continental has repeatedly rebuffed earlier efforts by United to form a combination," the paper writes.

Delta already has been at the forefront of merger speculation today. The company's stock has soared more than 13% "following renewed speculation that the nation's No. 3 carrier may be close to inking a deal to combine with another airline," The Associated Press writes. Just yesterday, the head of Delta's pilots union –- Lee Moak -– wrote in a letter to members that "consolidation may indeed be at our door." The Atlanta Journal-Constitution (free registration) says Moak acknowledged in the letter that "we have been hearing about 'inevitable consolidation' for many years," but added "it is becoming increasingly difficult to discount these facts and other recent events as simply more rhetoric." Stay tuned ...

Of the nation's seven most-frequently delayed flights, all involved a New York City airport and half involved a flight flying under the Continental logo. Continental affiliate ExpressJet Flight 2979 was the most-frequently delayed flight in November, the latest month for which federal data is available. Flight 2979 from Hartford to Newark Liberty arrived on time just 11.54% of the time in November, according to the Bureau of Transportation Statistics.

Rounding out the month's most-frequently delayed flights were: Continental Flight 1532 from Houston Bush to New York LaGuardia (on-time 12.5% of the time); Continental affiliate ExpressJet Flight 2076 from Newark Liberty to Indianapolis (14.81%); United affiliate Mesa Flight 7462 from Washington Dulles to New York LaGuardia (14.81%); American Flight 350 from Chicago O'Hare to New York LaGuardia (16.67%); American Flight 1497 from Newark Liberty to Chicago O'Hare (16.67%); and Continental affiliate ExpressJet Flight 2717 from Newark Liberty to St. Louis (16.67%).

That all seven of the nation's most-frequently delayed flights involved a New York City-area airport should not come as a big surprise. Among the 32 biggest airports, New York LaGuardia ranked last for on-time arrivals (53.5% arrived on time). Newark Liberty ranked 31st out of the 32 with a 60.9% on-time rating. And New York JFK ranked 29th of the 32 biggest airports in November with a 73.4% on-time rating. At the other end of the spectrum, Salt Lake City led all airports with an 88.5% on-time rating. Tampa (86.2%), Orlando (85.6%) and Chicago Midway (85.3%) all also each had more than 85% of their flights arrive on time in November, according to USA TODAY.

Photo: By Mike Derer, The Associated Press.

As usual, two carriers from the state of Hawaii were the most punctual for the month of November, the latest month for which federal on-time data (page 4) is available. Hawaiian led all carriers with a 92.4% on-time rating while Aloha was second at 91.6%. Delta turned in an impressive performance, leading the big carriers and placing third overall with 85.6% of its flights arriving on time. Frontier (84.5%), Southwest (84.5%) and Northwest affiliate Pinnacle (84.1%) round out the top five carriers for punctuality. US Airways had the second-best on-time rating of the legacy carriers, with its 80.64% on-time rating placing it 11th out of 20 airlines.

At the other end of the spectrum, the nation's two largest carriers turned in the worst-on time ratings. United, the nation's No. 2, carrier, placed last out of the 20 carriers reporting data, with 75.5% of its flights arriving on time. American, the USA's biggest carrier, had the second-worst on time rating, with 75.6% of its flights arriving on time in November. Rounding out the worst-performing airlines for on-time flights in November were Delta affiliate Atlantic Southeast (76.7%), American affiliate American Eagle (76.7%), ExpressJet (76.8%) and Delta affiliate Comair (76.8%).

Read on for today's "bonus bundle," which are quick quotes from the media involving recent aviation stories.

U.S. airlines begin to upgrade luxury seats
From USA TODAY: "Now that they're again earning profits after five yeas of industry losses, American, United, Delta, Northwest, Continental and US Airways are finally forging ahead with upgrades to take on foreign rivals. The six are plowing millions into tired, business-class cabins to win back former customers …, earn new ones and justify higher fares. … Profound changes in the competitive landscape are forcing the U.S. carriers to splurge while times are good. Not only have foreign airlines heightened travelers' expectations, but entrepreneurs behind boutique carriers Silverjet, Eos and L'Avion gave them new options." See the full story.

TSA profiling test underway at major airports
From the Seattle Post-Intelligencer: "Travelers at Sea-Tac and dozens of other major airports across America are being scrutinized by teams of TSA behavior-detection officers specially trained to discern the subtlest suspicious behaviors. TSA officials will not reveal specific behaviors identified by the program -- called SPOT (Screening Passengers by Observation Technique) -- that are considered indicators of possible terrorist intent. But a central task is to recognize microfacial expressions -- a flash of feelings that in a fraction of a second reflects emotions such as fear, anger, surprise or contempt, said Carl Maccario, who helped start the program for TSA." See the full story.

A la carte pricing ... or fees run amuck?
Canadian newsite Canada.com writes "airlines are going to absurd lengths to cut costs. Earlier this year, Air Canada tested a theory that planes stripped of paint fly lighter and, therefore, cheaper. The plan was soon scrapped. Last month, it revealed it was considering carrying wine in a box rather than bottles as a way to cut down on weight and save on wine costs. And last year, the airline got international attention for piloting a pay-for-your-own-pillow plan -- a $2 Comfort Kit with a blanket and inflatable pillow.  ... Airlines call it flying a la carte -- asking passengers to pay for everything from a bag of pretzels to an aisle seat. Unbundling free services, they argue, is the only way they can keep fares competitive. Consumer Reports, which examined ever-creeping airline fees in its January issue, calls it nickel-and-diming." See the full story.

Continental Airlines this morning became one of the first big U.S. carriers to say it would accommodate fliers affected by the shutdown of all-business-class carrier MAXjet. In a press release, Continental says "it will accept tickets for standby travel from passengers who were originally scheduled to fly on MAXjet."

Continental says those passengers "will be accepted for travel on a standby basis on Continental flights between Los Angeles/Las Vegas/Newark and London Gatwick" from Dec. 24 through Jan. 6. Fliers will be charged a $50 per flight segment ticketing fee, plus any applicable taxes and security fees. Continental says it "will waive the current fuel service charge normally required for Newark to London passengers, but adds that “proof of confirmed ticketing on MAXjet flights will be required to qualify for the special rate on Continental."

The Financial Times notes "Silverjet, (a) rival all-business class airline, which flies between London Luton and New York also offered MAXjet customers flying between London and New York access to a limited number of Silverjet seats for the same price as their MAXjet ticket."

Continental Airlines is asking the U.S. Department Transportation for the rights to add a second daily nonstop flight between Houston Bush Intercontinental and Bogotá, Colombia. The Houston Business Journal (free registration) says "the application is part of a DOT award that would allocate up to four daily flights to U.S. carriers between December 2007 and October 2008." Continental proposes flying its second flight on the route "to arrive in each city in the early morning and depart each city late at night." Colombia-bound flights would leave Houston at 11:55 p.m. and arrive in Bogotá at 5:09 a.m., all times local. Return flights would leave Bogotá at 12:15 a.m. and land in Houston at 5:10 a.m.

In a press release detailing its application, Continental apparently argues against other carriers applying for Colombia flights. "Continental cites the concentration of Colombia service at gateways in the U.S. southeastern region and the need for additional flight opportunities between the U.S. central and western regions," the airlines says.

Air Jamaica may be that nation's biggest carrier, but it is no longer the dominant force there. The Jamaica Observer writes that "since the turn of the decade, the ailing national carrier has lost grip of the market for which it once held a handsome share -– 58% of U.S. traffic in 1999." Now, according to the latest data from the U.S. Bureau of Transportation Statistics, Air Jamaica carries only 32% of passengers flying between the USA and Jamaica.

The Observer writes "a number of factors have contributed to the decline, including several (Air Jamaica) attempts at restructuring, but perhaps none stand out more than the growth in scheduled carriers that operate between the two destinations." The publication notes that since 2000, a number of U.S. airlines have added service to Jamaica -- including Continental, Delta, Spirit and United.

American has remained the top U.S. carrier to the island, "maintain(ing) its quarter share of the market over the years," the paper says. US Airways is next among U.S. airlines, with its share of the U.S.-Jamaica market rising to 12%. "But," the Observer writes, "far more impressive is Spirit, which … began operating in Jamaica in November 2005, now holds 9% of the U.S. market." That, the paper says, surpasses "even Delta, which began flying to Jamaica from as early as 2001 and now has 8% of the U.S. segment."

Read on for today's "bonus bundle," which are quick quotes from the media involving recent aviation stories.

'US Airways still likes merger idea'
That's the headline from a Dec. 5 story in The Arizona Republic, which writes: "US Airways remains aggressive on the merger front, despite speculation that its challenges this year and other obstacles may force it to sit out the next round of industry consolidation, the airline's president told investors and analysts in New York Tuesday. 'We're big proponents of a merger,' Scott Kirby said at the annual Calyon Securities airline conference. He said the Tempe airline 'hopes there will be an opportunity for us to participate.' US Airways is not interested in another hostile deal given its failed Delta bid, Kirby said, so any deal would have to be consensual. See the full story.

Airlines try to block New York's fliers' bill of rights
From USA TODAY: "The U.S. airline industry's main trade group goes to federal court next week to try to block a New York state law that would punish airlines for stranding passengers on jets without adequate food, water or sanitation. New York's airline passenger Bill of Rights, signed by Gov. Eliot Spitzer in August, is set to take effect Jan. 1. The first-of-its-kind state law would require airlines to provide food, water, electricity and waste removal when a flight from a New York airport waits more than three hours to take off." See the full story.

Near-miss reported at Newark
From The Star-Ledger of Newark, N.J.: "The Federal Aviation Administration is investigating a near miss at Newark Liberty International Airport last week in which an incoming Boeing 737 came within 300 feet of colliding with a taxiing commuter jet whose crew ignored a command to stop. The incident came one day after a federal report assailed runway safety and said a 'catastrophic' accident could be imminent. The near miss involving two Continental Airlines planes occurred at 9 p.m. Thursday when the crew of the smaller Embraer jet disregarded an order from air traffic controllers to stop and allow the Boeing 737 to land, FAA spokesman Jim Peters said." See the full story.

Midwest gives feds more time to look at sale to Northwest-backed group
From The Wall Street Journal (subscription required): "The proposed $452 million acquisition of Midwest Air Group by private-equity firm TPG and its minority partner, Northwest Airlines, won't close before Jan. 31, Midwest said Friday, to give federal antitrust regulators more time to complete their review. Earlier, Midwest had expected the all-cash deal to close by the end of this year. Even though it would be a small transaction, airline investors have been watching the case closely for clues about the Justice Department's general disposition to airline mergers. … While TPG would be Midwest's buyer of record, Northwest is putting up 47% of the money and gets rights to acquire TPG's interest in Midwest in certain circumstances." See the full story (subscription required).

Read on for today's "bonus bundle," which are quick quotes from the nation's media involving recent aviation stories.

Heathrow must grow to avoid losing world-class status, U.K. official says
From USA TODAY: "Britain's transportation secretary Thursday proposed building a third runway and another terminal at London's congested Heathrow Airport, the major gateway for American travelers to Europe. Heathrow has operated at nearly full capacity 'for too long' and results in 'relatively minor problems causing severe delays to passengers,' Transport Secretary Ruth Kelly said in a statement. 'If nothing changes,' she said, 'Heathrow's status as a world-class airport will be gradually eroded.' " Read the full story.

Frequent-flier programs may be worth more than the actual airlines
From a Bloomberg News report in The Seattle Times: U.S. airlines "are sitting on frequent-flier plans that may be worth as much as the airlines themselves. Demanding an upgrade on their investment, some shareholders want the programs sold. American's AAdvantage program, with more than 57 million members, may fetch as much as $5.7 billion, according to a Morgan Stanley estimate. That's about the same as American's market value. Bear Stearns projects United Airlines' Mileage Plus may go for as much as $22.8 billion, more than four times the airline's value. … Investors say selling the mileage plans would help reverse this year's nearly 20% drop in airline stocks amid a more than 50% rise in jet-fuel prices." Read the full story.

Dubai route marks Houston's ascent
That's from the Houston Chronicle, which writes: "When Emirates begins its nonstop service between Dubai and Houston on Dec. 3, it will mark the first direct link between the two energy hubs. It also highlights the growing importance of Houston as an international destination and connection point, said Rick Vacar, head of the Houston Airport System. In addition to Emirates, other international carriers are expressing interest in adding service to Houston soon, Vacar said. He would not name them. 'There are more coming,' he assured." Read the full story.

Higher fuel costs mean rising fares on fewer flights
From USA TODAY: "Air travelers face higher fares and reduced flight options as carriers grapple with persistently high fuel costs. … U.S. airlines, barely out of the their deep post-9/11 slump, have been dealing with unexpectedly high oil prices since Labor Day by pushing up fares and trimming flights. Average business fares on the USA's top 280 routes have jumped 8% from a year ago, according to price tracker Harrell Associates. And leisure fare prices on those same prime routes are up 26% from a year ago.  … Through the first 10 months of this year, U.S. airlines have reacted to rising fuel prices by cutting domestic capacity more than 2% from the same period in 2006, (Harrell Associates' Bob) Harrell says." Read the full story.

United has the best buy-on-board meal options while Northwest and Southwest have the worst. That's according to the "second annual" Airline Snacking and Onboard Food Survey from Dietdetective.com. Using a 5-star scale, the group gave United the best mark with 4½ stars. "The health and fitness network put United at the top and lauded the airline for its variety and healthful options," writes the Minneapolis Star Tribune (free registration).

"Continental Airlines came in second place and received high marks for offering a low-calorie and high-impact meals on flights of three hours or more," the Star Tribune adds. Continental is also rare among carriers since it still does not charge for its meals. Midwest placed third, with the survey saying the airline "takes its food seriously, and it shows." Still, DietDetective.com warns that Midwest's "famous fresh-baked on-board cookies can hurt: They're 120 calories each." Following Midwest were Delta, JetBlue, American and US Airways. Southwest and Northwest tied for last with two stars each.

As for Southwest, DietDetective.com says the carrier did not offer "much variety" nor "much in terms of nutritional value." But the group saved its most scathing remarks for Northwest. The survey cited NWA for snacks that "are very high in calories," but it also slammed the airline for not being cooperative. "It took a bit of work, but finally, after calling and e-mailing, some information was provided," DietDetetive.com says on its website. The group claims a Northwest spokesperson said: "Essentially, we don't keep track of nutritional values for our menus." DietDetective.com counters that "considering all the surveys showing that people want this information, maybe they should." Check out the DietDetective.com survey to see its finding for each airline surveyed.

Photo by Ben Mutzabaugh, USA TODAY.

The New York City area is playing an increasingly vital role for Continental, which operates an international hub out of Newark Liberty International Airport. The Houston Chronicle says "the amount of revenue Continental gets from New York-area flights is about to surpass revenue from its Houston flights, executives say. That's despite the fact that Continental has more than 700 daily flights out of Houston, far more than New York." Continental flies 469 daily departures from Newark, according to the Chronicle.

One factor driving Continental's Newark interest is international revenue. Like other U.S. legacy carriers, Continental has boosted its focus on international flying, which currently is more profitable than domestic flying. Continental's international revenue has grown about 20% during the past year, "mostly from flights to or from the New York area," the Chronicle says. "Other airlines have taken notice, a big reason why a Big Apple battle has broken out and promises to get more intense, even as federal regulators move toward limiting flights in the region," the paper writes. Indeed, competition among airlines over New York already appears to be heating up. Delta, American and JetBlue each operate hubs at JFK -- New York's other big international airport.

Delta, which has expanded rapidly at JFK in the past year, is the target of one Continental ad seen recently on a New York City taxicab. "This taxi can't take you to Beijing. Neither can Delta," the ad reads. The Chronicle says that's part of a new campaign by Continental meant to "emphasize the carrier's international scope compared to other airlines." Despite the intense competition, however, CreditSights analyst Roger King tells the Chronicle Continental is in the "very enviable position" of being the dominant carrier at Newark. "That allows them to have almost all domestic flights into Newark, and allows all their international flights to hook up with the domestic feed, which JFK flights don't have," King says. "That hub at Newark is the strongest Atlantic gateway of any airline."

As oil soars toward $100 a barrel pricing, could rising fuel costs increase momentum for airline mergers? That seems likely, according to Reuters. It notes that airlines have so far been able to "offset" soaring fuel costs "by reducing the number of seats for sale and raising fares. But if economic weakness crimps demand, airlines must consider mergers as a way to pull capacity from their systems, said (US Airways CEO Doug) Parker," who spoke Wednesday at a Wall Street investor conference.

Other airline executives at the conference echoed Parker's sentiments. "We do believe the right transaction for Delta would add tremendous value within the industry," said Delta CFO Ed Bastian. "If there was to be a consolidating environment, Delta has the strong hand there, and views itself as a natural acquirer, not a seller." AP says Bastian added the subject is "a front-burner issue for us." Even Continental CFO Jeff Misner addressed the subject, saying "Continental will not be left behind. We just don't necessarily have the ability to start the dominoes falling." Reuters points out "Continental has an unusual obstacle to consolidation — rival Northwest holds a 'golden share' in Continental that gives it the right to block mergers involving the Houston-based carrier … "

Meanwhile, airlines are doing what they can now to adjust. Northwest CFO Dave Davis, for example, said that if demand drops, NWA could end up grounding some of its aging -– but paid-off –- aircraft. "The cost to us of not flying those is relatively minimal," Davis is quoted as saying by The Dallas Morning News (free registration). "If we see a significant drop in demand, which we haven't seen yet, I think we're in a good position to respond." Delta officials suggested similar possibilities, according to the Morning News.

Many big U.S. carriers have already begun trimming capacity in response to soaring costs. US Airways' Parker noted that nearly every legacy carrier has been doing so, calling that "a pivotal and probably momentous change" in the industry. "I've been doing this quite awhile now. I've never seen that," he added, according to TheStreet.com. At the end of the day, however, it was American CFO Tom Horton who may have summed up the situation the most succinctly: "We've got to find a way to pass on fuel costs to our customers," he said.

The latest monthly federal airline on-time report showed some decent numbers –- especially when compared to how bad the industry has been performing so far in 2007. During September, the latest month for which federal data is available, 81.7% of flights operated by the nation's biggest carriers arrived on time. The Associated Press writes that's "up from 76.2% in the same month a year ago and up from 71.7% in August, the Department of Transportation's Bureau of Transportation Statistics (BTS) said." This September was the "28th best of the 153 months with comparable records with on-time performance," the BTS says in a press release.

Overall, Aloha (95.4% on-time rating), Hawaiian (93.7%), Frontier (88.4%) and Continental (88%) had the highest on-time ratings. The four poorest on-time ratings belonged to Delta affiliate Atlantic Southeast (63.4%), Alaska Airlines (73.3%), Northwest (77.8%) and United (78.2%). But despite September's improvement over previous months, AP points out that the industry's overall performance for the full year remains dismal. Nearly 25% of all the nation's flights have arrived late since January first, putting the industry on pace for its worst on-time performance "since comparable data began being collected in 1995," AP says. (Related item: Check out the airline on-time ratings)

Addressing one of the hot topics lately in the airline industry, the federal Bureau of Transportation Statistics says in its latest on-time report that "there were 79 flights in September with taxi-out times of more than three hours. There were no flights in September with (a) taxi-out time (gate departure to wheels off) of more than five hours. The three flights with the longest taxi-out times in September all had tarmac times of 257 minutes: United Airlines Flight 753 on Sept. 27 from Washington Dulles to Albuquerque, N.M.; (Continental affiliate) ExpressJet Flight 1281 on Sept. 27 from Newark to Washington Dulles; and (Continental affiliate) ExpressJet Flight 2454 from Lubbock, Texas, to Houston on Sept. 3." (Related item: Check out the airline on-time ratings)

Continental Airlines will relocate all of its Boston Logan operations to Terminal A "effective with all flights on Sunday," the carrier says in a press release. "At Terminal A, Continental will have access to four loading bridges at the main terminal (Gates A5, A6, A7 and A8) and two hard stand commuter positions (A11A and A12A)," the release says. Also located in Terminal A is Continental's SkyTeam alliance partner Delta. Members of Continental's President's Club will have access to Delta's Crown Room frequent-flier lounge in Terminal A "under a reciprocity agreement."

A federal proposal to impose flight caps at New York JFK has caught the attention of Continental Airlines officials. Continental CEO Larry Kellner tells the Houston Chronicle the company is concerned that capping JFK flights could ultimately affect Continental's hub at nearby Newark Liberty. The Chronicle says "a cap on the number of flights per hour at JFK could shift traffic to other New York-area airports, which are among the nation's worst for delays. Continental is trying to alleviate that problem in Newark by cutting flights. It is also switching to larger jets, allowing it to carry more passengers on fewer flights."

Kellner tells the paper that he met with Transportation Secretary Mary Peters to state his concerns, but he did not elaborate on the meeting. Continental's concerns come amid plans to expand its "global gateway" at Newark. "We're not through investing in Newark Liberty, and we're not through investing in Houston," Kellner tells the Chronicle. "The investment will be in the billions just over the next few years."

Continental CEO Larry Kellner "reiterated his long-held stance that Continental wants to remain independent if the landscape doesn't change," the Houston Chronicle writes in its recap of the airline's third-quarter earnings report. That comes as United CEO Glenn Tilton has continued to express interest in pursuing a merger with another carrier and after new Delta CEO Richard Anderson said this week that he thought a merger might be in the best interest of that airline. As for Continental, Kellner said: "We have got a very good plan. If the world stays the way it is, we have a bright future. If it changes, we will figure out the best thing to do."

Continental also broached the subject of delays, which have become a chronic problem at its Newark Liberty hub. Noting the airline had a 77.3% on-time arrival rating for the quarter, Continental President Jeff Smisek points a finger at the government and the air traffic control system. "Despite air traffic control challenges, my co-workers delivered excellent service this quarter, allowing us to again grow our revenue," Smisek says. "Continental's operations continue to be adversely impacted by our nation's antiquated air traffic control system, which is not keeping up with the demand for air travel in this country, especially along the northeast corridor."

Elsewhere, as with other carriers, fuel remains a concern, the Newark Star-Ledger says. "Continental's annualized fuel costs increase by about $44 million for each $1-per-barrel increase in the price of jet fuel," the Chronicle adds. Continental "is showing that high load factors and strong international growth can allow profitable growth at some airlines, even with oil at record level,'' Bloomberg News writes, citing an investors’ note from Standard & Poor’s analyst Jim Corridore.

Continental Airlines reported a net profit of $241 million ($2.15 per share) for the third quarter, a figure that compares to the airline's $237 million ($2.17 per share) profit during the same quarter a year ago. "The company had a slightly larger share count in the most recent quarter, which is why earnings per share fell even as profits rose," The Associated Press writes. Continental had "double-digit passenger revenue growth in every segment of its business except for domestic flights," AP adds. Passenger revenue from trans-Atlantic flights jumped more than 22% and more than 10% on flights to both Latin America and the "Pacific region." Passenger revenue on domestic routes rose 7%.

Continental's earnings also topped Wall Street expectations. Reuters says that "excluding a $12 million charge for a pilot pension plan settlement, Continental said it had earned $2.25 per share, beating the average Wall Street forecast of $2.13, according to Reuters Estimates." Reuters says Continental will also face increasing exposure to fuel costs as the percentage of its fuel covered by fuel hedges declines over the next two quarters. "The high cost of fuel continues to pose challenges for us, but we'll keep working those costs we can control," Continental CFO Jeff Misner says in a statement.

The airline rumor-mill got a kick-start yesterday thanks to Delta CEO Richard Anderson, who said he expected airline consolidation to occur and that a merger may be in the "long-term best interest of Delta." Predictably, that has the topic of airline mergers again grabbing headlines across the USA. The Houston Chronicle is one of several media outlets to follow Anderson's comments with a story looking at the climate for airline mergers. The Chronicle notes that Delta's Anderson -- who was recently named the airline's CEO –- "once worked for Continental Airlines in Houston and later headed Northwest Airlines."

The Minneapolis Star Tribune (free registration) picks up that angle with a story headlined: "Is NWA merger on horizon?" The paper writes "analysts long have argued … Northwest would make a good partner (for Delta) because the carriers' route networks complement each other. Delta and Northwest held preliminary merger talks while both were in Chapter 11 bankruptcy, but both chose to emerge from bankruptcy this spring as standalone carriers." As for Delta, it said it preferred to remain a standalone carrier as it successfully worked to thwart a takeover bid from US Airways during the past year. Now, however, the Star Tribune wonders if Anderson's "statements on Tuesday signaled that sentiment toward a merger is shifting within Delta, particularly if Delta takes the lead."

With Anderson's comments, "Delta seemed to be saying that it is interested and actively reviewing the possibilities" for a merger, airline analyst Bob McAdoo of Avondale Partners says to the Star Tribune. "We had previously been of the belief that Delta was unlikely to instigate a merger." And the renewed merger speculation doesn't stop with Delta. In an investors' report last week, UBS airline analyst Kevin Crissey points out that United has made no secret of its interest in consolidation, according to the Chronicle. Crissey says "United's ideal partner would have a Northeast and a Southern hub. Continental and Delta are the two carriers best fitting this criterion."

But is too much being made of Anderson's conference-call comments? The Atlanta Journal-Constitution (free registration) says that "in an interview, Anderson said he was simply restating Delta's earlier position on industry consolidation in response to frequent questions on the matter, and that 'nothing's imminent.'" Anderson adds: "I wasn't trying to kick off anything." If Delta does come to the merger table, however, look for it to be the aggressor. Delta President and CFO Ed Bastian says Delta is "best positioned to be an acquirer, not an acquiree," according to the Wichita Business Journal. CEO Anderson adds: "That's the most important point to make. We want to be in control."

Look for Continental to add destinations in India as it starts taking delivery of new Boeing 787 aircraft, Reuters reports. The carrier also would like to add more routes to China, if it can win approval as new routes are made available by U.S. and Chinese aviation officials. "The two places to be in today are China and India," James Summerford, Continental's vice president of European, Middle East and Indian operations, told reporters this week at a news conference in Mumbai. Continental launched its latest Indian route from there this week, adding nonstop service to Newark Liberty.

"We will begin operations to Shanghai next year and will add more Indian cities like Bangalore, Hyderabad and Chennai once we've taken delivery of the 787s," Summerford says. Continental has firm orders for 25 787s, with options for 35 more, according to Reuters. The airline is scheduled to take delivery of its first 787 in 2009, Summerford says. Those jets likely will also fuel other new international routes for Continental, which draws 47% of its total revenues from international operations –- up from 22% 10 years ago.

"What's going to be a big driver of our international expansion is the 787, which will open up new markets like southeast Asia and Australia," Summerford is quoted as saying by Reuters. Big U.S. carriers have increasingly gravitated toward international flying, where competition has been less cutthroat than on domestic U.S. routes. Continental's ability to sell premium-class seats on long international routes is another key factor. "There isn't as much pressure on our international fares, and there are more people in the seats in front," Summerford says.

The New Jersey sports arena currently known as the Continental Airlines Arena "will be rechristened the Izod Center" in time for the New Jersey Nets' National Basketball Association home opener on Oct. 31, The New York Times (free registration) reports. The arena –- across the Hudson River from New York City -– has had Continental's name and logo on it for about the past 12 years. The arena has had two pro sports tenants, though the National Hockey League's New Jersey Devils are set to play in a new Newark arena this fall.

The Times writes "Izod will pay $1.4 million a year in cash for the first two years of the five-year agreement, which will be cut to $750,000 annually in 2009 when the Nets are expected to move to Brooklyn." Once the Nets bolt, that will leave Continental Airlines Arena without a permanent major pro-sports tenant. "The purpose of our sponsorship was to gain exposure to major league sports fans because they are also our target market," Continental spokesman Dave Messing told The Star-Ledger of Newark in August. "With the absence of major league sports in the Arena, the sponsorship was no longer aligned with our marketing goals."

The August on-time flight ratings released yesterday by the Bureau Transportation Statistics showed that airlines remain on pace for one of the industry's worst-years ever (see below). USA TODAY takes a look at some of the other findings contained in the report.

Complaints: Passengers filed 1,359 in August, more than double the number (657) reported during the same month a year ago. US Airways scored the lowest with 4.4 complaints per 100,000 customers. That was double its rate from a year ago but was better than its July numbers. Looking at the DOT's Air Travel Consumer Report (page 40), these airlines rounded out the bottom five for complaints-per-passenger: United (2.87 complaints per 100,000 fliers), Northwest (2.49), Delta (2.4) and Delta affiliate Comair (1.99). The five airlines with the fewest complaints per passengers: Southwest (0.40 complaints per 100,000 fliers), Hawaiian (0.47), Aloha (0.57), JetBlue (0.59) and Frontier (0.69). The top legacy carrier was Continental (1.58), which rated 13th out of the 20 airlines in the report.

Taxi-out waits: USA TODAY says that "in August, 159 flights sat on a runway or taxiway for at least three hours. The longest wait was nearly six hours. An Aug. 17 ExpressJet flight left the gate at 2:17 p.m. in Portland, Maine, and took of for Newark at 8:07 p.m." ExpressJet flies as a Continental Express carrier on its routes to Newark.

Mishandled bags: Airlines mishandled 7.6 bags per 1,000 fliers, which USA TODAY notes showed a "slight" improvement over the 8.1-bags-per-1,000 fliers mishandled during the same month a year ago. The paper writes "US Airways improved its bag handling, yet its performance still was the worst of the major airlines." But several regional carriers fared worse, according to the Air Travel Consumer Report (page 30). American affiliate American Eagle had the worst rate (13.96 bags per 1,000 fliers), followed by Delta affiliate Atlantic Southeast (13.68), regional giant Mesa (12.42), Delta subsidiary Comair (12.14) and Northwest affiliate Pinnacle (10.64). The top five: Hawaiian (3.1), Aloha (3.72), AirTran (5.19), United (5.42) and Northwest (5.49).

The airlines with the worst on-time arrival ratings? That would be Delta affiliate Atlantic Southeast (ASA), whose flights arrived on time just 55% in August, according to the latest numbers released this morning by the federal Bureau of Transportation Statistics (BTS). United (66.2%) and Alaska Air (67.1%) had the next-lowest on-time ratings, according to the BTS. Two flights were late every day they operated in August, both on ASA. Those two chronically late flights were ASA Flight 4361 (Alexandria, La., to Atlanta) and ASA Flight 4530 (Atlanta to Hilton Head, S.C.).

At the the other end of the list were Aloha Airlines (97.1% on-time rating) and Hawaiian Airlines (93.6%). With those two airlines perennially at the top of the on-time list, many industry observers point out that both carriers' operations focus on Hawaii –- which has both relatively uncongested airspace and calm weather. Southwest had the third-best on-time rating, with 77.1% of its flights arriving on time. Continental had the best on-time rating of traditional "legacy" carriers, with 75.3% of its flights arriving on-time. Of the 20 carriers included in the report, that placed Continental seventh overall.

Continental Airlines today begins nonstop service between Newark Liberty and Mumbai (Bombay), India. Continental will begin the route with four weekly flights before upgrading to daily service on Oct. 28.

Delta received approval this morning from the Department of Transportation to begin nonstop service between Atlanta and Shanghai. The route is one of six new daily round-trip routes granted today by the U.S. DOT. Each of the USA's six traditional carriers -- American, Continental, Northwest, United and US Airways are the others -- were awarded one of the six routes.The route awarded to Delta was eligible to start as early as Aug. 1, though the DOT will give the Atlanta-based carrier until March 2008 to launch the route to China. It will be the carrier's first route to the country. Routes to China are tightly regulated by bi-lateral aviation agreements between the USA and China. A recently approved aviation agreement between the nations opened up the equivalent of six new daily routes to U.S. carriers.

All six of the USA's so-called legacy carriers received one of the new routes awarded for flights to China. The rights to operate the latest batch of flights are staggered to begin between now and 2009. Following Delta, United Airlines has been granted the authority to begin daily nonstop service between its San Francisco hub and Guangzhou, China. United will be permitted to begin flying that route in March 2008. The other four Chinese routes were awarded to: US Airways for daily service between Philadelphia and Beijing; Continental for daily nonstop service between Newark, N.J., and Shanghai; American for daily nonstop service Chicago O'Hare and Beijing; and Northwest for daily nonstop service between Detroit and Shanghai. (See additional details in the full story.)

More details are emerging about Continental's planned "reallocation" of regional jets from Newark to Cleveland. The shift is part of the airline's expansion plans for its Cleveland hub. While Continental will fuel some of its initial expansion at Cleveland by shifting regional jets from Newark, an airline spokesperson tells Business Travel News that the carrier plans to boost capacity at both airports. "We'll continue to build our business at Newark and have a clear strategy to update the aircraft there," a Continental spokesperson tells BTN.

"We're reallocating 37- and 50-seat regional jets from Newark to Cleveland, and on a one-for-one basis we'll replace them with the 74-seat Bombardier Q400 as well as other mainline aircraft in our fleet." BTN writes Continental's "spokesperson said the aim is to grow Newark without adding congestion to an already overburdened system."

Beginning April 5, Delta will start nonstop service between New York LaGuardia and Bermuda. The carrier will fly one daily round-trip flight using Boeing 737 aircraft. The New York route is one of the most competitive from Bermuda, according to the Bermuda Sun. American, Continental, JetBlue and Zoom also offer nonstop flights between Bermuda and one of New York City's three airports. As for Delta, it also flies to Bermuda from Atlanta and Boston.

Continental announced a big expansion for its Cleveland hub on Friday. But the decision to grow in Ohio may also have something to do with Continental's East Coast hub at Newark. Continental CEO Larry Kellner says growing Cleveland will help the airline reduce chronic congestion at Newark, according to The Cleveland Plain Dealer. "I think it's key. There's clearly a lot of congestion in New York air space," Kellner tells The Associated Press. The Houston Chronicle says most of the regional jets used for Continental's first wave of expansion in Cleveland will come from airline's Newark hub. The carrier will switch to larger aircraft for its flights at Newark, which the Akron Beacon Journal writes "ranked last among 32 major U.S. airports in on-time arrivals through July."

Standard & Poor's analyst Jim Corridore tells the Chronicle that Continental's effort to grow Cleveland may be part of a broader initiative. "Continental has been growing domestically faster than most of the carriers," Corridore tells the paper. "The East Coast where Continental has its major hub other than Houston is very congested. I think they are just shifting their growth over to Cleveland."

Connecting passengers flying on Continental will have a greater chance of connecting through Cleveland Hopkins International as Continental pushes ahead with its expansion there. "This growth strengthens Cleveland and gives customers more options when connecting within the Continental system," CEO Larry Kellner tells Air Transport World. "Building this connecting service here builds Cleveland into much more of a hub than it is today. It's the smallest of our hubs today and adding 20 new non-stop destinations really starts to build the scope and coverage of the Cleveland hub," Kellner adds to The Associated Press.

Not so, say airport officials at Akron-Canton Airport, which is located about 60 miles south of Cleveland. ''It's a positive for the region," Akron-Canton communications and marketing chief Kristie Van Auken tells the Akron Beacon Journal about Cleveland's expansion. "The way we view it is two thriving, growing airports in northeast Ohio, which is a positive economic indicator about what's happening with the fundamentals of our economy. We think it's great. More jobs and more activity and flights for the region is going exactly in the right direction.''

"We've been growing, and now they'll be growing,"  Akron-Canton chief Fred Krum tells The Repository newspaper of Canton . "I think that's a good thing." During the past decade, Akron-Canton has staked out a space alongside Cleveland Hopkins as a second airport for northeast Ohio. But Akron-Canton's Krum bristles at an "us-versus-them" mentality. "Northeast Ohio is blessed with having two thriving airports. Northeast Ohioans have to get over the idea that when someone's winning, someone's losing," Krum tells the Repository.

From USA TODAY reporter Roger Yu's Airport Check-in column: "Continental's announcement on Friday of plans to expand air service at Cleveland Hopkins is triggering some changes at the airport. Airport officials have been considering building a new Customs and inspection facility for a while, but the plan will now move up on the airport's to-do list, says Todd Payne, an airport executive. Hopkins has outgrown its current Customs area in Concourse A, he says. The airport hasn't determined when it'll begin construction."

"The airport also plans to install a new waiting area and more ticket counters for Continental in the main terminal. It's also considering adjusting the positions of its three checkpoints to accelerate security screening. Continental said it will expand service at Cleveland by 40% in the next two years. It will initially operate 50 new flights and add 20 new non-stop destinations by next summer."

Continental is pushing ahead with a $50-million expansion of its Cleveland hub, "bringing hundreds of new jobs in a move the state encouraged through incentives," AP writes. The move was officially announced by Continental today, though The Cleveland Plain dealer broke the story earlier this week. "State officials, worried that Continental would choose instead to grow at its Newark, N.J., or hometown Houston hubs, dangled $16 million in financial incentives to land the project," the Plain Dealer says. The expansion will include new ticketing areas and will result in new routes and more flights at Cleveland. Continental also will route more connecting passengers through its Midwestern hub.

Continental says it will expand in Cleveland in three phases. Phase one, the carrier says, is already under way "with a significant increase in capacity" this year. In addition to new routes to places like Quebec City (launched in June) and Oklahoma City (coming this month), Continental has also boosted capacity on existing routes to destinations such as San Francisco (a 45% capacity increase), Orlando (33%) and Seattle (32%). Continental says the "capacity increase has been achieved through a combination of adding additional flight frequency and using larger aircraft on these routes."

Phase two begins next year, when Continental will add daily nonstop service from Cleveland to 12 cities. Flights to Greensboro, N.C.; Omaha; Savannah, Ga., will begin March 3. Service to Birmingham; Charleston, S.C.; Green Bay, Wis.; and Tulsa will start April 6. Starting May 4, Continental adds service to Little Rock, Lansing Mich., and Memphis. And on June 12, service starts to Des Moines, Iowa, and Kalamazoo, Mich. Continental did not specifically say the any of the new routes would be on its regional partners, but says "initially" many new routes will be flown "principally on regional jets. ... Many of the regional jet aircraft used for the additional service will be reallocated from Newark." Internationally, Paris flights begin May 22 -– as previously announced.

In a press release, Continental says it will announced "later" additional cities that "will also be added during Phase Two." By June 2008, Continental expects to be flying 300 daily flights from Cleveland, up from the current 242. Its number of nonstop destinations is expected to grow to 100 from 80. The airline adds "Phase Three will be announced in 2008 and will add more nonstop destinations and a further increase in seats to existing Continental markets. The additional capacity will be in place for the peak summer 2009 travel period."

Photo credit: Continental Express jets lined up at Cleveland Hopkins International. By Mark Duncan, AP.

Continental announced on Tuesday that it contributed an additional $50 million toward its defined benefit pension plans. That brings the airline's total year-to-date pension contribution to $261 million. "We continue to focus on doing the right things for our co-workers and fulfilling our pension commitments," Continental CEO Larry Kellner says in a press release. The carrier says it expects to put more than $325 million toward its pension plans in 2007, "significantly exceeding its minimum funding requirement of $187 million for the year," according to Continental.

The Associated Press notes that "Continental and ... American Airlines have maintained their traditional defined-benefit pension plans while many other network carriers eliminated them, including through bankruptcy filings, after the travel downturn and terror attacks of 2001."

The SkyTeam frequent-flier alliance has added three new carriers: Air Europa of Spain, Copa Airlines of Panama and Kenya Airways. The carriers are the first three admitted to SkyTeam as "associate" members. A SkyTeam press release explains that "earlier this year, Air Europa, Copa Airlines and Kenya Airways each signed an agreement outlining their commitment to meet a set of predetermined safety, security and quality standards to be recognized as an Associate Airline. As part of the Associate Program, the carriers also adopted a current member's loyalty program. Air Europa and Kenya Airways recognized Air France-KLM's 'Flying Blue' program, while Copa ... accepted Continental's 'One Pass' program." The three airlines will add 47 additional destinations to the SkyTeam network.

As American goes after more of the lucrative international travel market, the carrier is putting much of its focus on New York JFK –- as evidenced by the carrier's new terminal there. "The business class cabin on international flights is the most profitable product we sell," David Cush, AA's senior vice president of global sales, tells the Fort Worth Star-Telegram (free registration). The airline is hoping that its new JFK facility helps lure more New Yorkers to its JFK flights -- both international and domestic. The Star-Telegram notes "about two-thirds of JFK travelers don't take connections to other cities." With the new terminal, AA hopes it can increase its passenger count by as much as 50% at JFK, Reuters and Dow Jones say.

"It's probably the deepest pool of revenue in the U.S. market overall, considering the international market and the domestic market from New York," says airline consultant Robert Mann. "It's a hotly competitive market." Mann says AA's new $1.3-billion terminal may pose the biggest threat to Delta, which has recently developed JFK as a big international hub. Mann "said that, in the next few years, Delta will have to update its aging facility just as American's terminal hits its stride," Reuters writes. Forbes adds AA's new facility "also puts American on equal footing with Continental Airlines, which is enjoying the benefits of a big investment in its international terminal across the Hudson River at Newark Airport in New Jersey."

The play for international fliers by airlines like American, Delta and Continental comes as the USA's traditional airlines have battled the growing presence of discounters on domestic routes. "The past five years, the domestic market has been a very tough market for a lot of reasons," Arpey tells The Dallas Morning News (free registration). "Therefore, with all the losses domestically, many airlines, including American, have shifted capacity internationally," he adds. AA, Delta and Continental have been among the most aggressive U.S. carriers in ramping up international operations, the Morning News says. "Continental, for example, had 48.6% of its capacity in international service in July, up 10.4 percentage points from 2001," the paper says.

By contrast, United and Northwest each fly more than 40% of their capacity on international routes, but that percentage has barely increased for those airlines since 2001. The Morning News writes "aviation consultant John Pincavage said airlines flying to international markets still have less competition and more regulation than on domestic routes, where easy entry into markets and no restrictions on fare cutting have brought ‘unbridled competition.'" But Pincavage tells the paper "the game is changing, but there's still enough there that if you're flying from a hub in the U.S. to a nonhub in Europe, you've got a shot at picking up the lion's share of the business."

From USA TODAY reporter Roger Yu's Airport Check-in column: "Travelers at Seattle-Tacoma can now check in and print their boarding passes when they enter the main parking garage. The kiosks are located on the fourth floor of the garage. The service is available for fliers not checking luggage if they're traveling on any of five airlines: Alaska, Continental, Horizon, Northwest and United. It may be expanded to other airlines."

Continental Airlines' name will soon come down from one of the New York City-area's most-prominent sporting venues. The arena –- within view of Manhattan in the New Jersey "Meadowlands" -– has been officially known as the Continental Airlines Arena for the past 12 years, but that’s about to change, The Associated Press reports. Continental spokesman Dave Messing says the airline will opt out of its naming rights deal for the arena, which is also a short distance from  Newark International Airport, where Continental operates a large hub.

As for Continental Airlines Arena, the facility is set to lose some of its luster in the coming years. The NBA's New Jersey Nets have plans to bolt to a new arena in Brooklyn while the NHL's New Jersey Devils will move to a new arena in downtown Newark. That will leave Continental Airlines Arena without a permanent major pro sports tenant. "The purpose of our sponsorship was to gain exposure to major league sports fans because they are also our target market," Messing tells The Star-Ledger of Newark. "With the absence of major league sports in the Arena, the sponsorship was no longer aligned with our marketing goals."

Continental had been paying $1.3 million a year for the naming rights and its name will stay on the arena until a new sponsor is found. The Star-Ledger writes that George Zoffinger, executive director of the New Jersey Sports and Exposition Authority, "said part of the $1.3 million from Continental had been in airline tickets. Some were used and some were not. Although Continental officials said they initiated the decision to drop the name from the arena, Zoffinger insisted the decision 'was mutual.' " Zoffinger says the "arrangement really wasn't working out for us."

Photo by Robert Deutsch, USA TODAY.

Beginning Sept. 30, Continental will add Continental Express service to Ottawa from its hub in Cleveland. Continental affiliate ExpressJet will fly two daily round-trip flights on 37-seat Embraer 135 regional jets. Ottawa Macdonald-Cartier International will be the fourth Canadian destination and seventh international city served from Cleveland by Continental and its Continental Express partners.

Photo credit: The Canadian Forces Snowbirds fly past the Peace Tower during Canada Day celebrations on Parliament Hill in Ottawa on July 1, 2007. By Chris Wattie, Reuters.

Beginning Sept. 30, Continental will add nonstop service to Oklahoma City from its Cleveland hub. Continental Express partner ExpressJet will fly two daily round-trip flights on 50-seat Embraer 145 regional jets. The service will be the only nonstop option between Cleveland and Oklahoma City.

Continental is the latest U.S. airline hoping to take advantage of the new U.S.-E.U. "Open Skies" pact by adding flights to London's Heathrow Airport. Currently, American and United are the only U.S. carriers permitted to fly into Heathrow, but that will change once the new agreement goes into effect early next year. "Eventually we will serve Heathrow not only from Houston but Newark as well," Continental CEO Larry Kellner is quoted as saying by the Houston Chronicle during yesterday's earnings report. He said he was confident the airline would get the landing slots it will need to add flights at the congested airport.

Revenue from trans-Atlantic flights helped Continental's second-quarter profit jump 15% over the same quarter a year ago, the airline said in an earnings report this morning. Continental reported a net profit of $228 million ($2.03 a share), which easily exceeded Wall Street's expectation of a $1.84-per-share profit, according to the Houston Chronicle/AP. Reuters says if a one-time charge related to a pilot pension plan settlement is excluded, then Continental's profit would have been $2.10 per share. In the same quarter a year ago, Continental made $198 million ($1.84 per share).

Bloomberg News writes that the airline's "profit was bolstered by a 21% increase in passenger revenue on Continental's trans-Atlantic flights to $689 million. Overseas flights account for about 47% of Continental's capacity, the most of any major U.S. airline, according to Susan Donofrio, a New York-based Cathay Financial analyst." Continental also announced plans to slow 2008 capacity growth to between 3% and 4%, down from earlier projections of 5%-7%.

The airline announced plans to sell 10 Boeing 737-500s to Russian carrier Transaero, with Bloomberg saying the planes are expected to leave Continental's fleet between October 2007 and November 2008. Reuters notes that transaction comes "amid the softening domestic market," adding that Continental is "in discussions to sell another five 737s." Bloomberg writes that Continental "has delayed until 2010 from 2009 the delivery of six 737NG aircraft. It also has moved forward to 2008 from 2009 the delivery of three 737-900ER jets."

Beginning Dec. 14, Continental will add nonstop service from its Newark hub to Mont-Tremblant, Quebec. The carrier will operate one round-trip flight on a daily basis, except between Jan. 8 and Feb. 13, when flights will fly every day except Tuesdays and Wednesdays. The service will be operated by Continental's Continental Express partners using 50-seat Embraer-145 regional jets. The northbound flight will leave Newark at 11 a.m. ET, arriving at Mont-Tremblant at 12:32 p.m. ET. The return flight leaves Mont-Tremblant at 1:15 p.m. ET and lands in Newark at 2:44 p.m. ET.

Mont-Tremblant, run by the same group that operates Steamboat Springs in Colorado, is a ski resort about 80 miles northwest of Montreal, according to The Montreal Gazette. The paper says the airport serving Mont-Tremblant "is the former landing strip of an abandoned military base in the tiny town of La Macaza," about 20 northwest of the resort. The Gazette says the airport "features the world's only log-house terminal." A public-private consortium put up a $420,000 guarantee for Continental to "cover the airline's operating cost risk for entering the new market," according to the Gazette.

The applications are coming in from U.S. airlines hoping to win rights from the Transportation Department to add flights to China, Air Transport World reports. One of the latest to be announced comes from Northwest, which "wants to begin daily nonstop flights between Detroit and Shanghai this year and add daily service from Detroit to Beijing in 2009," according to the Minneapolis Star Tribune (free registration). The paper says Northwest's bid for this year comes even though the DOT "initially said it preferred a 'new entrant' to secure a China route this year."

Travel Weekly (free registration) writes that NWA's "application came as Delta revealed it was expanding its application to include nonstop service from Atlanta not only to Shanghai for the rights that become available immediately, but also to Beijing using the route rights that become available in 2009." The Atlanta Journal-Constitution (free registration) says "most major passenger airlines were expected to apply by Monday's deadline for several new daily U.S.-China flights being awarded by the U.S. Department of Transportation over the next three years."

Other applicants include: United, which has asked for the rights to fly between San Francisco and Guangzhou and between Los Angeles and Shanghai; Continental, which has applied for Newark to Shanghai; American, which has applied to fly between Chicago O'Hare and Beijing; and US Airways, which hopes to fly between Philadelphia and Beijing. The Star Tribune adds that "in addition to the six network carriers, MAXjet, an all business-class airline that serves the United Kingdom, is seeking a China route between Los Angeles and Shanghai via Seattle." According to a newsletter from US Airways, MAXjet hopes to fly between Seattle and Shanghai with 96-seat Boeing 767-200s.

"Sometime after Aug. 2, the U.S. agency will choose among the airlines for one new route to begin flying this year, another route in 2008 and four new routes in 2009," according to Dow Jones Newswires. Of those six upcoming routes to be awarded, one industry observer expects the DOT will ultimately award one to each of the "Big Six" carriers (American, Continental, Delta, Northwest, United and US Airways). Four of the applying airlines have websites to specifically to promote their China bids: American, Delta, Northwest and US Airways. At least the first of the six routes is expected to be announced by the DOT in the next month or so.

The nation's airlines begin reporting their second-quarter earnings results this week. Though profits are expected to be higher than from the same quarter a year ago, many industry analysts have lowered their expectations for U.S. carriers "out of concern over everything from high fuel costs to summer storms," The Associated Press reports. That, AP says, underscores the industry's uncertainty as it struggles to regain its financial footing after a period of about five years during which U.S. airlines lost tens of billions of dollars.

This year, planes are flying at near capacity -– something that's helping carriers offset higher fuel costs and moderating ticket prices. "The good news is that it appears June came in pretty strong and the midsummer travel bulge is helping the industry, as it always does," says Bill Warlick, an analyst for Fitch Ratings. Two carriers –- United and Continental -– set June records by filling 89.1% and 87.7% of their seats in June, respectively. The USA's largest carrier –- American -– filled 87.1% of its seats for the month.

The first airlines' earnings numbers for the second quarter of 2007 will come Wednesday, with American, Southwest and Delta all scheduled to report. But even with most airlines expected to land in the black, the industry could be singing a different tune by the fall. "Before you know it, we'll be beyond Labor Day and we'll have the typical hand-wringing over fall ticket sales," Warlick says.

A mother says she and her 19-month-old son were booted off a Continental Express flight last month because "she refused a flight attendant's request to medicate her son to get him to quiet down," AP reports. The mother –- Kate Penland –- and her son were flying from Atlanta to Oklahoma via Houston last month when the toddler started saying "bye, bye plane" over and over again as the flight began to taxi out from the gate.

WSB-TV of Atlanta writes that Penland thinks of her son as having a "bubbly personality," but a flight attendant onboard apparently thought differently. "At the end of her speech, (the attendant) leaned over the gentleman beside me and said, 'It's not funny anymore. You need to shut your baby up,"' WSB quotes Penland as saying.

Surprised, Penland says she asked the attendant if that was meant as a joke. Penland claims the attendant replied: "You know, it's called baby Benadryl." Penland says she responded by saying, "Well, I'm not going to drug my child so you have a pleasant flight." WSB writes "Penland said when the other passengers began speaking up on her behalf, the flight attendant got angrier and soon announced they were turning around." Penland and her son were taken off the flight.

WSB writes that a "fellow passenger" told the station that other fliers on the flight did not appear to have a problem with Penland's son and said that Penland never appeared to threaten the attendant. KTRK-TV of Houston says it managed to track down a passenger on Penland's flight. "He wasn't any louder than the adult passengers on the plane," passenger Stacey Watts tells KTRK about Penland's son. Watts says he overheard the entire exchange between the mom and the attendant.

"Katie was in shock at that point," Watts adds to KTRK. "You could tell. She was in row 3 and I was in row 6. She just kept saying, 'I don't know what you expect me to do. I don't know what you expect me to do.'" Meanwhile, Kristy Nicholas, spokeswoman for Continental Express affiliate ExpressJet says "we received Ms. Penland's letter expressing her concerns and intend to investigate its contents."

One of the toughest tasks for U.S. airlines looking to renew their aircraft fleets (see above) could simply be snagging a place in line. USA TODAY writes that "because of the worldwide scramble for new airliners, waiting to begin fleet replacement and expansion is a fast-expiring option for U.S. carriers. Boeing and Airbus are mostly sold out through 2010, with some models effectively sold out into 2013." The paper adds Continental "needed to secure its place in the already long delivery line for (Boeing 787) Dreamliners to avoid being stuck 15 years from now with uncompetitive old planes. That's why it ordered 20 Dreamliners in late 2004, and raised that order to 25 in May."

The 787 won't even make its first flight until later this year, and the last five ordered by Continental wont join the airline's fleet until 2013. "Normally, we wouldn't commit to aircraft as far out into the future as we committed to those last five 787s. But when we saw the demand being what it had become, we decided to go ahead," Gerry Laderman, Continental's treasurer and vice president of finance, tells USA TODAY. (Related item: How the big airlines stack up in fleet orders)

So, as U.S. airlines struggle with plans for fleet renewal (see above), which carriers are flying the oldest planes? USA TODAY writes that "among the big carriers, Northwest Airlines has the oldest fleet as measured by average age: 18 years, according to the company." But the paper adds that "not all big carriers face the same challenge. Continental continued to take deliveries of new planes in the post-9/11 era and has the youngest fleet of the bunch. Average age: less than 10 years." Another big U.S. airline, US Airways, made news last month at the Paris Air Show when it ordered 92 new Airbuses at an estimated cost of $10 billion. For more detailed information, check out this USA TODAY chart that shows "how the big airlines stack up in fleet orders."

Add 2003 "American Idol" runner-up Clay Aiken to the list of entertainment personalities who have run into trouble on commercial flights. The Associated Press says the singer "apparently got into a dispute with a woman during a flight to Tulsa, drawing some scrutiny from FBI agents but no charges, a newspaper reported. … FBI Special Agent Gary Johnson told the Tulsa World there was a dispute between a male passenger and a woman on the flight. He said the man was a former 'American Idol' contestant but did not give his name."

The incident seems to have come to light during Aiken's concerts in Tulsa during the weekend. According to AP, Aiken "joked on-stage about being beaten up by a girl earlier in the day" –- an apparent reference to his Saturday morning flight on Continental. The FBI's Johnson says the dispute came when a male passenger –- presumably Aiken –- rested his foot on a woman's armrest. The dispute escalated to the point where the woman gave a "minor shove," though Johnson says the flight crew was ultimately "able to resolve the situation."

In case you missed this from last week, USA TODAY writes: "Northwest and Delta airlines, along with four other members of the SkyTeam global airline alliance ... asked the Transportation Department for expanded antitrust immunity that would allow them to act together in scheduling, pricing and operating their trans-Atlantic services. Currently Delta has antitrust immunity with Air France, Alitalia and CSA Czech Airlines, while Northwest and KLM Royal Dutch Airlines have immunity."

"The request is to expand the immunity to cover all six of the carriers. Four of the carriers, Delta, Northwest, Air France and KLM, also plan to form a joint venture to 'create a comprehensive and integrated partnership… across the Atlantic.' Continental, the third SkyTeam member from the USA, is not included in the request for antitrust immunity." Business Travel News says that "although a similar filing for antitrust immunity in 2005 went without DOT approval, the recent Open Skies agreement between European Union and United States is expected to ease regulatory hurdles for alliances seeking immunity."

Continental and its pilots union began talks Monday on a new contract. The Houston Chronicle writes "the pilots' union had requested early talks so the parties will have more time to reach a deal by the end of 2008. Management agreed, and the two sides issued a joint release announcing the deal." In contrast to labor-management relations at some other big carriers, the pilots union praised Continental's leaders for working with the union.

"Continental Airlines management has shown that it is interested in working with its pilots in a way that other airlines are not," Capt. Tom Donaldson, chairman of the governing body of the Continental pilots' union, is quoted as saying by the Chronicle. "Working with employee groups and not against them is one of the best ways, we believe, of contributing to an airline's success."

Capt. Jay Pierce, chairman of the union's negotiating committee, tells the Chronicle the talks will center on 13 sections of the contract between now and March. The Chronicle adds the early round of negotiations will "cover matters such as moving expenses, crew meals, the hotels where pilots stay and insurance benefits. More difficult issues, such as compensation, will follow, (Pierce) said."

Continental and India's Kingfisher Airlines announced today that they have entered into a "comprehensive partnership." In a press release, the airline says that starting Oct. 1, "members of the two airlines' frequent-flier programs … will be able to earn and redeem miles on all flights operated by the other carrier. Reciprocal airport lounge access for eligible customers … will also begin at this time."

By the end of the year, Continental hopes to place its "CO" code on Kingfisher flights connecting to Continental's daily flights between Delhi and Newark and upcoming service between Mumbai and Newark. "Customers traveling on connecting flights between Continental and Kingfisher will be able to have single check-in for all flights, including the issuance of electronic tickets, boarding passes and checked baggage to their final destination," the airlines' release says. Kingfisher says it currently operates 187 flights a day to 29 Indian destinations, according to AP.

Ohio is trying to persuade Continental to keep –-  and grow -– the airline's Cleveland hub. The state has offered $16 million in incentives meant to encourage the airline to add flights and around 700 jobs at Cleveland Hopkins International Airport, The Plain Dealer of Cleveland reports. The paper says "a letter from Lt. Gov. Lee Fisher to Continental disclosed for the first time that taxpayers might invest millions of dollars to renovate and build new ticketing and passenger reception areas for Continental. Until now, the state had confirmed only a $900,000 grant to the airline." The $900,000 grant is to help pay for new equipment and machinery.

The Associated Press writes "the incentives would be a combination of grants, loans, tax credits and hiring services. Continental estimates the expansion of its Cleveland hub would cost $50 million. The site competes with the airline's other hubs in Houston and Newark, N.J., for capital improvements." Continental spokeswoman Mary Clark says the airline's decision on whether to expand Cleveland -– or one its other hubs -– will rely heavily on public investment, according to The Plain Dealer. To help Continental grow in Cleveland, AP notes the airport this year "opened a $7.5 million automated baggage screening system exclusively for Continental." And starting next summer, Continental plans to begin Cleveland-Paris nonstops.

It may be time to start cranking up the airline-merger rumor mill again. The Charlotte Business Journal (free registration) writes "comments last week by United Airlines' Chief Financial Officer Jake Brace have fueled speculation the carrier may be interested in a merger with US Airways. … During a Merrill Lynch & Co. Inc. Global Transportation Conference, Brace said United is looking for a partner with a strong presence in the Northeast and a Southern hub with good access to the Caribbean and Latin America." So what airline could that be? The Business Journal says US Airways "fits most of that definition -- though it isn't the only airline that does."

Indeed, industry observers seem to agree that United's Brace was likely suggesting other carriers. "I think the two he had in mind were Delta and Continental," Michael Derchin, an airline analyst at FTN Midwest Securities, says to the Business Journal. While US Airways possesses most of the regional strengths mentioned by United's Brace, the airline does not have a Latin American presence that matches either Continental's or Delta's. Calyon Securities analyst Ray Neidl tells the Business Journal "United would like to merge with almost anyone, but US Airways is probably down the list."

But some wonder if US Airways could move up the list if United doggedly sticks to efforts to pursue a merger. "United would want to do things as soon as possible," predicts FTN Midwest’s Derchin. "They have not been able to get their first or second choices (Continental or Delta) to entertain discussions," he adds. "And that," the Business Journal suggests, "may leave the door open for a deal with US Airways."

But what about federal antitrust concerns, which ultimately caused a previous United-US Airways merger attempt to fall apart in 2001? Roger King, an airline analyst at CreditSights, says the government would not stand in the way now. "The Feds realized the airline industry needs to be consolidated. They would allow a merger. It's time for them to let the market work it out," he says.

Get ready for more competition among U.S. airlines as they battle for a raft of new rights set to be awarded to fly between the USA and China. Travel Weekly (free registration) writes the Department of Transportation last week "invited applications from U.S. airlines for the right to offer new service to China this year, next March and March 2009. The DOT plans to make selections for all the routes in the same proceedings."

Crain's New York Business (free registration) writes that under the latest agreement between U.S. and Chinese aviation officials, "seven new daily routes will be added between the two countries over the next three years. In 2007, the (DOT) will choose a new carrier for one additional route using a bid process similar to the one it undertook in January, when United Airlines won the rights to a nonstop service from Washington, D.C., to Beijing. Next year, one nonstop daily flight will be added between the U.S. and Guangzhou, China, to be provided by an incumbent carrier. In 2009, the DOT will add another new carrier, as well as distribute four available daily routes between the two countries."

Travel Weekly (free registration) writes that "Delta didn't waste any time in launching a campaign to enlist public support for its proposed Atlanta-Shanghai service." Right after the DOT officially called for proposals for new China routes (see above), "Delta immediately launched a website, www.nextgatewaytochina.com, to explain why it should get the route and ask people to sign an online petition in support," Travel Weekly writes. But Delta will have competition. US Airways, for example, has already announced its intention to apply for rights to fly to China from its Philadelphia hub.

And, as expected, Continental is already signaling its intent to apply for additional routes to China. "Applying is definitely on our radar," Continental spokesman David Messing tells Crain's New York Business (free registration). "We're very interested in serving the Newark-Liberty to Shanghai route." American, Northwest and United are also expected to bid for additional China service.

One airline that won't be applying is Hawaiian Airlines. Airline spokesman Keoni Wagner tells the Honolulu Star-Bulletin that "Hawaiian remains interested in serving China and helping to develop its enormous potential as a visitor market for Hawaii, but the current difficulty for citizens of China to get tourist visas from the U.S. government has led us to conclude that a daily service between Hawaii and China is not commercially viable today." Hawaiian unsuccessfully bid for a Honolulu-Shanghai route in 2005.

Continental Airlines is apologizing to passengers who were on an Amsterdam-to-Newark flight in which the jet's lavatories "started spewing sewage," according KING-TV of Seattle. The station writes passengers on the flight "had to hold their noses for hours as sewage overflowed from toilets while they were high over the Atlantic." AP adds "Flight 71, with 168 passengers on board, had taken off June 13 ... but made an overnight stop in Shannon, Ireland, to fix the lavatory problem, (Continental spokesman Dave) Messing said. He said everything appeared to have been fixed before the plane took off again for Newark the next day, renamed Flight 1970, but then 'the problem developed again.' "

Passenger Collin Brock tells KING-TV that flight attendants warned passengers not to eat or drink too much since the lavatories were out of commission. "To be blatantly honest, I was more nervous than I had ever been on a flight," Brock is quoted as saying by KING-TV. Once the flight landed in Newark, airline employees say they determined the problem was created when someone tried to flush latex gloves down the toilet. "We deeply regret the serious inconvenience to our customers and are apologizing to them and compensating them for the poor conditions on the flight as well as the diversion and delay," Messing is quoted as saying by AP.

The overflowing lavatories weren't the only unusual incident on a Continental-branded flight during the past week. The Newark Star Ledger writes that a pigeon "somehow … got inside a Continental Express plane [Tuesday] morning at Newark Liberty International Airport and did not take kindly to a female flight attendant who tried to shoo it away. The bird headed for the attendant instead of the door, hitting her in the head and drawing blood, according to a passenger." As a result, the flight to Grand Rapids, Mich., was delayed an hour and 19 minutes while a replacement flight attendant was located. 

Buffalo travelers will lose their nonstop connection to Albany, the New York state capital. "Continental Airlines confirmed Tuesday its subsidiary, Continental Connection, will eliminate the two daily flights July 7," The Buffalo News writes. "This is the first in our memory that there won't be nonstop service from Buffalo to Albany," Buffalo airport chief Lawrence Meckler tells the News. Continental affiliate CommutAir currently uses 19-seat Beachcraft 1900s on the route. "I'd say it's a market-driven decision," says Buffalo Assemblyman Sam Hoyt. "If the demand was there and there was money to be made, other airlines would be jumping in."

Photo credit: A CommutAir flight in Buffalo on Monday, June 18. By Ben Mutzabaugh, USA TODAY.

Continental says it has reached a marketing agreement with China Southern Airlines, the biggest Chinese carrier, according to USA TODAY's international edition. The paper says "the agreement allows customers to book connecting flights on both carriers using one ticket and earn frequent-flier miles on either airline. Joint frequent-flier benefits begin in September; the flight marketing agreement in November. Continental will add its ticketing code to China Southern flights connecting to the U.S. carrier's Newark-Beijing flight and to China Southern flights between Los Angeles and Guangzhou. China Southern will do likewise on Continental flights connecting with the Chinese carrier at Los Angeles." The agreement also includes a reciprocal use of airport lounges, AP adds.

Continental and JetBlue were rated the top U.S. airlines of their types according to the J.D. Power and Associates 2007 North America Airline Satisfaction Study released this morning. Continental was named the top traditional hub-and-spoke carrier for the second year in a row, earning a "satisfaction index score" of 704 out of a possible 1,000. Delta -– with a score of 680 –- and American (670) finished second and third, respectively, among the traditional carriers.

"Not only does Continental maintain its position as the highest-ranked traditional network carrier, but it also improves in overall satisfaction by seven index points over the 2006 study," says Linda Hirneise, executive director of the travel practice at J.D. Power and Associates. J.D. Power says it defines "traditional network carriers … as airlines that operate multi-cabin aircraft and use multiple airport hubs."

Among low-cost carriers, JetBlue earned J.D. Power's top ranking for the third year in a row. In a press release, J.D. Power says JetBlue "earns particularly high ratings in the low-cost carrier segment across all seven customer satisfaction measures — despite a double-digit segment decline in overall satisfaction since 2006. JetBlue achieves an overall satisfaction index score of 810 of a possible 1,000 points and is followed in the rankings by Frontier Airlines (750) and Southwest Airlines (744)."

J.D. Power's Hirneise says that although JetBlue "fell prey to severe weather delays in February 2007, they have been able to retain feelings of goodwill among their passenger base." J.D. Power defines low-cost carriers "as airlines that operate single-cabin aircraft with typically low fares." Still, Hirneise says other low-cost carriers –- notably Frontier -– "are working to close the gap" on JetBlue.

J.D. Power says its study measures "overall customer satisfaction based on performance in seven measures (in order of importance): cost and fees; flight crew; in-flight services; aircraft; boarding/deplaning/baggage; check-in and reservation. …  The study is based on responses from 9,653 passengers who flew on a major North American airline between April 2006 and April 2007."

Speaking at Wednesday's Merrill Lynch Global Transportation Conference in New York, Continental CFO "Jeff Misner acknowledged that his airline has been criticized for growing too fast, but he defended his airline's plans to expand its capacity by between 5% and 7% a year," writes The Dallas Morning News (free registration).  "We feel that's a very manageable, comfortable rate of growth," Misner is quoted as saying in the Morning News. "It keeps the machine in place, if you will, of hiring, training and bringing people on board. Everybody we bring on board now is coming off the streets, so that growth we've got from a labor-unit cost basis is very low-cost. Everybody is back from furlough. Everybody comes in at the bottom of the wage scale."

Despite Misner's defense of Continental's growth plan, however, the airline agreed on Wednesday to defer until 2010 the delivery of six of the 30 Boeing 737 aircraft it was to receive in 2009. AP says Continental "still plans to take delivery of 30 planes in 2008 and 24 in 2009." The Morning News adds that the airline also "is looking to lease or sell at least five of its older Boeing 737-500 jets and perhaps get rid of all 15 in its fleet if it finds takers, Mr. Misner said."

With finances of U.S. airlines improving, Reuters writes that carriers "are balancing their need for newer, more fuel-efficient planes with the need to place expensive orders at the optimal time. For years, experts have said the time is at hand for a flood of U.S. orders. Those orders have yet to materialize, however, as carriers wait for financial stability and a more modern narrow-body plane." Airline consultant Michael Roach takes stock of U.S. airline fleets by saying: "The average age of the fleet is amazing, and it's time to start serious renewal."

So, what's the holdup? Roach thinks some airline may be delaying orders to wait for what Reuters calls "the next wave of narrow-body technology that is not due for several years." Roach says: "I think there's a lot of reluctance on the part of the carriers to go out and buy a lot of an already obsolete aircraft." At American, the USA's biggest carrier, the airline has accelerated the deliveries of 47 Boeing 737-800 jets that will help it begin replacing its less fuel-efficient MD-80 aircraft. Still, AA CFO Tom Horton tells Reuters he thinks the "industry needs to be very careful about allocating further capital until they can prove they can get a return on that capital."

Reuters says that of the USA's traditional carriers, "Continental Airlines has the youngest fleet with an average age of 10 years old, according to Fitch Ratings data." John Greenlee, Continental's managing director of fleet planning, says. "We've been very disciplined over the last 10 years. It does pay to have that advantage as a younger fleet." The oldest fleet? That would currently be Northwest, where the average aircraft is about 18 years old. Reuters notes that NWA "is in talks with unnamed makers to replace its DC-9 aircraft, which are at least 25 years old."

Continental Airlines last week began flying to Loreto, Mexico, from its hub at Houston Bush Intercontinental. The carrier will fly the route Thursdays and Sundays during peak travel season (summer, winter and spring). Continental says the Loreto flights are timed for convenient connections to the Midwest and East Coast. Loreto is located on Mexico's Baja California peninsula.

One of today's most interesting airline-related articles comes from The Washington Post (free registration), which reports that some carriers are enlisting executives to monitor chat rooms and other forums in an effort to stay ahead of customer-service issues. Though several airlines have joined the trend, the Post writes that "none of the carriers has weighed into the often passionate, quirky and nit-picky airline blogosphere like Continental."

In fact, Continental has even assigned one of its workers to monitor Flyertalk and other airline-focused sites. That person is Scott O'Leary, who the Post describes as "a customer service guru at Continental who spends several hours each day prowling such Web sites for customer complaints." The Post writes that "since being assigned to monitor Flyertalk, http://www.airliners.net and blogs on various Web sites, O'Leary has solved dozens of problems that irritate road warriors. He has posted more than 500 comments in the past year alone on Flyertalk, most answering questions, shooting down rampant rumors or highlighting a change in the airline's frequent-flier program."

"These are free focus groups," O'Leary tells the Post. "Every airline executive in his right mind is reading Flyertalk and other sites. If it is bothering these customers, it is probably bothering others who don't post on the sites." In addition to helping solve individual issues, O'Leary has also helped Continental make changes based on comments first found on the Web. Adding an elite check-in line in Houston and streamlining seat-assignment procedures are two example. As for the customers O'Leary is monitoring, the Post writes that "Flyertalkers generally agreed that they enjoyed having O'Leary on their forum because he doesn't overwhelm them with company propaganda and usually answers their questions."

Continental Airlines begins non-stop service to Athens, Greece, from its Newark hub today. The carrier will operate one daily round-trip flight between the cities using a 174-seat Boeing 767-200ER aircraft. The jets will be configured with 25 seats in Continental's BusinessFirst cabin and 149 in coach. In a press release, Continental says that to compensate for lower demand during the winter, "the frequency of service will be reduced to five flights weekly in November and December 2007, four flights weekly in January and February 2008, and five flights per week in March 2008 (exact dates to be decided). A daily frequency will resume effective April 2008." Athens will be Continental's 29th trans-Atlantic destination.

In a story from earlier this week, the USA and China agreed to more than double the number of daily passenger flights between the two countries by 2012. Reuters writes that "one (daily) flight will be awarded this year and next followed by four in 2009, three in 2010 and two each in 2011 and 2012. The 2008 service will be limited to Guangzhou." The Chicago Tribune (free registration) adds that "transportation officials said two new flights, one to be awarded this year and another in 2009, will go to airlines that do not serve China. That means, the likely winner would be either Delta Air Lines, the largest U.S. airline now shut out of China, or U.S. Airways, or both. They, plus the four airlines already serving China, account for the bulk of U.S. air travel abroad."

As for the slot to be awarded this year to a new-entrant carrier, the DOT says it could make a decision by this summer. Delta has proposed Atlanta-Shanghai service while US Airways has indicated it hopes to fly to China from Philadelphia. The Tribune says airlines will be lining up to win rights to the lucrative new routes. The paper adds the increased flights to China could "open up a … market dominated by United Airlines." But even with the increase flights, experts say fares may not be impacted. "The demand for travel over there is so great, and the supply is so constricted, the price of the good seats will stay high," says aviation consultant Darryl Jenkins.

While none are eligible to bid for the 2007 route, the four existing U.S. carriers that currently offer service to China (American, Continental, Northwest and United) are expected to bid for more flights in the future. "We still have our sights set on flying a Newark-Shanghai route, and the new agreement makes that achievable," a Continental spokesman tells Crain's New York Business.

Officials from American and Northwest say they also will make future bids. And even though it already holds a dominant position among U.S. carriers, United says it shouldn't be discounted when bidding starts on other China routes. "As we learned when we applied for Washington-Beijing service, the best route proposal that benefits the most customers wins the day," United spokesman Jean Medina says to the Tribune. And there could be some unexpected bidders. Hawaiian Airlines, for example, unsuccessfully applied for China rights in the past.

In case you missed this story from yesterday, USA TODAY writes that "airline passengers are some of the most dissatisfied consumers in the USA, says the University of Michigan's American Customer Satisfaction index." The industry earned its worst mark in survey since 2001, even faring worse than the oft-maligned Internal Revenue Service. "If a company has a score close to the IRS' score, something is awfully wrong," Claes Fornell, the study director, tells USA TODAY. Of the 19 industries included, only the cable and satellite TV industry turned in a score worse than the airlines'.

What led to the lower-than-usual ratings? "According to the study, the year-to-year drop is the result of 'the same problems that have pulled airline passenger satisfaction down the past few years -- disenchanted employees, increasing fuel costs, bankruptcy, and now also record levels of lost, delayed and damaged luggage,' " USA TODAY writes. The best-performing airlines in the survey were Southwest and Continental –- two airlines accustomed to finishing at or near the top of aviation-industry ratings.

"United Airlines and Delta Air Lines, both of which restructured under Chapter 11 in recent years, ranked last and next-to-last, respectively," The Associated Press writes. USA TODAY adds that United is "lowest among the seven airlines mentioned in the survey. It also registered the largest year-over-year drop -- 7 points -- and is 'one of the lowest-scoring companies measured by the ACSI,' the study says." United spokeswoman Robin Urbanski says: “We are committed to doing a better job at giving customers the service they expect," says United spokeswoman Robin Urbanski.

Continental Airlines announced on Wednesday that it would push up the start date of its proposed Newark-Mumbai (Bombay) service following "a positive market response." The carrier now plans to begin service Oct. 1, pending government approval. Continental initially will fly four times a week on the route, with flights departing Newark on Sundays, Mondays, Fridays and Saturdays. The airline plans to make the service daily on Oct. 28, pending government approval. Originally, Continental had set an Oct. 30 launch date for the route.

An attempt by U.S. airlines to raise fares appears to be gathering strength. Continental and American "said Friday they raised fares systemwide on flights in the continental United States by $5 each way in what may be a crucial test of industry pricing power ahead of the busy summer travel season," Reuters writes. The latest attempt –- which Reuters says was initiated by Continental -– follows two other recent fare hikes led by United and Southwest. Some industry observers had expressed skepticism that new fare hikes would stick since many large U.S. carriers have recently reported the consumer demand seemed to be wavering.

Both Continental and United reportedly are looking to secure landing rights in the United Arab Emirates, according to a report in the Gulf Times. "Marion Blakey, Administrator of the Federal Aviation Administration (FAA), said the two airlines were keen to follow in the footsteps of Delta Air Lines, which will begin flights from its Atlanta hub to Dubai in late May," the paper writes. The Times did not say what city either airline would be interested in, though the UAE city of Dubai has become a hot choice among world carriers during the past few years.

Blakey also suggested to the Times that either Continental or United could enter into a passenger-sharing codeshare alliance with the UAE's Etihad Airways. Etihad is based in the UAE capital of Abu Dhabi and currently offers non-stop service to the North American cities of New York and Toronto. A spokesman for Etihad tells the Times that the carrier "is engaged in lots of discussions with other airlines, but in no way is anything imminent and on the table."

Flights are set to resume on May 1 to three West Virginia cities that lost airline service last month after the Federal Aviation Administration grounded regional carrier RegionsAir. RegionsAir, operating as a Continental affiliate, had been the only airline offering service to Parkersburg, Clarksburg and Morgantown. Now, Colgan Air will begin flying to those cities as a US Airways Express carrier. The airline will fly three non-stop flights each weekday and two flights during the weekend to Pittsburgh, according to The Associated Press.

Continental Airlines today reported a net income of $22 million (21 cents per share) for the first quarter, beating Wall Street expectations and giving the airline its first first-quarter profit since 2001. That quarter is traditionally a weak one for U.S. airlines. Reuters writes Continental was "helped by fuller planes, higher fares and a slight decline in fuel prices." During the same quarter a year ago, Continental reported a loss of $66 million (76 cents a share). Reuters writes that "excluding a gain from the sale of the company's holdings in regional carrier ExpressJet Holdings and some other one-time items, Continental reported profit of 25 cents per share. On that basis, Wall Street analysts were expecting 14 cents, according to Reuters Estimates."

Boston's Logan International is among the airports featured this week in USA TODAY reporter Roger Yu's Airport Check-in column. In his column, Yu writes:

"Boston Logan officials are considering a plan that will move Continental Airlines to Terminal A from Terminal C. Terminal A is about one-third empty and primarily used by Delta Air Lines. The airport's promise to JetBlue for three more gates in Terminal C in 2008 is prompting the discussions."

Check out the full version of Yu's column online.

Continental Airlines announced Wednesday that it contributed an additional $30 million in cash to its defined-benefit pension plans. The carrier says that brings its total year-to-date contribution to $136 million, adding in a press release that amount "exceeds the minimum funding requirement applicable to Continental's plans."

Continental says it expects to contribute $320 million to its pension plans this year, "significantly exceeding its minimum funding requirement of $185 million for the year," the company says in its release. "We are committed to fulfilling our pension obligations and keeping our promise to co-workers," says Continental CEO Larry Kellner.

A Continental Airlines flight bound for Tel Aviv was intercepted by Israeli fighter jets this morning after the airliner lost contact with air traffic controllers in a communications failure, Israeli security said. The Associated Press writes: "Following anti-terror procedures, two Israeli warplanes intercepted the plane and guided it back over the Mediterranean Sea until communications were restored, Channel 10 TV reported. When it was determined that there were no problems on board and the pilot was in control, the plane was allowed to land at Israel's international airport, the officials said, speaking on condition of anonymity because of the sensitive nature of the incident."

If you feel like flights are getting more and more crowded, it's not your imagination. USA TODAY writes that "most of the USA's biggest airlines operated their planes fuller last month than in any previous March, virtually snuffing out hope among passengers for an empty middle seat to sprawl across."

Four carriers –- American, Delta, Continental and United -– each announced last week that they reported their highest-ever percentages of filled seats for the month March. While that's good for airline finances, it's not necessarily good for passengers –- especially if weather disrupts flight schedules. Take, for example, the poor weather that created havoc for many travelers flying last month during the busy spring break season. "Due to cancellations, airlines had to consolidate passengers on fewer planes than initially planned. Planes were so full that passengers waited days to be rebooked on other flights," USA TODAY writes.

Despite the notoriously frosty relations common between labor and management at most U.S. carriers, company leaders are increasingly turning to front-line workers for cost-cutting suggestions, the St. Paul Pioneer Press (free registration) reports. "As jet fuel continues to hover around $2 a gallon -- nearly triple the cost just five years ago -- airlines are turning to employees to learn more ways to save fuel. Ideas, no matter how small, can add up to big dollar signs with airlines using billions of gallons of fuel each year. Every 25 pounds removed from a plane saves $200,000 a year," the paper says.

"As a line pilot, you're out there and you see how the operation really works," Lindsay Fenwick, a Northwest pilot who retired eight days ago, says about the unique perspective front-line workers have. He's one of many Northwest workers who have used their front-line observations to suggest cost-cutting ideas to management. "These are no-brainers," he tells the Pioneer Press. Northwest has received more than 300 such ideas from its workers since last summer. At Continental, the Pioneer Press writes "more than 400 suggestions by employees helped save about $190 million, or 95 million gallons of fuel, in 2006."

Industry consultant Robert Mann says: "It's not just public relations. People do feel that (companies) are listening. And people see their ideas implemented." However, not all workers have been swayed. "Northwest has done this before -- asked for input from employees. In the end, no one received credit, no one saved our jobs and no one avoided pay cuts," Terri Kurita, a 28-year Northwest flight attendant tells the Pioneer Press. "Everybody's pretty jaded by the experience."

Beginning June 9, Continental Airlines will add seasonal service between its Cleveland hub and Quebec City. The carrier will fly from Cleveland to Quebec on Saturdays, with the return flight operating on Sunday mornings. The flights will be operated by Continental's Continental Express partners using 50-seat Embraer ERJ-145 regional jets. In a press release, Continental claims the flights will mark the "first-ever non-stop scheduled service" between Cleveland and Quebec's Jean Lesage International Airport. The airline adds "the flights will enhance Continental's existing service to Quebec from its New York hub at Newark."

AA's decision to expedite orders for 47 Boeing 737 jets (see above) could just be the tip of the iceberg. The Associated Press writes that "the moves by the world's largest airline likely herald a surge in orders for new planes from the Boeing and Airbus from long-established 'legacy' carriers, including several that have been through or remain in bankruptcy reorganization proceedings and now operate aging fleets, analysts told the Seattle Post-Intelligencer."

Scott Hamilton, an aviation industry consultant whose Leeham website keeps readers up to date on the Airbus-Boeing rivalry, tells the Post-Intelligencer: "The U.S. legacy carriers can't put off for much longer ordering replacement planes, and that's what we are starting to see." As examples, the paper notes that US Airways is considering an order for as many as 60 single-aisle jets while Continental and Northwest have already put in orders for Boeing's new 787 Dreamliner model.

Continental Airlines CEO Larry Kellner reiterated his desire to keep the Houston-based carrier independent, according to the Houston Chronicle. "My general belief is that if the industry stays as it is, we don't see huge benefits in consolidation for us," Kellner is quoted as saying by the paper. "We are very well-positioned competitively." The paper adds that "Continental has maintained that position for months, but each comment is closely scrutinized for any hint of change in light of the spate of takeover speculation" that has ramped up in the past year or so.

American Airlines will drop its opposition to Virgin America's bid to begin flying, "a further sign that efforts to keep the startup grounded are waning," the San Francisco Business Times (free registration) writes. AA "told the U.S. Department of Transportation it will not object to the tentative approval of Virgin America's operating license. Meanwhile Continental Airlines, which battled Virgin America for more than a year, has been silent on the startup for more than two months," the paper reports.

Virgin America appears closer to takeoff after the DOT gave the airline tentative, conditional approval this week to begin flying in the U.S. The airline had faced questions about whether it was in the "actual control" of U.S. citizens, as required by federal law. American spokesman Tim Smith tells the Business Times: "It is fair to say that we had previously made all our points and concerns known in our original filing and it would serve no purpose to restate those again."

Continental is wasting little time trying to take advantage of the new "open skies" agreement that was reached this morning by European officials. The airline issued a press release saying that it "applauded today's approval of an open skies agreement between the U.S. and the European Union which will provide Continental with flights access to London's Heathrow Airport for the first time. Upon news of the European Commission vote, Continental immediately filed an amended application at the U.S. Department of Transportation for rights to serve new routes to Europe once the open skies agreement takes effect."

Continental adds that it "plans to inaugurate service from its Houston hub to London/Heathrow before summer 2008, subject to government approval and the airline obtaining necessary slots and facilities at Heathrow Airport. As it expands into Heathrow, the airline will retain service to London/Gatwick currently offered from the airline's three U.S. hubs."

Photo credit: An image of what Continental's 787 fleet will look like. Courtesy of AFP/Getty Images.

Flight schedules at Newark's Liberty International Airport were disrupted yesterday after the "right engine of a Continental Airlines jet shattered during an aborted takeoff, sending debris flying across one of the airport's runways," The Record of northern New Jersey writes, citing airport officials. The airport "briefly closed the runway after Continental Flight 84 aborted its takeoff when the engine malfunction occurred. The plane, a Boeing 777, was carrying 260 passengers and 16 crew members, was headed to Tel Aviv, said Mary Clark, an airline spokeswoman," adds the Record.

The incident was at least the second for Continental this week. On Monday, a Continental jet bound for Newark aborted its takeoff and came to an abrupt stop after pilots reported a "thrust problem," writes Channel 3 of Las Vegas. That Continental flight was on a Boeing 757-300 with 216 passengers and seven crew. The station adds "the mishap was the second in week involving aborted takeoffs … at the Las Vegas airport. A week ago, an Air Canada jet carrying 146 people skidded to a stop after tires blew and engines were damaged during acceleration down a runway. That was an Airbus A-320. Officials say pilots reported brake problems before the March 12th mishap." No one was reported hurt in any of the incidents.

Continental and Southwest were named the USA's most admired airlines according to Fortune magazine's 2007 World's Most Admired Companies survey. Among global airlines, Continental placed first, beating out Singapore, Lufthansa, British Airways and Air France/KLM. In a press release touting its finish, Continental says it "placed No.1 in all categories measured to determine the most admired global airlines: innovation, people management, use of corporate assets, community/environment, quality of management, financial soundness, long-term investment value, quality of products and services, and globalness."

When looking at only U.S. carriers, Continental edged out Southwest for the top spot in the Fortune rankings. Rounding out the top five were JetBlue, Alaska Air and American. However, when looking at the overall rankings for "America's Most Admired Companies" in 2007 -– regardless of industry -- Southwest placed No. 5 on the list, trailing General Electric, Starbucks, Toyota Motor and Berkshire Hathway. Southwest was the only passenger carrier to show up in the top 20 in the overall category. And, in the overall category for "global companies," 17th-ranked Singapore was the only passenger airline to show up in the top 50.

While the grounding of RegionsAir has disrupted several of American Airlines' commuter routes (see above), three West Virginia airports also have lost all of their commercial service during the debacle. RegionsAir operated ContinentalConnection flights to the West Virginia airports of Clarksburg, Morgantown and Parkersburg. Those cities are now without airline service through May 1, when US Airways affiliate Colgan Air takes over flights from those airports.

Perhaps surprisingly, some local officials say RegionsAir's issues haven't had that much of an effect on the West Virginia airports. "Regions being grounded has not done much harm to area businesses because they were not very reliable when they were flying," Mike Jacoby, executive director of the Southeastern Ohio Port Authority, says to the Marietta (Ohio) Times. Marietta, Ohio, is just across the Ohio River from Parkersburg, W. Va. Keith Burdette, president of the Wood County Economic Development Authority, added: "I don’t think many flyers are affected by Regions being grounded because they are not used to flying out of the area. The service was inconsistent for so long."

Continental passengers traveling through the airline's Newark hub soon could find themselves flying onboard Bombardier Q400 74-seater turboprop aircraft. Air Transport World writes that "Pinnacle Airlines yesterday signed a contract for 15 74-seat Q400s plus 10 conditional orders and 20 options. … Aircraft will be operated by Pinnacle subsidiary Colgan Air for Continental Connection." The Wichita Eagle adds that Colgan will operate the planes "primarily at Continental Airlines' hub at Newark Liberty International Airport."

Boeing had a banner day Monday, racking up a whopping $4.5 billion in commercial plane orders. The U.S. aircraft manufacturer hit that total after "Continental Airlines upped an existing order and operators from Russia and Kuwait agreed to buy more planes," CNN/Reuters reports. In particular, Boeing has been boosted by the sales of its new fuel-efficient 787 Dreamliner model, which is expected to enter commercial service in 2008. Boeing confirmed 11 new 787 orders Monday according to The Associated Press, which adds that "the deals widened [Boeing's] lead over European rival Airbus, whose competing A350 widebody is five years behind the 787 in development."

Analyst Richard Aboulafia of the Teal Group tells AP that the soaring orders for Boeing's 787 establish that model as "the most successful widebody launch in the history of the industry." So far, Boeing has received 475 orders for the 787. "They're over a year away from first delivery and closing in on 500 orders. That's unprecedented," Aboulafia says. Reuters adds that "the orders underline airlines' excitement" about the 787 while also keeping the "pressure on European rival Airbus, which has seen its share of the lucrative wide-body and freight markets slide dramatically." The "new carbon and titanium jet … will be able to service fast-growing routes between the United States, Asia and Europe, promising big fuel savings due to its lower weight," Reuters adds.

Continental Airlines announced this morning that it intends to buy five additional Boeing 787 Dreamliner jets. That increases the number of 787s Continental has on order to 25 from 20. The Associated Press writes that "the additional planes will help [Continental] expand its international service and will replace less efficient wide-body jets. Financial terms were not disclosed."

Continental also announced plans to "convert 12 of [its] original order for 787-8s into 787-9s. That means Continental now has a total of 17 787-9s on order and eight 787-8s," Reuters writes. The news agency adds that the "the 787-8 version is designed to carry 210 to 250 passengers on routes of 7,650 to 8,200 nautical miles. The larger, more expensive 787-9 can take 250 to 290 passengers on routes of 8,000 to 8,500 nautical miles."

The Federal Aviation Administration has grounded flights on regional carrier RegionsAir, a small feeder airline that operates flights for American and Continental. The Herald & Review of Decatur, Ill., says RegionsAir announced late Thursday that many of the airline's routes would be suspended indefinitely. That marks the second time in a week that the FAA has grounded the carrier. The issue apparently centers on wording in the airline's training manual that doesn't meet the federal agency's approval. That issue also caused the FAA to halt RegionsAir's flight this past Saturday, according to Channel 14 WFIE of Evansville, Ind.

At that time, RegionsAir spokesman Nate Vallier told Channel 14: "This was pretty much an administrative issue. It had nothing to do with safety. I mean at no time was the safety of our passengers or our crews in jeopardy." As for the latest episode, Vallier tells the Herald & Review that "the issue that we felt was rectified on Saturday has obviously crept back up again. There were a variety of discussions with the FAA. It's just been a little confusing because we thought we had this issue resolved." According to its website, RegionsAir flies 12 AmericanConnection routes to AA's St. Louis hub and three ContinentalConnection routes to Continental's Cleveland hub.

Beginning Oct. 30, Continental Airlines will add daily non-stop service between Newark and Mumbai, India. Continental will fly one daily round-trip flight on the route using Boeing 777-200 jets. Mumbai -- formerly known as Bombay -- will be Continental's 30th trans-Atlantic destination and second in India. The carrier has flown between Newark and Delhi since 2005. Flying time to Mumbai will take about 14 hours, 50 minutes, with the return flight taking about 16 hours, 15 minutes.

In a press release, the airline says its new service "will be timed to provide convenient connections at Continental's New York hub with more than 230 other cities throughout the U.S., Canada, Latin America and the Caribbean." Jim Compton, Continental's executive vice president for marketing, adds: "Mumbai is the largest trans-Atlantic market not currently served by Continental and offers significant opportunities for growth in the future." But Continental won't be the only airline offering service between the New York City area and India's largest city. Delta began flying between Mumbai and New York JFK on Nov. 1.

While JetBlue's latest round of cancellations and delays at New York JFK were capturing most of the media's attention this morning (see below), the winter storm that moved into the Northeast last night also created headaches at other airports in the region.

At Newark Liberty International –- a major hub for Continental –- airport officials said about 100 flights were canceled because of the weather, The Star-Ledger of Newark reports. Flights that still were scheduled were operating with only minor delays. KDKA Channel 2 of Pittsburgh notes that both Continental and Delta had canceled some New York-bound flights out of that city. And Bloomberg News adds: "American Airlines said it will have to cancel some morning departures from New York until planes arrived to replace those canceled yesterday, spokesman John Hotard said."

Watch out JetBlue. American says its ready to defend its position in New York where the world's largest carrier slowly has been losing market share since JetBlue began flying in 2000.  AA announced today it will begin non-stop service this September between New York JFK and Las Vegas, a key route for JetBlue. AA also will add new service on several other routes from New York, including San Francisco -– a route rival JetBlue is set to begin this year.

But in addition to staking its position against JetBlue, The Associated Press writes that "the appeal of New York is obvious. It is the nation's largest city, a major tourist destination and a hub for international flights." Home to the nation's most lucrative travel market, AA officials say they are targeting the region's business travelers who regularly pay top fares for flights on premium business routes. Other new non-stop routes that AA plans to add from either JFK or LaGuardia include Louisville, Cincinnati, Port-au-Prince and Caracas, Travel Weekly (free registration) reports. As part of AA's New York push, look for an advertising blitz that includes billboard and taxicab ads.

David Cush, AA's senior vice president for global sales, says that lately "other airlines may have been a little bit flashier, but we've been here from our beginning, more than 80 years." Indeed, AA's New York position is not a weak one. JetBlue may have moved past AA as the busiest carrier at JFK, but American is still "neck-and-neck" with Delta for the No. 2 position in the New York City area (by available seats), according to The Wall Street Journal (subscription required). Continental, with its hub at Newark, is the metro area's top carrier, while JetBlue has risen to No. 4. The Dallas Morning News (free registration) adds that "while American's relative position has slipped, it's still powerful. The New York market is so big and fragmented that no carrier has an insurmountable lead, as opposed to most large cities that have one major airline that carries over half the traffic from the main airport."

Aside from focusing on competing with fast-growing rival JetBlue, airline industry consultant Julius Maldutis tells the Morning News that AA's focus on New York also includes a push on its quality of service, including switching to mainline flights on some routes. "Consumers now are judging airlines on the quality of their service, the whole package," Maldutis says. "While everyone cut their service, Continental was the only one that maintained it -– giving pillows, meals and maintaining quality of service –- and it was shown that that it was the right move. In my opinion, American's move is a very important, positive move, recognizing what their public wants."

On June 7, Continental Airlines will begin non-stop service between its hub at Houston Bush Intercontinental and Loreto, Mexico. The airline will offer two weekly flights –- on Thursdays and Sundays –- using 50-seat Embraer 145XR jets. During the slower fall travel schedule, Continental will reduce its Houston-Loreto service to Saturdays only. Loreto is located on the southern part of the Baja California peninsula and will be Continental's 31st destination in Mexico.

As expected, the Department of Transportation finalized its decision to award United the rights for the latest non-stop route to China. The government tentatively awarded those rights to United last month, when it picked United's Washington-Beijing application over Continental (which had proposed Newark-Shanghai service) and Northwest (Detroit-Shanghai), according to The Associated Press. American had sought to fly from Dallas/Fort Worth to Beijing, though the DOT considered that bid withdrawn after AA tried to change its application amid a disagreement with pilots over the flying time needed for the route.

Now that the DOT's decision is final, United plans to start its Washington-Beijing route on March 28, with tickets going on sale Saturday. The non-stop flights will be the first to connect the two nations' capital cities. The Detroit News notes that the route was approved despite objections from Northwest and Michigan lawmakers. The paper writes that those groups had asked the DOT "to reconsider, saying the Detroit-Shanghai route would serve more business customers. But in Thursday's announcement, the department said it considered linking the two national capitals to be a primary goal. The announcement also said the Washington area is the nation's largest metro area without non-stop service to China."

Perhaps marking an end to the airline industry's post-9/11 downturn, the employment market has suddenly become hot for pilots at U.S. airlines. "But the airlines are discovering that many of the 10,000 pilots who lost their jobs during those bleak years aren't interested in returning to their old lives," writes the Chicago Tribune (free registration). "After slashing pilot jobs and pay to survive the last downturn, old-line carriers may find it tougher to hire pilots to keep pace with the industry's rebound, experts say. In fact, they appear to be facing a shortage in the decade ahead. The trend is a byproduct of the loss of financial security and prestige suffered by the airlines that have long dominated U.S. travel, increased recruiting of American pilots by foreign carriers and the global boom in commercial aviation and airliner sales," the paper adds.

About one-third of pilots across the globe work in the USA, but the Tribune says U.S. pilots are becoming "hot commodities" overseas with air-travel markets booming in places like Asia. Domestically, the Tribune says that Delta and Continental are the only legacy carriers that are hiring new pilots. Others –- such as United -– are still going through their lists of furloughed pilots. "Guys have to make a decision whether they're coming back to United or not," says Steven Derebey, a Boeing 737 captain at United and a spokesman for the company's pilots union. "When they reach the end of that [list], they will have to start looking to the outside for new pilots."

But, the surge in demand for U.S. pilots could be having other effects, according to The New York Times (free registration). It writes that "with most of the industry returning to profitability — in part by extracting billions of dollars of pay cuts from workers — pilots are demanding that they should recoup some of the pay and other benefits they gave up in recent years and share in the improved fortunes." US Airways Captain Jack Stephan, also head of the local Air Line Pilots union at the airline, tells the Times that captains on 737s (or comparable jets) once made $227 an hour at the airline. Now, following US Airways' two bankruptcies during the past few years, he says pay for those pilots has dropped to just $125 an hour. "This is truly payback time," Stephan tells the Times.

Continental announced on Wednesday that it will make an early contribution of an additional $35 million in cash to its defined benefit pension plans. Reuters writes the "airline said the money is in addition to a $71 million contribution made less than a month ago. The contribution will be made from the proceeds of the sale of shares in ExpressJet Airlines." In a press release, Continental CEO Larry Kellner said: "We remain focused on meeting our pension commitments to our employees. Our company culture is strongly linked to our co-workers' trust that we will meet these commitments now and in the future."

The subject of defined benefit pension plans has become a hot topic in the airline industry over the past few years after several carriers used the Chapter 11 bankruptcy process to eliminate their plans in cost-cutting moves. The airlines that recently eliminated their plans insisted they had to do so to be able to effectively emerge from bankruptcy. But, on the other side of the aisle, critics say those moves have now unfairly burdened carriers that opted to honor their employee pension plans and must still make payments to the plans.

With US Airways' bid for Delta off the table, some industry observers now think the push for consolidation in the airline industry may fade along with it. But that's not necessarily the case, says the Houston Chronicle. The paper writes that the failure of US Airways' attempt does not mean that other possible mergers among legacy carriers "are off the table" -– especially "if there's money to be made." But the failed attempt may stall the next round of consolidation talk. Citing Helane Baker of The Benchmark Company, the paper writes that US Airways' withdrawn offer "means Continental Airlines, [for example] — which was in talks with United Airlines before US Airways made a bid for bankrupt Delta Air Lines late last year — doesn't have to feel compelled to make any major moves" at the risk of falling behind merging rivals. "I think there was a sense that if one merged they would all merge. When one goes they all go like dominoes. But when none of them goes, they don't move," Becker explains.

The Atlanta Journal-Constitution (free registration) seems to agree, writing "the deal that was supposed to set off a flurry of marriages among U.S. airlines ended up pouring cold water on feverish consolidation talk." Industry observers and analysts now say they expect a lull in consolidation talk. "Airline mergers or talk of mergers are probably off for the next 12 months," says Calyon Securities analyst Ray Neidl. "But I think everyone will wait for Delta and Northwest to emerge from bankruptcy and then the rounds will start over again." Others, however, say that with money to be made be investors, it's simply "when" -– not "if" –- we'll hear the next merger rumor involving tow big airlines. "It's something that will eventually happen. But it's hard to say quite when ...," says Standard & Poor's airline analyst Philip Baggaley. One proposed merger that's not off, however, is AirTran's bid for Midwest. Reuters writes that "AirTran ... said [today] it was extending its offer to buy Midwest Air Group, and proposed a slate of nominees for Midwest's board." Stay tuned to Today in the Sky for more details.

Beginning Sept. 5, Continental will add non-stop service to Mississippi's Jackson-Evers International Airport from its hub at Newark. The service will be operated by Continental partner ExpressJet on 50-seat Embraer ERJ-145 regional jets. In a press release, Continental claims the flight will be the first ever to link Jackson and the New York City area. Continental also flies from Jackson to Houston, offering six daily round-trip flights on that route.

Continental became the third airline in a row to post a full-year profit for 2006, reporting a net profit of $343 million ($3.30 per share) for the 12-month period. In a press release detailing its earnings, Continental calls that a "substantial improvement over the 2005 net loss of $68 million." The airline's full-year figures come after it posted a $26 million loss (29 cents per share) for the fourth quarter of 2006, down from its $43 million (53 cents per share) deficit during the same quarter a year ago. Continental said strong fare pricing helped offset increased fuel and labor costs in improving its fourth-quarter results, according to The Associated Press.

Continental's quarterly results were substantially better than what Wall Street analysts had forecast. Reuters writes that "excluding a charge of $22 million for lump-sum payments to retiring pilots, Continental's loss was 4 cents a share. Wall Street analysts, on average, were expecting a fourth-quarter loss of 15 cents a share, according to Reuters Estimates. The fourth quarter is generally a tough period for airlines because, aside from the frantic travel over the Thanksgiving and Christmas holidays, demand is soft." Continental's recent focus on international growth also helped boost its revenue in 2006. AP writes that the airline's "total revenue grew 11% to $3.16 billion from $2.85 billion last year, driven by double-digit percentage growth in its international regions."

Like other legacy airlines, Continental has beefed up its overseas routes in recent years -- an effort to draw high-yield international travelers while avoiding low-cost competition within the USA. But the Houston Chronicle writes that "instead of concentrating solely on huge tourist draws like London, Paris and Rome, the Houston-based carrier has moved into midsize cities, establishing non-stop links between its Newark Liberty International Airport hub and places like Bristol (England), a growing business center with a population of about 400,000." In addition to Bristol, Continental has added non-stop flights to other smaller and medium-sized European cities, including Belfast (Northern Ireland), Edinburgh (Scotland), Stockholm (Sweden), and Cologne and Hamburg in Germany.

The Chronicle says "the strategy has given some European cities a first-ever nonstop link to the United States and has allowed Continental to expand its European presence greatly, despite its inability to get coveted landing rights at London's [highly restricted] Heathrow Airport." Some industry observers say the strategy is a smart one for Continental. "These places might not seem very big to most of us, but they are very important places for Continental," says Howard Wheeldon, an airline specialist at BTC Partners brokerage in London. "They're growing at an equally fast pace as larger airports like Heathrow. If they play their cards right and choose places wisely, I don't think it matters if they're not in the center of London."

James Summerford, Continental's vice president for Europe, the Middle East and Asia, tells the Chronicle that such routes are proving "very strong" for the carrier. "We have a structural advantage over other airlines that allows us to hit a lot of these secondary markets. First, we have the only hub in the New York City area, with Newark Liberty," he says, apparently not paying much credence to Delta's recently developed hub at New York JFK. "Second, we have the right kind of aircraft for these small markets, the Boeing 757-200, with 172 seats. It's great for the thin market, and it's very economical to fly. That makes routes work for us that don't work for other airlines."

Beginning June 7, Continental Airlines will add non-stop service to Athens, Greece, from its Newark hub. The carrier will operate one daily round-trip flight between the cities using 174-seat Boeing 767-200ER aircraft. The jets will be configured with 25 seats in Continental's BusinessFirst cabin and 149 in coach. In a press release, Continental says "the frequency of the service will be reduced to five flights weekly during September/October and April/May and to three flights weekly from November-March due to the traditional seasonal reduction in demand. ... Athens will be the 29th city, and Greece will be the 16th country, in Continental's trans-Atlantic route network."

Continental announced Thursday that it contributed another $71 million to its pension plans. The airline says the amount "significantly exceeds" the airline's minimum requirement for the plans. Continental adds it has contributed nearly $1.2 billion to its pension plans since 2002. "This is another step that demonstrates our commitment to meeting our pension obligations," CEO Larry Kellner is quoted as saying by the Pacific Business News of Honolulu. "Underfunded pensions have been a major problem in the industry in recent years," writes the Houston Chronicle. "The Pension Benefit Guaranty Corp. has taken over some plans. Earlier this month, the agency announced it has become trustee of the Delta Air Lines pilots retirement plan, taking responsibility for paying pension benefits to more than 13,000 active and retired pilots," the paper adds.

The Transportation Department's decision to award United Airlines a new route to China capped an intense competition among four carriers, but the fallout from the decision is widespread. From auto plants in Michigan to office parks in Virginia, the decision will impact all four of the airline applicants (American, Continental, Northwest and United), in addition to communities served by those four airlines. With that in mind, here's what a variety of media sources have to say about United's victory for the China flights.

Aggressive bidding was unprecedented
From Bloomberg News: The aggressiveness of the carriers' lobbying efforts was new to the competition for approval on routes, consultants who watched the process said. The airlines spent millions of dollars to generate support for their bids. American won support from 30 U.S. senators and 92 members of the House of Representatives.

Bidding was 'fierce'
From the Houston Chronicle: The battle over the right to fly the new route was fierce. Houston-based Continental, which like the others employed lobbyists and a mass letter writing campaign, went so far as to send messages in fortune cookies to officials in Washington.

Route a 'boon' for D.C. area
From The Washington Post (free registration): The flight is expected to provide an economic boon for the Washington area of at least $275 million and add 3,400 jobs, according to a study prepared for the Metropolitan Washington Airports Authority. James C. Dinegar, president and chief executive of the Greater Washington Board of Trade, said: "We'll see some interesting office parks and satellite business offices open up around the airport over the next several months and years. When people get off the planes, they're not going to want to drive for another three hours."

AA had been considered early front-runner
From The Washington Post (free registration): Early in the process, several analysts said it appeared that American had the strongest application because of its big hub in Dallas and support from 32 senators and nearly 100 House members. American has only seven flights a week to China through Chicago, and transportation officials had previously seemed interested in spreading out competition. … But American was unable to resolve a contract dispute with its pilots over duty hours and sought to amend its application to allow a stop in Chicago on the way to the Chinese capital.

Rift deepens between AA management, labor
From the Fort Worth Star-Telegram (free registration): American Airlines has lost its bid to launch a flight to Beijing from Dallas/Fort Worth Airport, deepening a rift between labor and management, slowing the carrier's push into the exploding Chinese economy and frustrating North Texas business people weary of connecting flights and long trips. After six months of campaigning, American's bid unraveled in a tangle of negotiations with its pilots union on a side agreement that would have covered the 16-hour nonstop flight, a long flight not allowed by the current pilots contract.

AA thought it could get pilots' OK
From The Dallas Morning News (free registration): The length of the DFW-Beijing flight made it inevitable that American would have to get the pilot union's permission to get around the duty time limits, a fact that its competitors noted in their responses to the government. American conceded that it thought it would get the approvals, much as it did for a Shanghai-Chicago route the year before.  However, the union has taken a tougher stance with American this year, amid employee anger over bonuses given to management. At American's request, the company and union began talks on a new contract in September.

Capital-to-capital bid hard to overcome
From The Washington Post (free registration): The company (United)and its supporters highlighted the symbolism of linking the two nations' capitals for the first time. The route would also benefit government officials seeking to visit counterparts in Beijing, analysts noted. "Keep in mind that some people in Washington are selfish and this would provide better government travel between Washington and Beijing," said Michael Miller, an airline analyst with the Velocity Group. "With all of the support that United received in the Washington area, it obviously swayed politicians to push for this."

Continental's politics may have hurt China bid
From Bloomberg News: Continental may have damaged its chances with regulators when it helped kill an effort to encourage more foreign investment in U.S. carriers, said consultants such as Jon Ash, president of the aviation consulting firm InterVistas-GA2 in Washington. The announcement by China Eastern Airlines last month that it would fly from Shanghai to New York's JFK International Airport also hurt Continental's bid from Newark.

Northwest loss a setback to Michigan
From the Detroit Free-Press: In a setback to Michigan's economic hopes, Northwest Airlines has lost a bid to United Airlines for new daily nonstop service to China. Northwest had applied to fly from Detroit to Shanghai, a manufacturing and business center with 17 million people that is a center of China's booming auto industry. … Business and civic leaders in metro Detroit viewed the route as essential to rebuilding Michigan's economy. "This is a blow to Michigan. Our future is in exports and knowledge industries. International trade is critical to us. International connections are critical to us," said Patrick Anderson, principal and CEO of the Lansing-based Anderson Economic Group.

Flying from Tokyo –- instead of Detroit –- hurt NWA's latest bid
From the Detroit Free-Press: In its 24-page decision, the [DOT] said it decided against Northwest because the airline already has permission to fly non-stop to China. Between April 2000 and September 2001, Northwest operated non-stop flights from Detroit to Shanghai. Due to a drop in traffic after the Sept. 11 attacks, Northwest rerouted those flights through its Tokyo hub. Now, Northwest flies to Beijing, Shanghai and Guangzhou through Tokyo. Those routes collect passengers from cities including Los Angeles and San Francisco. Northwest said altering those routes is not an option because it would limit competition to Asia from the West Coast.

United VP: Boeing 747 helped our bid
From Bloomberg News: United Vice President Michael Whitaker said his carrier's bid using a Boeing 747-400, now the largest commercial aircraft, helped win the new route. "Our current China flights are running 80% full year-round,'' he said. United expects the additional flights to help it compete against 13 other carriers flying into China. "We think we'll win a good share of that business,'' Whitaker said.

United, NWA now have 'control' of Pacific routes
From the South Florida Sun-Sentinel: United's victory will give it and Minneapolis-based Northwest control over more than 75% of the flights to China from the U.S. That's a virtually insurmountable lead, analysts say. "It's going to take American and Continental a long time to catch up with those guys," said Roger King, senior analyst with CreditSights. "In fact, I don't think it's going to happen. It makes those two airlines, United and Northwest, that much more valuable as merger partners [to other airlines]."

Collapsed bid a 'disaster' for AA's labor relations
From the Fort Worth Star-Telegram (free registration): American's bid to fly to China collapsed behind the closed doors of union meeting rooms and the airline's executive suite, even as the Fort Worth-based carrier signed up supporters, lobbied Congress for approval and publicly proclaimed itself the front-runner for the hotly contested route. It's a failure that demonstrates how much relations between the airline and its pilots union have soured in the past year. And it could be an ominous portent of future labor issues, as the airline looks toward contract negotiations with all its unions. "This is mildly bad news for American in terms of their route network," said Alan Sbarra, an airline consultant with Roach and Sbarra in San Francisco. "But it's much worse news for American in terms of labor relations. It's kind of a disaster, really."

Route vindicates Dulles' standing as international gateway
From The Newark Star-Ledger: For United, the prize is also a huge boon to its efforts to create an international gateway at Dulles International Airport. The new route also strengthens the airline's dominance at the once-sleepy airport, which has evolved into a Mid-Atlantic hub for United. ... Carol Welti, vice president of the Washington Airports Task Force was savoring the victory. After 9/11, United was under a lot of pressure from Wall Street to drop Dulles.  "They stuck with us and now they're expanding," Welti said. "I think they have found this is no longer a sleepy little government town. In this economy, you need links to a global market in order to prosper and grow."

Code-sharing partners helped United
From The Wall Street Journal (subscription required): In choosing United, the government also said its code-sharing arrangements with Air China, one of China's leading airlines, will allow United's passengers seamless connections to other Chinese cities. United's alliance with US Airways Group Inc. will provide additional convenience for US Airways' passengers. Finally, the government noted that United proposed to fly a 347-seat Boeing Co. 747-400, offering more capacity than that under rivals' plans.

US Airways is in the midst of a bid to acquire Delta Air Lines out of its Chapter 11 bankruptcy. United and Continental have been talking about a merger, and discounter AirTran so far has been rebuffed in a bid for Midwest Airlines. Delta creditors are mulling the unsolicited offer from US Airways: stock and cash valued at more than $8 billion. If the deal is OK'd by the creditors and the bankruptcy judge, and if it wins subsequent approval from regulators, it would create the world's largest airline. If US Airways succeeds, it could unleash a frantic round of merger-and-acquisition activity by competitors not wanting to be left behind. Not surprisingly, speculation is rampant in the airline industry about who the next possible dancing partners will be. To help you keep up with the merger carousel, we've put together a look at possible combinations among big U.S. carriers and offers his opinion about whether each would make sense. Check out our cool interactive chart that shows the pros and cons of merging any of the USA's biggest airlines. Some are possible -– others have no shot -– but speculating about the possibilities is a favorite pasttime for aviation fans.

The U.S. Department of Transportation today awarded United Airlines the rights to begin service between Washington, D.C., and Beijing, USA TODAY reports. The DOT's decision culminates an intense bidding process for the highly coveted new rights to fly to China, where access by foreign carriers is greatly restricted.  As part of bi-lateral aviation agreements between the USA and China, seven additional weekly flights between the USA and China are to be opened up to U.S. carriers beginning this year. United's winning route will give the nation's capital its only non-stop connection to China and comes as the airline has been expanding international options out of its hub at Washington Dulles International Airport. Previously, Washington had been the largest U.S. market without non-stop service to China. (See the full DOT report)

Continental says it has completed the installation of on-demand audio/video entertainment systems in the BusinessFirst cabins of its entire fleet of 41 Boeing 757s. In a press release announcing the installation, Continental says it uses those jets primarily "on trans-Atlantic flights to/from its New York hub." The carrier says that its on-demand audio/video "allows customers to choose from up to 25 movies, 25 short-subject programs and 50 compact discs." Customers may watch the programming whenever they choose and will be able to control the programs with touch-screens to stop, pause, rewind and fast forward. Also included will be 20 video games.

Continental will also boost the number of power ports on its 757s, making them available throughout business class and at coach seats located forward of the over-wing emergency exits. As for the on-demand audio/video, Continental also plans to install a similar system on its 777s. The first 777 to be outfitted with the system is expected to be ready in March. The on-demand systems on the 777s will "allow customers to choose from more than 250 movies, 300 short-subject programs and 150 compact discs with a jukebox feature to make individual playlists," Continental's press release says.

There's another fare hike that U.S. airlines are trying to get to stick. This time, however, it's Southwest that has initiated the increase, "boosting one-way ticket prices by $2 for flights of less than 400 miles, $3 for flights of 400 to 750 miles and $3 on some longer flights," according to Bloomberg News. Continental, Delta, Northwest, United and US Airways had all matched the increase, according to Reuters. "The unique confluence of rising fuel and labor costs at Southwest has turned that carrier from a spoiler to a leader when it comes to industry pricing," says Jamie Baker, a J.P. Morgan analyst. "We expect this push for higher fares at Southwest to continue."

Bloomberg says Southwest first started pushing the hike at the end of December, with the increase likely to affect about 25% of its passengers. "We had to offset a $600 million addition to our fuel bill in 2006," Southwest spokeswoman Beth Harbin says, adding that the airline's fuel spending could rise by another $300 million this year. As for American, it said its fare-hike match would not apply to markets to the west out of both Chicago and Dallas. AA and Southwest are big players in both markets.

Virgin America was dealt a setback by the Department of Transportation (DOT), which ruled Wednesday that the proposed start-up carrier "was effectively controlled by overseas investors," the Financial Times/MSNBC reports. Federal laws state that domestic carriers must have at least 75% of their voting interests owned or controlled by American citizens, according to Reuters. Virgin America is 25% owned by British tycoon Richard Branson's Virgin Group, with the remaining 75% of the company in the hands of U.S. investors Black Canyon Capital and Cyrus Capital Partners, according to MarketWatch.com. But, in tentatively rejecting Virgin America's start-up bid, the DOT concluded "Virgin America's close relationship with the U.K.-based Virgin Group indicates that the carrier is not under the actual control of U.S. citizens."

The DOT adds that "Virgin America would have to revise its ownership, corporate structure and associated agreements to be 75% owned and actually controlled by U.S. citizens before it can receive an operating certificate." Though big U.S. airports such as San Francisco, Las Vegas and Denver have supported Virgin America's bid, would-be rival airlines –- led by Continental –- have joined with groups like the Air Line Pilots Association in questioning the carrier's "nationality." Virgin America said it intends to appeal the decision by Jan. 10, though it did not say how it would attempt to reverse the DOT’s decision. Bloomberg News writes that the DOT's current verdict "is a victory for U.S. rivals that opposed the Virgin America bid as well as for organized labor, which feared job losses. It's a blow to Branson's plan to funnel U.S. passengers to his trans-Atlantic carrier and expand the Virgin brand in the world's largest travel market," Bloomberg adds.

As for Virgin America, spokesman Gareth Edmondson-Jones singled out Continental as one of its biggest foes. "Every step of this process is a public forum, so anyone is able to put in their comments," Edmondson-Jones told the Palo Alto (Calif.) Daily News. "We have had a lot of comments from Continental. Their concern is we are not American enough, which is a little subjective. It is a bit ridiculous." Despite the setback, Edmondson-Jones told the San Francisco Chronicle that "we remain committed to getting our wings.''

Delta's official unsecured creditors committee wants former Continental CEO Gordon Bethune to help it evaluate the competing plans to bring the Atlanta-based carrier out of bankruptcy protection. Bethune confirmed last week to the Houston Chronicle that he had been contacted by the committee with a request to be an independent consultant. "They were looking for some industry knowledge to make sure they are thorough in their review of all the proposals," Bethune says. The Chronicle -– which notes the deal must first be OK'd by the bankruptcy court –- writes that "the veteran airline industry executive… would be paid $250,000 for 10 days of work, a court filing in the bankruptcy case shows. Additional work by Bethune, if required, would be paid at the same rate."

Bethune retired from Continental in 2004 and is now the chairman of the parent company of Aloha Airlines. The Atlanta Journal-Constitution (free registration) writes that "while not widely known beyond the airline industry, Bethune has been one of its more colorful executives in recent years, and he was credited with transforming Continental from a perennial basket case into an industry overachiever."

Meanwhile, 17 other creditors who hold $2.25 billion in unsecured claims against Delta have urged the company to "proactively" look at options other than management’s preferred stand-alone plan, according to the Journal-Constitution. That presumably would include US Airways' $8.5 billion hostile takeover bid for Delta. The Journal-Constitution describes the 17 creditors as a group that has "banded together separately from the official committee of unsecured creditors in Delta's bankruptcy case."

United got a surprising endorsement for its proposed China route from a prominent politician. U.S. Rep. James Oberstar, the incoming chairman of the House Transportation and Infrastructure Committee that oversees aviation, says he will support United's bid for new flight rights to China over competing bids from American, Continental and Northwest. What's surprising about Oberstar's endorsement? The St. Paul Pioneer Press (free registration) notes that Oberstar -– who represents Minnesota –- "stands out from other legislators who have backed their home-state airlines' efforts to start or expand flights to China."

Oberstar says United's Washington-to-Beijing proposal would make the most sense since it would connect the nations' capitals and because Washington is currently the largest U.S. market without non-stop service to China. "I decided the United service renders the greatest national benefits for aviation trade," Oberstar says. Predictably, Minnesota-based Northwest is disappointed that it did not get the backing of one of its home-state congressmen. Saying the company was "terribly disappointed," Northwest spokesman Roman Blahoski adds:"We respectfully disagree with the congressman. Northwest's China proposal will best serve the greatest number of customers from the greatest number of cities, and we offer unique benefits that no other carrier offers, including one-stop service from 60 cities." Northwest has proposed non-stop flights between Detroit and Shanghai.

Are executive egos playing a role in the recent wave of airline merger proposals? Reuters takes a look at that idea, writing that "mergers can often be a difficult experience for executives struggling to retain power or simply remain relevant at companies they spent many years helping to build or run. In the aviation profession, these leaders may simply want to stand out in a field that's had more than its share of luminaries." In particular, Reuters examines US Airways' proposed takeover of Delta. That bid pits US Airways' young CEO Doug Parker (45) against Delta's 74-year-old Gerald Grinstein. Grinstein has so far rejected US Airways' bid, insisting that Delta would be better off as a stand-alone carrier.

However, Reuters writes that "Grinstein's opposition to a takeover may be partly rooted in ... internal conflict, experts say, without passing judgment on the wisdom of his position." Stuart Klaskin of KKC Aviation Consulting says: "Grinstein's got a legacy management problem. He doesn't want his legacy to be the guy who sold Delta Air Lines." And what about US Airways' Parker? Reuters writes that "some aviation business experts say part of Parker's agenda may be to cement his own legacy as the CEO who led the overall consolidation of the airline industry."

Merger talks are also underway between Continental and United, though there's been no word about which management team would take control of a combined company. "Basically one side is in there negotiating their jobs away," says airline consultant Darryl Jenkins. "If you're an airline or any other company CEO, you need to have a very thick skin." Airline consultant Robert Mann says good things can happen when two CEOs come together to hammer out a deal. But it doesn't always turn out the way. "Egos, innovation and high finance. A potentially valuable, but most often disappointing combination," Mann says.

Continental Airlines on Saturday begins non-stop service between its Newark hub and Bonaire in the Netherlands Antilles. The flights will leave Newark for Bonaire on Saturdays, with return service to Newark operating in Sundays. Continental will fly the route using Boeing 737-700 jets with 12 seats in first class and 112 in coach. The flights will leave Newark at 11:55 p.m. and arrive in Bonaire at 5:40 a.m. the following day (all times local). The Sunday return flights leave Bonaire at 7 a.m. and arrive in Newark at 10:45 a.m. Continental also offers weekly non-stop service to Bonaire from its hub at Houston Bush Intercontinental.

That's the thinking of several prominent industry observers, who predict fliers will be left with fewer choices, higher fares and worse service if the current batch or merger talks sparks a round of airline consolidation. One of the merger skeptics is Kevin Mitchell, who heads the Business Travel Coalition advocacy group. He fears that the current merger efforts involving US Airways-Delta, United-Continental and AirTran-Midwest could set off a chain reaction that drags nearly every big U.S. carrier into the merger frenzy. "You're essentially putting the whole system in play. There would be customer-service disruption for years," he says to the Chicago Tribune (free registration).

The New York Times (free registration) adds that mergers may help some U.S. carriers financially, it could also mean "more bad news for their passengers. Fewer planes would lead, certainly in the short term, to more-crowded flights and higher fares," the paper adds. But not everyone agrees that the long-term effect on fares would be bad. Some argue that a contraction by the big airlines would be an invitation for low-cost rivals to bring their low fares to new areas. "JetBlue, Southwest, AirTran, Frontier, Spirit -- all of these carriers look for targets of opportunity and will move in and create downward pressure on fares," David Stempler, president of passenger advocacy group Air Travelers Association, tells The Washington Times. 

But industry observer and frequent airline critic Joe Brancatelli has yet another take. He tells The Associated Press that travelers are already losing in the merger mania –- regardless of whether any combinations actually come to pass. "So much management time is being consumed by creating or fighting a merger," says Brancatelli, a contributor to USATODAY.com who also runs a website for business travelers called joesentme.com. "All that time would have otherwise been spent on plugging holes in the already creaky system."

Read on for a survey of what U.S. media outlets are saying about the reported merger talks involving United and Continental:

Is United just biding time?
From The Denver Post: Stuart Klaskin, a partner at KKC Aviation Consulting in Miami, speculated that United could be acquired by another airline or broken up, with a possible spinoff of discount operation Ted. "I get the sense the management largely looks at their time now at United as kind of a stewardship thing ... in an interim period until it consolidates with someone else," Klaskin said.

United CEO Tilton touts 'overdue' consolidation
From the Chicago Tribune (free registration): United Chief Executive Glenn Tilton long has been an outspoken advocate for consolidation, saying repeatedly he would be open to striking a deal if it were advantageous to United and its shareholders. And he reiterated that position earlier Tuesday at a Chicago function intended to showcase United to investors. "We are not waiting for opportunities to come to us, simply because we haven't identified to you which one works best," Tilton said at the conclusion of a 3½-hour management presentation to more than 75 analysts. He added that consolidation is "good and overdue for the industry."

Skeptical of United deal, two execs say United wanted Delta
From The New York Times (free registration): United's chief executive, Glenn F. Tilton, and Continental’s chief executive, Larry Kellner, have met in person to discuss a combination, a person with knowledge of the talks said. But two executives with knowledge of United's efforts expressed skepticism over the likelihood of a United-Continental deal. The executives, who requested anonymity because of their role, said Mr. Tilton had initially approached Delta, which said it was not interested, before contacting Continental.

This is 'take two' for a United-Continental merger
From the Chicago Tribune (free registration): This isn't the first time the two airlines have discussed joining forces, sources say. Continental approached United during the last airline boom cycle before the Sept. 11 terrorist attacks but was rebuffed by management at United parent UAL Corp. … United executives reached the same conclusion in the late 1990s, after running a war-games exercise to determine the best fit for the world's second-largest carrier if massive consolidation ever shook the U.S. aviation market. "The combination was unbeatable," said a former United executive, who spoke on the condition he not be identified. The industry conditions modeled by United a decade ago finally appear to be taking hold.

How would NWA's 'golden share' complicate a Continental merger?
From The Wall Street Journal (subscription required): The preliminary talks on merging United Airlines and Continental, the nation's second- and fifth-largest airlines, respectively, have run into several vexing issues, including what to do about the "golden share" that Northwest Airlines Corp. holds in Continental, which could complicate any deal Continental might attempt, the people familiar with the matter said. Northwest's golden share is a special voting series of Continental preferred stock it owns in connection with its marketing alliance with Continental, which runs through 2025. Northwest could use those shares to block a merger of Continental with another major airline -- if the combination required a vote by Continental shareholders. Even with the golden share in place, however, Continental could buy another airline without interference from Northwest if that transaction didn't require Continental shareholders' approval.

Mergers would be a bad thing for consumers, biz travel advocate says
From The Associated Press: Kevin Mitchell, the chairman of the Business Travel Coalition, said if [a predicted] ''tsunami'' of airline consolidation were to occur, the repercussions for fliers would be disastrous, in that fares would surely rise as competition waned. ''Other merger proposals would follow as sure as the sun rises in the east,'' he said. ''What's more, these potential transactions represent a near-term fix to the industry's difficulties and do not address systemic profitability problems and root causes.''

United an 'admirer' of Continental's revenue premium
From The Wall Street Journal (subscription required): United for years has admired Continental for its revenue premium, good service and strong presence in the big New York market. Analysts don't see much route overlap between the two carriers, with United dominant in the Midwest, West and Asia. But the combination would vault the pair to the largest airline by traffic, larger even than a combined Delta-US Airways, which could prompt intense regulatory scrutiny.

United-Continental 'makes a lot of sense,' analyst says
From Reuters: Despite the potential hurdles, the combined company would have many interesting components. United brings its strength on the West Coast, coveted gates at London's Heathrow Airport, and its strong presence in the important Chinese market. Continental offers its key Newark, New Jersey, hub, Transatlantic access, and a strong presence in Latin America. "It makes a lot of sense," said Roger King, an analyst with CreditSights. "It would be a good aggressive strategy by United and a good defensive strategy by Continental."

That's a question being asked in an article today by MarketWatch.com. The publication writes that "all eyes are on whether Doug Parker, the CEO of US Airways, can persuade Delta's creditors to take up his offer -- and whether the combination would pass muster with antitrust regulators." MarketWatch then quotes AirTran CEO Joe Leonard as saying: "You could have a situation where everything fizzles out and goes away. I think if one big deal gets done, then you're going to, by necessity, see some others get done."

The airline merger frenzy has officially begun. Heading the news are published reports saying United and Continental are in merger talks. Separately, AirTran has reportedly made a bid for Milwaukee-based Midwest Airlines. As for the potential United-Continental tie-up, The New York Times (free registration) reports that talks were "apparently initiated by United" and "recently picked up pace after US Airways' bid last month to buy Delta Air Lines." The Times cited "people involved in the negotiations." The Wall Street Journal (subscription required) also cites "people familiar with the matter" in reporting on the United-Continental talks. However, both the Times and the Journal are quick to point out that the merger is neither certain nor imminent.

Regardless of how far along they are, the talks come despite quotes from Continental CEO Larry Kellner that he'd prefer to keep the airline on its own. On that note, the Journal says that "people familiar with the ... airline's strategy said Continental favors the status quo because it believes it's better-positioned than its peers in terms of its popularity with business travelers, ability to command higher fares, strong hubs in Houston and Newark and extensive routes to Europe and Latin America. It also has a seasoned management team that is respected in the industry. But if others start merging, Continental would become even smaller by comparison." At that point, the Journal says that "size and scope –- and not customer service" -– could hurt Continental in efforts to win important corporate contracts. So, who would run a combined United-Continental? "Analysts generally hold Continental management in higher regard, and hope it would run any potential United-Continental carrier, rather than Mr. Tilton, a former oil executive, writes the Times.

As for AirTran, the Journal says it "proposed Wednesday to acquire all of the outstanding common stock of Midwest Air Group for $11.25 a Midwest share in cash and AirTran stock or a total equity value of about $290 million, signaling that consolidation pressure has extended beyond the industry's behemoths." Bloomberg News calls the that move a "takeover offer" by AirTran that follows a rejected merger bid that it made for Midwest in October. The Journal says that "in going public with its bid, AirTran is putting pressure on Midwest, which has quietly built a business around a few hubs, notably Milwaukee and Kansas City, Mo."

Stay tuned to Today in the Sky,  which will be updated through the day with more news on the subplots and background information on the merger stories.

Industry observers say American's last-minute decision to alter its bid for non-stop flights between Dallas/Fort Worth (DFW) and Beijing "likely dooms the airline's bid to add new service to China next year," according to the Fort Worth Star-Telegram (free registration). The Associated Press writes that AA says it is "changing is proposal because non-stop Dallas-Beijing westbound flights are 15 minutes longer than allowed under the airline's contract with its pilots." To get around that, AA now wants the China-bound flights to first fly from DFW to Chicago, where AA would change flight crews before flying to Beijing. The Chicago-to-Beijing flight time currently is less than the limits stipulated in the pilots' contract. Return flights from Beijing would still fly non-stop to DFW since prevailing winds in that direction lessen flight by enough to meet the pilots' maximum flying time.

With that change, however, American's bid is "dead in the water," according to airline consultant Darryl Jenkins, who supported American for the new China rights. "I thought they had a reasonable chance, but now it's zilch," he says. Other industry observers share Jenkins' opinion that the change will ruin AA's chances. "American is not going to be able to get a one-stop through. That’s just not going to sell," Jon Ash, president of consulting firm InterVistas-GA2, says to Bloomberg News. "American has effectively eliminated themselves with this. It really moves United's bid up,"he adds.

Indeed, many seem to think that AA's loss will be United's gain. "Before the change, American and … United Airlines were considered to be the front-runners," writes The Wall Street Journal (subscription required). "United, which proposes a daily flight from Dulles International Airport outside Washington to Beijing -- linking the two capital cities -- may now have the edge," the paper adds. Continental is also thought to be a contender with its proposal for Newark-Shanghai service. A fourth bid by Northwest is considered by most insiders to be a long shot. For American, however, the development is "just really sad," says consultant Jenkins, who adds: "It's got to be a tough day at American Airlines."

Newark Liberty International Airport just got a lot closer to lower Manhattan. That's thanks to US Helicopter, which has partnered with Continental to offer a traffic-proof 8-minute helicopter shuttle connection between Liberty Airport and the Manhattan Heliport at Wall Street, according to Travel Weekly (free registration). The copter connection will begin Dec. 18 (PDF file) and costs $159 each way, not including security fees. Customers who check in at the heliport will receive boarding passes for both the helicopter ride and their Continental flight. Fliers also go through security screening at the heliport and can check their luggage to their final destination. The shuttle drops passengers off at a post-security location in Liberty's Terminal C, from which they can proceed directly to their Continental gate. The partnership with Continental is the second airline link for US Helicopter. It began flying from Manhattan to JFK Airport in February in a partnership with American Airlines. In 2007, the company expects to add the East 34th Street Heliport as a second Manhattan base for its shuttle service.

For those who don't have an extra $150-plus to drop on airport transit, however, Liberty's popular AirTrain link is also immune to lower-Manhattan traffic and can transport you between the airport and New York Penn Station in about an hour for about $28.

(Photo: A US Helicopter lands at Wall Street Heliport.)

Glitches with a new de-icing system at Cleveland's Hopkins International Airport caused long delays on Tuesday. Fortunately, however, airport officials say those problems have been solved -- just in time to handle today's expected lake-effect snowstorm. Gusty winds and up to 20 inches of snow are forecast for parts of northeast Ohio.

On Tuesday, however, "communication breakdowns and unfamiliarity with the system" led to delays of up to three-hour delays on some flights Tuesday morning as Cleveland was hit with its first snowstorm of the season. The de-icing delays led to eight canceled flights on Continental Express. "We had some very serious growing pains," airport commissioner Fred Szabo tells The Cleveland Plain Dealer. However, if the planned fixes don't work and lines again grow long, Szabo says the airport will allow airlines to de-ice their planes at the gates as a back-up plan. The Plain Dealer writes: "Previously, planes were de-iced at the gates, and the chemicals drained into sewer pipes, where they could contaminate nearby waterways." The new system is designed to keep chemicals out of the sewers.

That would be Continental, which was named the continent's top carrier in several key categories, according to Business Traveler magazine's "Best in Business Travel Awards." In addition to being named the survey's "Best airline for North American travel," Continental also was picked by Business Traveler's readers for having the USA's best flight attendants and in-flight services. The best frequent-flier program, however, went to Delta –- which also finished atop the categories for the top airline website and the best airport lounges. The USA's top low-cost carrier? Don't look for perennial favorites JetBlue or Southwest atop these rankings. Instead, Business Traveler's readers tabbed Frontier Airlines as the top discounter.

How did Business Traveler calculate the results of its 18th annual Readers' Choice Business Travel Survey? The publication says it randomly sampled its subscribers and then commissioned a third-party agency to conduct the annual survey. More than 33% of the magazine’s subscribers responded, with Business Traveler noting that its readership base spends an average of 67 nights on the road and collectively flies 6 million round-trip flights per year.

Who else impressed the magazine's readers? Delta was voted as having the top frequent-flier program, though the Star Alliance outranked Delta's SkyTeam group in the survey for the world's top frequent-flier alliance. If you're looking for the best airline in the world, however, you'll have to look outside North America. That award went to Singapore Airlines, which also finished atop several other categories –- including those for the "Best airline for international travel" and for having the world's best economy-class seating section. The best first-class carrier came from the Middle East went to Dubai-based Emirates. Business Traveler readers thought South Korea's Asiana had the world's best flight attendants. On the ground, Singapore Changi International Airport was named the world's top airport while Denver was named the best in North America. Check out the full list of Business Traveler's Best in Business Travel Awards, which also includes categories for subjects like hotels, rental cars and credit cards.

Today's talker: Do you agree with the survey’s findings? Or do you think the survey missed the mark? Share your thoughts with other readers.

Noting that "merger speculation is in the air" following US Airways' hostile bid for Delta, the Houston Chronicle takes a look at where Houston-based Continental could wind up in the fallout. Not surprisingly, some of the paper's most intriguing tidbits come from Gordon Bethune, the outspoken former Continental CEO. As industry observers speculate about a possible round of competing bids for Delta and the subsequent consolidation that could follow, some suggest Continental may be the legacy carrier left out in the cold. Bethune tells the Chronicle it could play out as an airline game of musical chairs. "When the music stops, you need a place to sit," he says, adding that current Continental CEO Larry Kellner "needs to think about watching the combinations because it's got to be something you can participate in."

So, if such a wave of merger speculation comes to pass, who does Bethune see as a good fit for Continental? "What needs to happen is Continental needs to acquire United in some fashion and run it out of Houston," Bethune tells the Chronicle. "The last thing Continental needs is to become United and run it out of Chicago. Continental just has way too much on the ball to sit in the back seat." Bethune, who is now chairman of the board at Aloha Airlines, also addresses the "golden share" that Northwest holds in Continental –- something that essentially gives Northwest veto power over any possible acquisition of Continental. Bethune, who was at Continental when the deal was put in place, says the agreement "just says we (Continental) can't be bought by another airline. But that didn't preclude Continental from buying someone else."

Southwest Airlines flew the most passengers of any U.S. airline in August, the latest month for which data is available from the federal Bureau of Transportation Statistics. The carrier flew 8.7 million passengers for the month, according to the Chicago Tribune/Bloomberg (free registration). "The total includes domestic and international passengers. Southwest, which doesn't offer international flights, previously had ranked No. 1 in domestic passengers, but this is the first time it topped the list for total passengers," observes The Arizona Republic. The Pacific Business News of Honolulu called the development a "a sign of the ascendancy of the discount carriers" in the USA. As noted in this Today in the Sky post from November 2004, Southwest overtook all airlines for the lead in domestic passengers in May 2004. As for the August numbers, the next largest airlines -– as measured by the number of passengers boarded in August –- were American, United, Delta, Northwest, Continental and US Airways.

Officials at Continental must inspect one of the company's 737 jets after an airport tug got wedged under its nose at Minneapolis-St. Paul. The tug –- a tractor-like vehicle used to help move aircraft –- was getting ready to push back the plane when the accident happened this morning around 5:50 a.m. CT. No one was hurt, according to The Associated Press.

Just two days after news broke that American has not yet received backing from its pilots union for its proposed new route to China, rivals Northwest and United are making it known that their employee groups are supporting their bids. The Dallas Morning News (free registration) writes that "American doesn't have an agreement with the Allied Pilots Association to operate its proposed service between Dallas/Fort Worth International Airport and Beijing. The duration of American's proposed flights  -- ... plus additional time on the ground -- isn't covered by the contract with the pilots union." However, Northwest and United are among the top U.S. airlines to Asia and already have agreements in place with union groups that cover staffing and rest issues. Both airlines are in a heated competition with AA and Continental to win federal approval for a new route to China that will become available next year. Though neither took direct aim at American, groups representing both Northwest and United issued statements noting that their employees backed their respective bids for China.

If you haven't checked your frequent-flier account lately, you may want to make sure all of your miles are still there. That's because some of the traditional U.S. airlines are changing the expiration period for miles sitting in dormant accounts. Previously, most major carriers allowed miles in unused accounts to "live" for three years, though the lifespan of those miles would be extended anytime miles were added to or subtracted on an account. The latest airline making a change is US Airways, which now requires frequent-flier members to have any sort of account activity at least once every 18 months to prevent miles from expiring. Previously, the limit was three years. The first group of US Airways frequent-fliers affected by the new limit could lose their miles as of Jan. 31, provided they have no new account activity. "One other major airline, Continental, has the same rule: Use a frequent-flier account once every 18 months, or the miles expire," The Philadelphia Inquirer writes in a story carried on the website of the Wilkes-Barre Times Leader. Among other legacy carriers, Delta allows a two-year grace period for miles in accounts with no activity.  American, Northwest and United still give fliers a three-year window.

U.S. airlines again are trying to raise domestic fares, the third attempt in recent weeks, CNN/Reuters reports. Delta raised fares overnight in markets where it does not face low-cost competition. So far, at least American and Continental have matched. But while the airlines' other recent attempts failed, industry observers predict this one may stick since discount routes aren't in play. "Discounters are incapable of acting as spoilers," J.P. Morgan analyst Jamie Baker says in a research note. "We ascribe a high probability of success to this increase." The latest hike – which applies only last-minute walk-up purchases – will push up fares by $25 to $50 each way in about 50 markets.

A Lufthansa Boeing 747 clipped the wing of a Continental Boeing 757 on Tuesday as the Lufthansa plane was taxiing out of Newark's Liberty International Airport. The Continental jet was being to towed to a hangar for service, according to The Associated Press. None of the 291 passengers or 17 crewmembers on the Lufthansa flight were hurt, but the jet did have to return to the terminal so customers could be accommodated on another flight. AP writes that "the incident … comes as federal officials examine how a jetliner carrying more than 160 people landed on a taxiway instead of an adjacent runway at the same airport Saturday night. … There also were no injuries Saturday when the Continental flight from Orlando landed in the wrong place, but "Taxiways often have planes, vehicles or personnel on them," the news service adds. Continental spokeswoman Mary Clark says: "The pilots have been temporarily removed from flying duties and are assisting the company in analyzing the incident."

A $6 fare hike initiated by United at the end of last week appears to have fizzled out Saturday when the airline opted to rescind its increase. American, Continental, Delta and Northwest –- which all initially matched United’s price hike –- followed suit Sunday, according to The Associated Press. US Airways and Southwest did not match the rate increase. United spokeswoman Robin Urbanski tells The Washington Post (free registration) that the airline's decision to back off "had to do with low fare carriers not matching our increase."  Rising fuel costs were one reason cited by United for instituting the ill-fated fare increase in the first place. But, with oil prices falling recently, that rationale seems counterintuitive to some, says airfare expert Terry Trippler. "People always ask me: Since the price of crude oil has come down $20 a barrel this year, why aren't airlines lowering -- not increasing -- their fares?" he says. "The reason is that airlines didn't increase their fares much when oil was very expensive. If they had, airfares would have gone through the roof."

That's the headline from an article in today's USA TODAY, which writes that the success of overseas carriers "in selling goods and services unrelated to transportation has caught the attention of many in the U.S. aviation industry." Some overseas discounters -– notably Europe's Ryanair – hawk everything from apartment rentals to lotto tickets on their flights. Says Ryanair spokesman Peter Sherrard: "We will brazenly sell you anything — before your flight, during your flight and even after your flight." 

Will such a trend develop here in the USA? USA TODAY writes that "none of the U.S. carriers are embracing the trend as enthusiastically as Ryanair," but the paper does note that airlines like  American, Continental, JetBlue are among those in the USA that are experimenting with the sale of retail merchandise as a way to boost revenue. "As fuel prices rise, we look for more ways to generate revenue," says Kim Ruvolo, brand manager of JetBlue.

The New York-based low-cost airline already uses its website to sell item such as clothing, skin care products, coffee mugs and golf balls. "Our door isn't closed on anything," Ruvolo says. Still, most U.S. carriers have refused approaches that are as aggressive as those seen at Ryanair. That reluctance comes largely out of fear that the airlines could cheapen or confuse their brand images. But some think its time U.S. airlines rethink that approach. "Marketing experts say airlines have a golden sales opportunity because they have a captive in-flight audience and websites that draw lots of viewers," USA TODAY writes.

Ryanair may be the world's least-favorite airline (see above), but TripAdvisor's survey also broke out results for U.S. airlines and airports. "American Airlines was voted the favorite airline among Americans, followed by Southwest, Delta, Continental and JetBlue," TripAdvisor writes in a press release announcing its survey results. "Travelers selected these airlines as their favorite primarily because of their friendly and helpful staff, and good on-time arrival and departure records," the travel website says. The least-favorite airlines among the U.S. travelers surveyed by TripAdvisor were Delta, Southwest, US Airways, United and Northwest. It's interesting to note that Delta and Southwest made both the most-liked and most-disliked lists. As for airports, TripAdvisor says the favorites among U.S. travelers are Orlando, Las Vegas McCarran and Denver. Chicago O'Hare was the least favorite airport, followed by Atlanta and New York JFK.

Another day, another newspaper about the four-way airline competition to win lucrative flight rights between the USA and China. The latest story comes from The Washington Times, which writes that the bidding airlines (American, Continental, Northwest and United) "are locked in a frenzied effort to convince the [Department of Transportation] they deserve the right to establish a new link to the world's most populous country." Virginia-based airline industry analyst Darryl Jenkins explains: "This is a highly sought-after route, and all of the airlines are taking this very seriously." The Times notes that Jenkins is working on AA's bid for flights between Dallas/Fort Worth and Beijing.

One of the interesting angles in today's Times story is that the airlines appear to be getting snippy regarding their competitors bids. For example, Continental spokeswoman Mary Clark tells the Times that "it would be a travesty to exacerbate the current United monopoly" by giving that carrier its requested Washington-Beijing route. Another example comes from Northwest, which takes aim at AA's proposal. NWA claims that AA's proposed flight from China from Dallas is a circuitous route. Northwest goes on to say in a document that it thinks AA's plan "is so flawed from a service and public benefits standpoint that it should be discarded from serious consideration," according to the Times. And, of course, the airlines not specifically mentioned above also have tried to discredit their rivals' bids. The barbs may be flying because the stakes are so high. "This is the best and most intense [route] competition I've ever seen," says analyst Jenkins.

Continental and Southwest today made it three-for-three for airlines reporting profits during the third quarter. Continental said its third-quarter net profit surged to $237 million, a figure Reuters says was "boosted by a $92 million gain from the sale of a stake in Copa Airlines." Excluding special items –- including the Copa sale -– Continental's Q3 profit was $146 million ($1.36 per share). That topped Wall Street expectations of about $1.30 a share and was up sharply from the carrier's $61 million ($0.80 per share) profit from the same period a year ago. Reuters writes that "the Houston-based airline has been one of the few traditional carriers to add capacity over the past year, while rivals like US Airways and Delta Air Lines reduced fleets. With fewer seats available for sale industry-wide and demand robust, Continental's planes filled up even as fares rose." The airline said planes flying under the Continental logo -– including flights operated by regional partners –- flew at 82.7% of capacity. That's up from 81.7% a year earlier, and comes even with the carrier's added capacity since that time.

There was a slightly different tone at Southwest, where The Associated Press says airline's "third-quarter profit fell sharply, with the low-cost carrier citing rising fuel costs and a downturn in air travel after a terror threat in August." Southwest reported a net profit of $48 million (6 cents per share) for the July-to-September period, which was down from a $210 million result (26 cents per share) from the same quarter in 2005. Excluding special items, the airline's earnings came to 19 cents a share. Reuters Estimates had predicted Southwest would earn 21 cents a share. Despite Southwest's extensive fuel hedges –- which lock in fuel prices at set rates -– the airline said fuel costs rose 67.1% in the quarter to $563 million.

"Southwest is under pressure to maintain its low fares as its fuel hedges gradually expire. Rivals have also cut costs to compete more effectively with the budget carrier," Reuters writes. Southwest CEO Gary Kelly also says that August's thwarted London terror plot cost the airline $40 million in revenue as domestic fliers stayed home in light of tighter security measures. The carrier also saw its flights fly less full at a time while other airlines are flying at near-record levels. Reuters writes that "the average Southwest jet flew 74.7% full in the third quarter, down from 74.9% a year ago. Most U.S. carriers have been seeing occupancy rates rising."

Four of the USA's biggest airlines are bidding for the rights to land coveted new flying rights to China. Each carrier -– American, Continental, Delta and Northwest –- is asking the DOT for the approval of one new route, which will be added in 2007 per bilateral agreements between the USA and China. Underscoring just how lucrative that route could be, the airlines bidding for the route are pulling out all the stops in their efforts to win the rights. Each has made the Internet part of their battleground for the China rights, and the carriers are "turning out big numbers," writes the Detroit Free Press. "The airlines collected more than 100,000 signatures and letters each in Internet petitions that will be submitted to the U.S. Department of Transportation," the paper writes.

George Hamlin, a vice president at Morton Beyer & Agnew, an aviation consulting firm, says he can't recall a past competition for flying rights that has turned out this way. "It's the first time that I remember where this has become a public popularity contest," he tells the Free Press. And, of course, "all four carriers say their plan is best," the paper writes. Adding to the publicity blitz, all four airlines issued press releases in the past week offering reasons why their bids should be selected. (See the releases for AA, Continental, NWA and UA.)

Despite all the hoopla, however, most industry observers predict that the online support and other forms of self-promotion by the airlines will hold little sway with federal officials. Dawna Rhoades, an instructor at Florida's Embry-Riddle Aeronautical University, predicts that the DOT will simply choose the carrier whose plan most benefits consumers.

Related information: Check out each airline's website promoting their bids for new China service: AA, Continental, NWA, UA.

ExpressJet, which currently operates as a Continental Express partner on regional flights, announced Tuesday that it will start a new unit to charter planes to businesses and other private entities. The company says it will spend between $5 million and $6 million to redesign an initial fleet of 10 Embraer 145XR jets. The airline's new corporate jets will feature "redesigned seats, XM radio and a new door with stairs to allow maximum boarding flexibility without the need for a jet bridge or portable stairs," writes the Houston Chronicle/AP, which cites a company filing with the Securities and Exchange Commission. Reuters notes that ExpressJet's plan for the new unit comes after the company said in May that it would "retain 69 aircraft after (mainline partner) Continental canceled a capacity purchase agreement. ExpressJet … had been mulling a number of options, including a corporate shuttle, starting its own scheduled service, and joining up with another carrier."

For the second time in two years, ground workers at Continental have voted against union representation by the Transport Workers Union of America (TWU). The union says "the vote to represent the 7,800 workers, which included ramp, operations and cargo agents, fell less than 300 votes short," the Houston Chronicle writes. "By honoring our commitments to employees, we will continue to maintain the culture of trust we've built at Continental Airlines," says Bill Meehan, senior vice president of airport services for Continental. Calling the TWU effort one of "the biggest organizing campaigns this year," the Chronicle/AP writes that "the union tried to convince workers that it would protect their jobs in case a rumored Continental-United Airlines merger takes place."

Continental Airlines announced in a federal filing Wednesday that it will turn a profit in the third quarter, which Wall Street expected. The airline didn't say how much the profit would be, but the company is scheduled to report its quarterly profit report one week from today, according to Reuters. There appears to be more good news for Continental workers. Bloomberg News reports that the airline "has amassed an employee profit-sharing pool of $100 million that will be paid in February." The final amount of the profit-sharing payout still depends on the carrier's fourth-quarter results, according to the Houston Chronicle/AP. "A payout next year would be the first for Continental's 43,000 workers under the plan, which was created in 2005 in exchange for $500 million in annual wage and benefit concessions by employees. If the pool's size doesn't change by year-end, each employee would be in line for about $2,325," Bloomberg writes.

Falling fuel prices are "acting as white knight" for the airline industry, The Wall Street Journal (subscription required) writes. The paper notes that lower fuel prices –- which dropped to $58.52 Wednesday after peaking in the $70s earlier this year –- come just us U.S. airlines start "coping with slowing revenue growth" with the slower fall travel season and after a drop-off in fliers following the August terror threat in London. Airline stocks have responded with a modest bump -– despite airline warnings that revenue would be hurt as fliers stayed away after the alleged liquid bomb plot that was thwarted in the United Kingdom. "Even though some travelers are being scared away, investors have concluded that any decline in fliers is more than overcome by the drop in fuel prices," the Journal writes.

So, how much is the drop in fuel costs helping the airlines? At American Airlines, each $1 drop in the price of a barrel of oil shaves about $80 million from fuel costs, according to the Journal. For the year, AA's new estimates on fuel costs indicate the carrier could save about $475 million during the second half of the year. But, in an interesting twist, the Journal writes that "some airlines stand to gain more than others from lower fuel prices." Airlines with big hedges likely won't have as much to gain. United, for example, locked in 28% off its third-quarter fuels costs at $69.84 per barrel of oil. "That seemed like a good price when oil was soaring above $70, but with recent price drops to $60, United is losing money on at least some of those hedges," the Journal writes. However, United says any hedging loss is "dwarfed" by the amount the airline will save on falling prices for its non-hedged fuel costs. The Journal says other airlines likely to "lose at least some money" on fuel hedges are Northwest, US Airways, JetBlue, Continental and Delta.

At a time when other big airlines are dropping employees' pensions, Continental put out a press release last week announcing that the Houston-based carrier "is contributing $70 million to its pension plans. The contribution will bring the airline's 2006 pension contributions to $246 million to date. "It is important to us that we meet our pension obligations," Continental CEO Larry Kellner said in the release. "I'm pleased that we have achieved a solid record for making our required contributions -- plus some. Today's contribution clearly shows the value we place on protecting our co-workers' futures."

After spending this past weekend in New York City, it was hard to go more than a few blocks without seeing an advertisement for either Delta or Continental. That's not entirely surprising, of course. Delta announced earlier this year that it would create an international hub at New York's JFK Airport, so a big media and advertising blitz seems natural for Delta as it attempts to promote its expanded presence in The Big Apple. One example of that can be seen in the picture to the left –- a large billboard ad just off Houston Street in lower Manhattan in which Delta touts some of its new international routes out of JFK.

Ads for Continental are also nothing new for New Yorkers. The airline has one of its largest hubs at Newark -– just across the Hudson from Manhattan –- and Continental has long advertised heavily in the New York area in an attempt to establish itself as one of the city's hometown airlines. But despite being a codeshare partner with Delta, some of Continental's recent ads are now aimed directly at its fellow SkyTeam member -- a move Continental is presumably making to defend its own large New York-focused international hub. One Continental ad targeting Delta was perched on top of a cab I took on Sunday. As seen in the photo to the right, that ad came off almost like a sports score, reading: "Weekly non-stops to the Caribbean: Continental 82, Delta 27."

That's the question asked by the L.A. Times (free registration) travel columnist Jane Engle, who suggests that Continental may have uncovered the blueprint that spells success for U.S. airline in the coming years. Describing the carrier as "the Clark Kent of airlines," Engle writes that "low-key" Continental "may one day shape the way most people fly: pampered in business and first class, with a few key perks in economy. And lots of routes to chose from." Though it's only the fourth-largest carrier in the USA, Engle notes that Continental flies to more international destinations than any other U.S. airline. It also has hubs in Houston, Newark and Cleveland that make Continental at least a connecting option for most U.S. fliers. Plus, Continental belongs to SkyTeam alliance, which gives the airline access to flights not only on international carriers, but also on U.S. partners Delta and Northwest. 

Continental also tries to make its service a key component of its success. Engle writes that "coach fliers, even on domestic routes, still get free blankets, pillows and hot meals." Jim Compton, Continental’s executive vice president of marketing, says: "People value those little things that put them in a good frame of mind when they get off the plane." Continental also offers perks that are coveted by top-tier fliers, such as generous upgrade options. But, Engle notes that "Continental's largesse has its limits." Some fliers, for example, say Continental's 31-inch seat pitch in coach is too tight. And, don’t expect seat-back entertainment options anytime soon. "Our customers tell us, 'We don't want to be entertained. We want to be productive,' " says Compton. He tells the Times that such systems are too expensive and weigh down aircraft. Still, some experts predict that Continental's mix of selective perks and efficient service could become the model of choice for U.S. airlines. "The real future is with carriers like Continental," aviation analyst Mike Boyd tells the Times.

The Transport Workers Union (TWU) is hoping that it can persuade about 7,800 ground workers at Continental Airlines to join the union. The TWU is trying to convince those workers that "they need a union to protect their jobs in case rumors of a Continental-United Airlines merger come true," The Associated Press/MSN writes. Consolidation "is a big issue because of the possible merger with United," says labor organizer Steve Roberts. "United's ramp agents have a collective bargaining agreement that protects their jobs in a merger." Continental, however, has repeatedly said that it would prefer to remain a standalone carrier. Continental officials also have said that even if it did become involved in a merger, "they would require the other carrier to protect the seniority of Continental workers," AP writes. The vote by ground workers on whether to join the union ends Thursday. The TWU fell 300 votes short on a similar vote in 2005.

Continental Airlines says it plans to begin non-stop service between Cleveland and Paris sometime in 2008. In a press release, the carrier says the new route “will be open for sale in the summer of 2007 and will initially be seasonal.” The Cleveland Plain Dealer writes that the new route “is the first time Continental, which has a hub at (Cleveland's) Hopkins International Airport, has added non-stop service to Europe since it began direct flights to London's Gatwick Airport in 1999." Continental’s announcement of the new Europe flight came Friday at a news conference in which the airline said it plans to expand its Cleveland hub. "We intend to help Cleveland and Northeast Ohio better participate in the global economy," Continental president Jeffery Smisek said at the event. Similar to Continental’s Cleveland-London Gatwick route, the airline’s new Cleveland-Paris flights will operate May through September. Smisek told the Plain Dealer that the route could be extended year-round if business travelers support it. In addition to Paris and London, Continental’s other international routes from Cleveland are Cancun, Mexico; Montreal; Toronto and Nassau, Bahamas.

Continental Airlines will no longer accept checked luggage that weighs more than 70 pounds. The Houston Chronicle says that the move makes Continental "the first major U.S.-based carrier to turn away bags that heavy." The airline says the move is meant to bring its limits in line with international partners, adding that the 70-pound limit will minimize problems for passengers making connections on international partners. "Those that serve the international market have already adopted a 70-pound limit," spokeswoman Julie King says. The airline also says the limit will make life easier for Continental’s baggage handlers. Industry observers predict the rule will impact few travelers. "Continental is an airline, not Allied Moving Vans," says consultant Michael Boyd of the Boyd Group. "They are supposed to take people from A to B, not move their household goods. If you need more than 70 pounds of stuff with you, you should probably drive."

Delta affiliate Atlantic Southeast had the worst record for on-time arrivals in July, the latest month that data is available from the Bureau of Transportation Statistics. Just 42.7% of the airline's flights arrived on-time for the month. Regional airline Mesa (which flies as Mesa, United, US Airways, Delta and go!), had the USA's second-worst on-time rating, with 33.3% of its flights arriving late. Rounding out the bottom five for on-time flights were low-cost carrier ATA (32.6% late), Continental affiliate ExpressJet (32.1% late) and Continental (31.5% late).

Click on "read more" to see complete airline-by-airline rankings.

Regional giant Mesa led the nation in canceled flights in July, the latest month for which data was available from the Bureau of Transportation Statistics. The carrier, which flies for itself, United, US Airways, Delta and go!, canceled 4% of its scheduled flights in July. American Airlines subsidiary American Eagle canceled the second-most (3.9%). Rounding out the bottom five for canceled flights were Delta subsidiary Comair (3.1%), Delta partner Atlantic Southeast (3%) and Continental partner ExpressJet (2.9%). Of legacy airlines, United canceled the highest percentage of its flights (2.2%). United's number was the sixth-highest of the 20 airlines reporting. Of low-cost carriers, US Airways (1.3%) and ATA (1%) canceled the highest percentage of their flights. 

Click on "read more" to see complete airline-by-airline rankings.

Tighter security rules that ban liquids from carry-on luggage are having an effect on the bottom line of U.S. airlines. Even though demand remained strong, the new rules –- instituted in August -– have apparently created a drag on airfares. “Travelers balked at paying the highest fares in August in the midst of increasingly cumbersome security. That offset a rise in passengers, damping revenue per (each) seat flown (one) mile at Southwest, Continental and US Airways,” writes Bloomberg in a report carried by The Baltimore Sun (free registration). The story notes that “rules requiring all liquids to be put in checked baggage increased security-screening time at airports and made it more difficult for travelers to take overnight trips with only carry-on bags.”

Southwest, which relies heavily on short-distance flights where driving is sometimes an reasonable alternative, was one of the airlines to report an impact on revenue. "We are hoping it is a short-term blip ... but we don't know that yet,” Southwest spokeswoman Beth Harbin tells Reuters. Bloomberg writes that Continental Airlines reported “its revenue per seat flown rose as much as 7.5% from last August,” but “would have been 9.9% without the security changes.” But as long as demand remains strong, Calyon Securities analyst Ray Neidl thinks the impact on revenue will be “short-lived.”

As mentioned by a reader in yesterday’s chat, speculation about possible airline mergers continues to be a hot topic in the U.S. media. The latest comes from The Plain-Dealer of Cleveland, which prognosticates about a possible United-Continental merger. A deal between Continental and United "makes as much sense as any and more than most," Michael Roach, industry analyst and former founding president of America West Airlines, tells the paper. But other industry observers suggest a United-Continental merger may not be the grand slam some make it out to be.

“One complicating factor is Continental's relationship with Northwest. Northwest owns a so-called golden share of preferred stock in Continental that would allow Northwest to block a merger involving Continental,” the paper writes, citing Benchmark analyst Helane Becker. Another industry analyst, Robert Mann of R.W. Mann & Co., tells the paper that labor obstacles could be too much to overcome. United, for example, has an older workforce than Continental, which would likely raise seniority issues in a merger. That, in addition to other potential labor conflicts, could possibly scare off the financing needed to pull off such a merger, Mann says. As has been the case in previous media reports, neither United nor Continental would comment on the speculation.

Former Continental CEO Gordon Bethune was named chairman of the board at Aloha Airgroup, parent company of Aloha Airlines, the Pacific Business News of Honolulu reports. Known for his often candid and colorful commentary, Bethune retired from Continental in December 2004 –- the same month Aloha filed for Chapter 11 bankruptcy protection, according to the Houston Chronicle/AP. Aloha emerged from bankruptcy protection this past February. Aloha CEO David Banmiller described Bethune as "a dynamic industry leader with a proven track record of driving up customer, employee and company value." The Honolulu Star-Bulletin writes that “Bethune has ties to Aloha through Greg Brenneman, another former Continental executive who in late 2001 tried to organize a merger between Aloha and Hawaiian Airlines. During their time at Continental, Brenneman and Bethune were credited with turning around the then-ailing carrier.”

Speculation about airline mergers continues to be a hot topic. One of the latest stories on the subject comes from the Chicago Tribune (free registration), which writes: “Delta Air Lines and Northwest Airlines, both operating in bankruptcy, often are seen as the two most likely targets for a suitor. But United Airlines, Continental Airlines and US Airways' names also have come up as possible partners.” One potential combination that has generated lots of attention is a marriage between United and Continental, though there's been no concrete evidence of talks between the carriers. Regardless, Joe Brancatelli, a USATODAY.com columnist and publisher of the JoeSentMe.com business traveler newsletter, tells the Tribune that several potential groupings “make sense, but I see problems with all combinations. There's a lot of stuff that goes on when you try to merge cultures and corporations." Other industry observers say merger speculation could be moot if a major airline goes out of business. "If one major airline were to disappear, all this talk of mergers would damp down quite a bit," says Aaron Gellman, a professor at Northwestern University's Transportation Center. Gellman also warns that a merger would not necessarily ensure the success of the new carrier. "Bad management drives out good in mergers," he tells the Tribune. "There are exceptions, but usually the worst managers stay on because their alternatives are less."

The Chicago Tribune story also is carried by the Times Leader of Wilkes-Barre, no registration required.

British authorities said Thursday they had foiled a plot by terrorists to blow up U.S. aircraft flying from Britain to the USA. The plot involved carrying concealed explosive devices in carry-on bags. Both Britain and the USA raised security levels -- the Transportation Security Administration (TSA) posting a red alert on commercial flights from the United Kingdom to the USA.

Authorities in U.S. airports have quickly followed Britian's lead by banning passengers from carrying liquids onto flights, according to TSA. It includes beverages, hair gels and lotions.

With their planes flying nearly full, airlines are becoming more strict with their carry-on policies, reports The Wall Street Journal (subscription required). The fight for space in the overhead bin is also causing bad behavior among travelers, it says.

American Airlines tells the paper that it's enforcing its carry-on rules -- one bag plus one extra personal item -- more strictly than in years past. In July, British Airways also began firmly enforcing its policy. American and United recently sent internal memos to gate agents and flight attendants, directing them to be stricter about carry-ons on full flights.

The paper also reports of some strange carry-on items. One traveler reports a passenger trying to shove a five-foot-high stuffed giraffe into a bin.

Some travelers are being creative. One British Airways traveler used a plastic bag to put two books into it. Once he got through security, he put them right back in his hand luggage.

Airlines are also tightening the rules on checked luggage. British Airways is lowering the maximum weight for checked luggage from 70 pounds to 50 pounds in October.

Starting September, Continental Airlines also is cutting its weight limit on checked bags to 70 pounds from 100 pounds. Late last year, United made a similar change on international routes, cutting it's limit to 50 pounds from 70 pounds. American dropped to 50 pounds from 70 pounds.

-- Roger Yu

U.S. airline flights arrived on time 72.8% of the time in June, the latest month for which statistics are available from the federal Bureau of Transportation Statistics. That figure is down from May’s 78.3% on-time rating, and from June 2005 (75.2%). Of the 20 U.S. airlines that reported data to the agency for this category, Hawaiian Airlines led all U.S. carriers with 94.6% of its flights arriving on schedule. Rounding out the top five were: Aloha Airlines (85.5% on-time rating), regional carrier SkyWest (80.1%), Frontier (79.4%) and Northwest (77.8%).

At the other end of the spectrum, Atlantic Southeast Airlines had the worst on-time arrival rating for June. The carrier, which is owned by SkyWest and flies regional flights for Delta, had 36.5% of its flights arrive late for the month. ATA (36.3% of its flights were late) had the second-worst mark for on-time arrivals in June, followed by regional carrier Mesa (33.3% late), Continental affiliate ExpressJet (32.6%) and Continental (32.2%).

Click on "read more" to see the on-time ratings for the 20 airlines that report data to the BTS and Department of Transportation.

Regional giant Mesa canceled more flights than any U.S. carrier in June, the latest month for which statistics are available from the federal Bureau of Transportation Statistics. Mesa –- which canceled 5% of its flights in June -– flies regional flights for United, US Airways and Delta in addition to operating a standalone carrier in Hawaii called go!. After Mesa, Continental affiliate ExpressJet canceled 3.9% of its flights for June. Rounding out the top five were American subsidiary American Eagle (3.7%), Delta subsidiary Comair (3.2%) and Delta affiliate Atlantic Southeast (2.9%). United canceled the most flights (1.9%) of the USA’s traditional carriers, ranking sixth out of the 20 airlines reporting. ATA had the highest cancellation rate among discounters, ranking 10th out of 20 airlines by scrubbing 1.1% of its flights.

At the other end of the spectrum, Frontier canceled the fewest flights among the 20 U.S. airlines reporting data. Frontier canceled seven flights for the month, or 0.1% of its schedule. JetBlue had the second-lowest cancellation rate at 0.1% (18 flights total). Rounding out the five airlines with the lowest cancellation rates were: Hawaiian (0.3%), AirTran (0.5%) and Southwest (0.6%). Continental had the best mark among the legacy carriers, turning in the sixth-lowest rate of canceled flights (0.6%) for the month.

Click on "read more" to see the full airline-by-airline breakdown.

SkyWest subsidiary and Delta affiliate Atlantic Southeast was the airline most likely to misplace your bags in June, the latest month for which statistics are available from the federal Bureau of Transportation Statistics (BTS). According to the BTS data, Atlantic Southeast had 19.2 reports of mishandled baggage for every 1,000 passengers. American subsidiary American Eagle had the second-worst mark (13.18 reports per 1,000 passengers), followed by Delta subsidiary Comair (11.15), Continental affiliate ExpressJet (11.05), and regional giant Mesa (10.9).

Hawaiian Airlines had the best mark for mishandled luggage out of the 20 airlines reporting data to the BTS. The carrier had 2.6 reports of mishandled luggage for every 1,000 passengers. JetBlue had the second-best mark (3.08 reports per 1,000 passengers), followed by Northwest (4.07), Southwest (4.12) and Frontier (4.29).

Click on "read more" to see the full airline-by-airline breakdown.

With flights flying fuller than ever this summer, more passengers are being turned away because of oversold flights. In fact, U.S. fliers "are getting bumped off flights more frequently than at any time in the last six years,” USA TODAY writes -– citing the latest data from the U.S. Department of Transportation (DOT). The paper adds that “some 16,300 passengers were bumped against their wishes in the April-June quarter, a rate of 1.12 passengers per 10,000. That rate is one-third higher than a year earlier” and is the highest since the second quarter of 2000. The increase in bumping comes as airlines are flying near capacity these days, meaning flights are often sold out or overbooked. Predictably, that increases the likelihood that an airline will be forced to bump a passenger from a full flight.

So, which airlines have the worst mark in this category? That would be SkyWest subsidiary and Delta affiliate Atlantic Southeast, where 3.6 of every 10,000 passengers was involuntarily denied boarding during the April-to-June quarter. Regional giant Mesa had the second-worst mark at 2.45 bumped passengers per every 10,000 fliers, followed by Delta subsidiary Comair (2.38), Alaska Airlines (1.95) and Continental (1.8). The airline least likely to bump you? That would be Aloha, which involuntarily denied boarding to .08 passengers out of every 10,000 passengers. AirTran had the second-best rate (.09), followed by JetBlue (.13), Hawaiian (.18), Frontier (.56) and United (.72).

Click on "read more" to see the full airline-by-airline breakdown.

Starting Dec. 16, Continental Airlines will begin non-stop service between its Newark hub and Bonaire in the Netherlands Antilles. The flights will leave Newark for Bonaire on Saturdays, with return service to Newark operating in Sundays. Continental will operate the route using Boeing 737-700 aircraft configured with 12 seats in first class and 112 in coach. The flights are pending government approval. Continental also offers weekly non-stop service to Bonaire from its hub at Houston Bush Intercontinental. Bonaire is located in the southern Caribbean Sea, east of Aruba and Curacao, and north of Venezuela.

As more Americans travel frequently to destinations such as India, China and Japan, airlines are moving to meet that demand by increasing their non-stop offerings to such destinations. The ultralong, non-stop flight is the fastest-growing length category of flight, according to a USA TODAY analysis of airline schedules. While the idea of a 14-hour (or longer) non-stop flight may sound like a punishment, many business travelers say they want time-saving flights so they can hit the ground running when they land. "I prefer this to stopping for a layover in Europe," says Michael Diminich, an international trade consultant from Long Island, N.Y., says from onboard American’s roughly 15-hour non-stop flight from Chicago O’Hare to New Delhi. "I'm always working the day after I land, because clients demand it."

So, what’s it like to sit in a 15-hour flight? As part of USA TODAY’s coverage, I put together a blow-by-blow account of how I passed the time when I was on that flight in March. Did I mention I was sitting in coach?

American Airlines has filed an application with the Department of Transportation to add a second route to China. The carrier hopes to win the rights to add service to Beijing from its Dallas/Fort Worth (DFW) hub, AP reports. AA began flying its first China flights in April with service between Chicago O’Hare and Shanghai. If it wins the rights for the route, “the new service could play an important role for American, which has been working to expand its international network,” writes The Dallas Morning News (free registration). But AA will have to compete with at least one other carrier to win rights for the new China flights. Continental has also applied to begin flights between its Newark hub and Shanghai.

In 2004, the USA and China reached an aviation agreement that opened up the market to new flights, which are to be phased in over several years. The Morning News writes that the rights that AA and Continental are competing for are part of the “next tranche of service, seven weekly flights to one of China's three largest business centers -– Beijing, Shanghai or Guangzhou -– which becomes available in March.” Northwest and United also are thought to be considering applying, though neither have yet. They have until Aug. 17 to file. As for AA's proposed Beijing flight, DFW officials are keeping their fingers crossed. “This flight would be one of the most historic flights and most high-profile routes in the 100-year history of aviation in north Texas,” Jeff Fegan, DFW's chief executive, tells the Fort Worth Star-Telegram (free registration).

In filing its application for new service to China (see above), American Airlines CEO Gerard Arpey says his carrier should get strong consideration for the flights. He claims that the existing service between the USA and Asia is "heavily tilted" toward rivals United and Northwest, The Dallas Morning News (free registration) reports. Arpey says that if AA wins additional rights to China, it could "challenge the stranglehold of incumbents and spur competition." United and Northwest are currently the top U.S. carriers to China, the Morning News reports. United flies 28 weekly flights to Beijing and Shanghai while Northwest offers seven to Beijing. Northwest also operates 21 flights a week to China that stop first in Tokyo. As for AA, it’s April launch of Chicago-Shanghai service marked the airline’s first China route. Arpey declined to say whether that route has been profitable for the airline so far, but he did say AA was “solidly ahead" of its start-up expectations.

Continental Airlines announced a robust second-quarter profit this morning, making it the third consecutive airline to report healthy results for the period. The nation’s No. 4 carrier reported a $198 million profit ($1.84 a share), nearly double its result from the same quarter a year ago. Reuters writes that, “excluding special items, the Houston-based company posted earnings of $1.93 a share. Wall Street analysts were expecting $1.94, according to Reuters Estimates.” Reuters adds that cost cuts by Continental -- including pay and benefit cuts -- “more than offset a rise in the company's fuel costs, which increased $216 million.” It hedged about 25% of its fuel costs during the second quarter, a number that’s expected to increase by 33% during the current period.

May appears to have been a bad month for those flying into or out of Newark on Continental or its regional partner ExpressJet, according to the latest figures available from the Bureau of Transportation Statistics. Six of the nation’s seven most-delayed flights for the month were on those airlines. And all seven of the nation’s most-chronically delayed flights involved a flight to or from Newark. The worst offender: ExpressJet Flight 2030 from Newark to Omaha, which arrived on-time just 5% of the time for the month. The nation’s second-most chronically delayed flight was American subsidiary American Eagle Flight 4659 from Newark to Raleigh/Durham, which arrived on time 9.7% of the time in May. The month's third most-frequently delayed flight was Continental/ExpressJet Flight 3023 from Charlotte to Newark, which landed on time 11.1% of the time. (Photo: Planes at Newark Airport. By Mike Derer, AP.)

Click "read more" to see a list of the nation's 20 most-delayed flights for the month of May.

Low-cost carrier ATA Airlines had the worst on-time arrival rating in May, the latest month for which figures are available from the Bureau of Transportation Statistics. More than three of every 10 ATA flights arrived late in May, with the airline completing just 66.1% of its schedule on time. American subsidiary American Eagle had the second-worst on-time rating (68.4%) while Continental affiliate ExpressJet was next with a 73.1% on-time rating.

Click on "read more" to see the on-time ratings for all carriers.

American Airlines affiliate American Eagle canceled a higher percentage of its flights than other U.S. carriers in May, the latest month for which figures are available from the Bureau of Transportation Statistics. American Eagle canceled 3.5% of its scheduled flights for the month. Mesa –- which flies regional flights for Delta, United and US Airways –- canceled the second-highest percentage (2.2%) of its flights while Continental affiliate ExpressJet had the third-highest mark (1.9%).

Click on "read more" to see the cancellation ratings for all U.S. airlines.

Frontier Airlines was the airline least likely to cancel your flight in May, the latest month for which statistics are available from the Bureau of Transportation Statistics. Frontier led all carriers by canceling just 0.1% of its scheduled flights for the month. JetBlue had the second-best mark (0.2%) while Continental was next (0.3%). (Photo: A Frontier jet takes off from Washington's National Airport. By Paul J. Richards, AFP/Getty Images)

Click on "read more" to see the full delay ratings for all airlines.

United Airlines planes were packed at record levels last month, with the carrier filling 88.3% of its seats in June. That marked the airline’s highest-ever number for the month, according to the Rocky Mountain News. And United wasn’t alone in reporting a record June. Continental also filled its planes like never before in June, with 84.8% of its seats filled for the month. "We're now seeing the effects of major cuts in flight schedules, and the flights are becoming like sardine cans — more bodies, fewer seats," Joe Schwieterman, a transportation expert at Chicago’s DePaul University, tells Reuters. More records are likely. "We're going to see historical numbers this summer," says Tom Parsons of travel site Bestfares.com. "If you haven't bought tickets for the month of July, you're probably going to experience ticket shock. There's simply not that many seats left."

Continental Airlines announced Wednesday that it received $156 million from the sale of 7.5 million shares of Class A common stock of Panama-based Copa Holdings, parent of Copa Airlines. From that amount, Continental will contribute $75 million to its pension plans -- bringing its 2006 pension-plan contributions to a total of $172 million, according to The Associated Press. Continental still holds about 4.4 million shares in Copa. Since 2001, Continental has contributed $1.07 billion to its pension plans, according to the Houston Business Journal.

The Pittsburgh Post-Gazette reports that US Airways CEO Doug Parker is keeping his ears open on a possible merger (see below), but the paper also touches other merger speculation. “So, what carriers are out there looking?” the paper asks. The Post-Gazette quotes airline consultant Darryl Jenkins as saying he believes United, Delta, Continental and US Airways are all interested in consolidation. On the other side, he claims that American, Northwest and Alaska Air are not interested. Because its route network overlaps with so few other carriers, Alaska is "one of the most attractive merger candidates," Jenkins says. But he thinks that airline’s management has no interest in a merger. One other often-quoted airline consultant has a somewhat different take. For starters, Delta is not interested in a merger, says Michael Boyd of the Boyd Group. "I know they are not," he tells the Post-Gazette. "The chairman of Delta told me that they are not."  Boyd says he thinks United is the only carrier actively pursuing a partner. Senior management "is trying to shop the company," he says.

As for US Airways, the Post-Gazette writes that “Jenkins is convinced that Parker wants to build the nation's largest airline -- through mergers -- and that the union of US Airway and America West was just the first step.” The paper asked Parker if that was actually his long-term goal. The Post-Gazette says Parker “deflected the question” by saying: "We want to be the nation's best air carrier and that doesn't necessarily mean the biggest." He added that his top priority is wrapping up the US Airways-America West merger, which could be completed sometime next year. "But what we have learned so far is there is a lot of value to be had by taking two airlines and putting them together," Parker says.

In results released earlier today, a new J.D. Power and Associates survey found that JetBlue and Continental are the top two North American airlines for customer satisfaction. JetBlue not only led J.D. Power’s ratings for low-cost carriers, but it also earned the best score among all airlines. Continental was found to have the highest customer-satisfaction rating of traditional hub-and-spoke airlines, “followed closely by … Delta Air Lines,” according to The Atlanta Journal-Constitution (free registration). J.D Power surveyed 9,334 passengers who flew a major North American airline in the first five months of the year, assigning a score to each airline. J.D Power used a scale of 0 to 1,000, with the latter marking a perfect score. Among "traditional" airlines, Continental led the survey with a score of 697. Delta was second with a score of 695, followed by American (682), Alaska (672), US Airways (659), United (658), Northwest (656) and Air Canada (655). In the group’s category for low-cost carriers, JetBlue led with a score of 820, followed by Southwest (735), AirTran (722) and Frontier (716).

The Journal-Constitution says J.D. Power's customer satisfaction scores are based on seven factors. In order of importance, they are: cost and fees; flight crew; in-flight services; check-in; boarding/deplaning/baggage; aircraft; and reservations. "The traditional network airlines have had a particularly difficult time connecting with passengers the past few years, struggling with increasing fuel costs, competition from discounters, massive layoffs and dramatic cost cutting," says Linda Hirneise, the executive director of travel practice at J.D. Power. "However, these carriers still have a strong base of customers who value the flexibility of flight legs and additional cabin classes traditional airlines offer. The challenges for the traditional carriers are to manage customer expectations as amenities that used to be expected on such carriers have either disappeared or now require a fee."

(Continental photo by Doug Mills, AP. JetBlue photo by JoeRaedle, Getty Images.)

Continental Airlines and Alitalia will expand their code-sharing partnership to include connecting travel between Italy and both Canada and Mexico. Code-sharing allows airlines to place their own flight numbers and sell seats on each other’s flights. In the expanded Alitalia-Continental deal, Alitalia will place its airline code on Continental non-stop flights between Continental’s Newark hub and Mexico City and the Canadian cities of Montreal, Quebec and Ottawa. That will allow Alitalia customers to use a single ticket to fly from Rome to Newark on Alitalia and then connect on Continental to Canada or Mexico. Both Alitalia and Continental are members of the SkyTeam frequent-flier alliance.

JetBlue will announce today that Houston will be its newest destination, with non-stop service to New York JFK scheduled to begin Sept. 7, according to the Houston Chronicle. The carrier will fly to Houston’s Hobby Airport instead of the city’s bigger Bush Intercontinental Airport. Hobby is the city’s second-busiest airport and is home to other low-cost carriers such as Southwest, AirTran and ATA. JetBlue will fly three daily flights between Hobby and JFK, with regular fares ranging from $117 and $349 each way (plus taxes and fees). The Chronicle writes that JetBlue’s entry into the Houston market “pits (it) against two strong competitors", including "Houston-based Continental Airlines, which flies between its hub at George Bush Intercontinental Airport and its hub in Newark, as well as to JFK and LaGuardia airports.”

The other chief Houston rival, the Chronicle writes, is “ Dallas-based Southwest, which carries more than 80% of the travelers moving through Hobby.” The paper notes that JetBlue and Continental “already have been duking it out” in the New York area since JetBlue added Florida and Puerto Rico flights out of Newark. The Florida routes are some of Continental’s most popular routes out of its Newark hub. JetBlue will also compete with both ATA and Southwest on the New York-Houston route. ATA offers flights between Hobby and New York LaGuardia, and its partnership with Southwest allows Southwest to sell seats to its customers on those flights as well. (Photo by Eileen Blass, USA TODAY)

Continental Airlines was named the top carrier in North America, according to the 2006 World Airline Survey conducted by airline research firm Skytrax. JetBlue was named the top low-cost carrier in North America, while Midwest Airlines was tabbed as the continent’s best “regional carrier.” Overall, however, no North American airline managed to crack the worldwide top 10 in the 2006 "World Airline of the Year" voting. In the global rankings, the top honor went to British Airways, which bested No. 2 Qantas of Australia in the rankings. Last year’s winner –- Cathay Pacific -– finished third in the 2006 rankings, followed by Thai Airways and Emirates. Rounding our the worldwide top ten were: Qatar Airways, Singapore Airlines, All Nippon Air (ANA), Malaysia Airlines and China Airlines.

The rankings were based on an SkyTrax’s annual World Airline Survey, which was conducted between September 2005 and May 2006. The Times of London say the survey measures about 35 different aspects of passenger satisfaction for each airline's product and service standards. SkyTrax says it surveyed more than 13.6 million air travelers to come up with the 2006 rankings. (Photo by Doug Mills, AP)

Continental Airlines today announced it has placed orders for 10 additional Boeing 787 “Dreamliners.” The Seattle Post-Intelligencer says the order is a “big boost” for Boeing “in its quest to place its Dreamliner with U.S. customers.” As of Monday, Boeing had 350 firm orders for its 787, though many of those orders have come from overseas. Most traditional U.S. carriers have held off on ordering new planes during the recent industry slump, but Continental, which had previously placed seven firm orders for the long-haul 787 prior to today’s announcement, is bucking that trend. The airline also placed orders for 24 Boeing 737-800 aircraft. With the orders, the airline apparently is looking to grow at a time when most legacy carriers are pulling back on capacity. "These aircraft will give us the ability to seize long-haul market opportunities, remove less efficient aircraft from our fleet and maintain our role as a global network leader," Chief Executive Officer Larry Kellner said in a statement. "We continue to target 5% to 7% annual growth in capacity. Our fleet plan remains flexible, permitting us to respond appropriately to market conditions."

Photo credit: Continental planes within view of the Manhattan skyline. By Mike Derer, AP.

Low-cost carrier ATA Airlines had the lowest on-time arrival rate in April, the latest month for which figures are available from the federal Bureau of Transportation Statistics. More than three of out of every 10 ATA flights (34.8%) arrived 15 minutes late or more during the month. American affiliate American Eagle had the second worst rate, with 27.8% of its flights arriving late. Continental had the third-worst mark (27.7%) late.

Click on "read more" to see the airline on-time ratings for all 20 carriers reporting to the BTS.

Low cost carrier ATA Airlines took home the dubious distinction of having the nation’s most consistently delayed flights in April, the latest month for which figures are available from the federal Bureau of Transportation Statistics (BTS). ATA’s newly scheduled service between Houston Hobby and New York LaGuardia appears to be having a hard time operating on schedule, according to the BTS numbers. Both ATA Flight 4234 (Hobby to LaGuardia) and ATA Flight 4233 (LaGuardia to Hobby) were late 100% of the time during the month. ATA also had the month’s third most-consistently delayed flight, with Flight 4232 (Houston-to-LaGuardia) late 96.55% of the time. Rounding out the nation’s five-most delayed flights for April: Continental affiliate ExpressJet Flight 2669 from Newark to Kansas City was late 96% of the time, while United affiliate SkyWest’s Flight 6174 (Monterey, Calif., to San Francisco) arrived late about 9 out of every ten times (89.66%).

Click "read more" to see a list of the nation's most-delayed flights in April.

Photo credit: An ATA ticket counter. By Michael Conroy, The Associated Press.

Continental Airlines has jumped ahead of Northwest to become the USA’s fourth-largest airline. That marks the first change in the top-five rankings since 2001, according to a Bloomberg News report carried by the Chicago Tribune (free registration). The Detroit Free Press writes that Northwest's change in ranking "reflects the large number of planes and flights it has shed as it reorganizes." And a second change in the top five could be close. Southwest could come close to tying Northwest for the No. 5 spot by the end of the year, Bloomberg reports. American is currently No. 1, followed by United, Delta and now Continental. The rankings are based on the number of miles flown by paying passengers on each airline.

“There is a shift happening,'' says airline consultant Alan Sbarra. “We're going to see that carriers that do not get their costs in order and can't compete in the long run are going to shrink more and more.'' But Northwest’s shrinkage could come to an end later this year, according to the Minneapolis Star Tribune (free registration). Citing an internal Northwest memo, the paper writes that the carrier –- which has cut capacity 10% this year –- plans to expand its flying throughout the rest of this year and into 2007. "The expansion would take advantage of heavy passenger demand and Northwest's new ability to operate with much lower labor and aircraft lease costs,” the Star Tribune writes.

Photo credit: A Continental Express Embraer 145 is framed by the approach lights as it lands at Cleveland Hopkins Airport last month. By Mark Duncan, AP.

Continental Airlines on Tuesday began non-stop service between Newark, N.J., and Copenhagen, Denmark. The carrier operates one daily round-trip flight using 172-seat Boeing 757-200 aircraft. The planes are configured with 16 business class seats and 156 in economy.

Cathay Pacific was named OAG Airline of the Year, taking the award for the first time. The Hong Kong airline also took home the honor for the "best trans-Pacific airline" and the "best airline based in Asia." Closer to home, Continental Airlines was named "best carrier based in North America," taking that title for the third consecutive year. And for the fourth consecutive year, Continental was tabbed as the "top business/executive class airline," AFP reports. JetBlue took the title for "best low-cost/no-frills airline." It was the first time JetBlue took that title, beating out finalists Southwest, British-based easyJet and last year’s winner Virgin Blue of Australia. American Airlines was voted the “airline of choice for passengers with a disability.” OAG voters thought United offered the "best economy/coach class in the world." British Airways fared well in the survey, earning the title for "best airline based in western Europe" and "best trans-Atlantic airline."

Travel company OAG –- whose name stems from “Official Airline Guide” –- has been awarding the airline rankings since 1982. The company’s rankings are based on votes “from a worldwide audience of business travelers who subscribe to OAG travel information and planning products.” AFP writes that "OAG is best known for its airline schedules database" and for "holding flight details for 1,000 airlines and more than 3,500 airports."

Photo credit: A Continental jet nears the runway at Washington's National Airport. By Doug Mills, The Associated Press.

Four of the nation’s six traditional airlines have filed for bankruptcy during the past five years, but Chapter 11 may not have been the magic solution the companies were hoping for. TheStreet.com writes that “despite bankruptcy's prevalence in the airline industry and the recent success of US Airways -- which filed for bankruptcy protection in both 2002 and 2004 -- it's becoming clear that ... the recent round of legacy airline filings aren't yet curative.”

The publication notes that United had gone back “to the drawing board,” seeking $700 million in additional cuts, even after its three-year bankruptcy reorganization. Delta says it reduced its previously massive losses to just $6 million for the month of March, but TheStreet.com claims the Atlanta-based airline “performed badly relative to its peers.” Northwest also cut its losses, but its performance appears to be trending in the right direction, labor issues aside. US Airways, of course, is one of the few airlines to post a first-quarter profit in 2006 and has emerged as one of the airline's industry's newest darlings on Wall Street.

“Bankruptcy may work, but the emphasis is on the 'may,' " says aviation consultant Scott Hamilton. He points to Continental, a carrier that’s faring reasonably well today, but one that filed bankruptcy twice prior to 2000. Like US Airways, he contends, Continental needed two Chapter 11 filings to get things right. More ominously, however, Hamilton notes that the industry’s biggest collapses –- those at Braniff, Eastern and Pan Am -– were also preceded by bankruptcies.

Photo credit: A US Airways Express plane lands at Philadelphia International Airport. Wall Street has been a big fan of the "new" post-merger US Airways. By George Widman, The Associated Press.

Continental Airlines today starts nonstop service between Newark, N.J., and Barcelona, Spain. The airline will fly one daily round-trip flight between the cities using a 172-seat Boeing 757-200 jets with 16 business-class seats and 156 in coach. During the slower winter season, Continental will reduce the daily service to five weekly flights.

Continental Airlines President Jeff Smisek lit off some fireworks during a “particularly candid” address at the Bear Stearns Global Transportation Conference, TheStreet.com reports. Smisek took aim at rivals that have ditched their pensions and cut pay through bankruptcy. "Our network competitors have frankly screwed their employees by defaulting on their pension plans and taking away wage and benefits in a very hostile manner," he said. In contrast, Smisek noted that Continental has retained its pension plans and sought to make wage cuts only after slashing $1.2 billion in non-employee costs. Continental is also one of the few legacy carriers to hold onto perks such as free meals in coach. "We did not follow our competitors in a race to the bottom to achieve a crappy product. ... We did not take off pillows, we did not take off blankets, we did not take off meals at mealtime and we will not charge fifteen bucks for an aisle seat," he was quoted as saying by TheStreet.com. Smisek saved one of his most pointed jabs for rival JetBlue, which recently began service at Continental’s Newark hub. Acknowledging JetBlue’s 36 channels of free seatback TV, Smisek had this to say about their low-fare rival: "They are a low-cost carrier, they are also an extremely low-(revenue) carrier, and their customers don't pay them a penny to watch those I Love Lucy reruns. ... It is a wasted investment in my mind."

Continental Airlines today begins non-stop service between its Newark hub and Cologne/Bonn, Germany. The carrier will operate one daily round-trip flight aboard 172-seat Boeing 757-200 aircraft configured with 16 business-class seats and 156 in economy. Flying times will be approximately 7 hours, 25 minutes eastbound and 8 hours, 45 minutes westbound. Continental also flies to the German cities of Berlin, Frankfurt and Hamburg. Continental is offering 2,000 bonus miles to frequent-flier members who fly between May 10 and July 31. Pre-registration is required to earn the bonus.

Continental Airlines today begins non-stop service between Newark, N.J., and Moncton in New Brunswick, Canada. The airline will fly one daily round-trip flight between the cities. Moncton is the ninth Canadian city served by Continental.

Airlines are increasingly looking to niche groups to find loyal customers, and pet owners have become a popular target. Several carriers have recently rolled out promotions or frequent-flier options to court such travelers, with the latest coming from Continental. In a press release issued today, the company today says it will open an "airline-owned kennel situated on airport property in the United States." The kennel is inside Continental's cargo facility at its Houston Bush Intercontinental hub and the airline says it will provide care 24-hours a day, seven days a week, "for animals that have stopovers or overnights in Houston." Services at the 1,100-square-foot facility include separate caging areas for all species, separate ventilation systems, exercise runs and full grooming facilities. For more information, visit the pet-information page on the airline’s website.

Continental Airlines reported a $66 million loss (76 cents a share) during the first quarter as labor-cost cuts and higher revenues offset soaring fuel prices, Reuters reports. When special items related to stock-based compensation, pension payments and plane leases are excluded, Continental’s loss totaled $46 million (53 cents a share) -- a figure that beat Wall Street’s estimate of a 67-cents-a-share loss. Reuters writes that Continental’s results “were helped by a reduction in labor costs after all of its major unions agreed on some $500 million in annual wage and benefit cuts which the … airline said were crucial to its survival.” But, with the Continental's fuel costs rising $191 million over the same quarter a year ago, that wiped out most of those gains.

Continental will boost its domestic mainline capacity (a number that excludes regional partners) by nearly 4% from last year, a move that comes while Continental's legacy counterparts reduce U.S. flying, The Wall Street Journal (subscription required) reports. Among the domestic cuts are a 15%-20% reduction by Delta and a 4% decrease by American. “We have to grow domestically to feed our international operation," says Continental president Jeff Smisek.” The Journal writes that “part of the reason Continental … is being more aggressive than other legacy carriers is that it entered the latest industry downturn with some advantages. Thanks to bankruptcy and a major reorganization in the 1990s, the ... airline has a more productive work force than some competitors and a newer, more fuel-efficient fleet." Continental is also blessed with hubs in big markets like Newark and Houston, where the carrier can rely heavily on more-profitable point-to-point fliers. Additionally, Continental has expanded flights and cut fares on some routes to Florida out of its Newark hub, where it faces recently added competition from JetBlue. “"We will never, ever let anybody take our customers on price," Smisek says.

If you can say you’ve flown over the Arctic Circle or the North Pole, your club isn’t as exclusive as it used to be. More airlines are flying the routes over the far north, where passengers are treated to a view of what the Chicago Tribune (free registration) describes as “a seemingly endless horizon of ice and snow meeting blue sky.” Why the northern routes? To save time and -– more importantly –- money. "If we had to go more south, on more traditional routes, we would not be able to carry all the passengers we carry, and we wouldn't carry all the cargo," says Sean Donohue, United Airlines' vice president of operational services. His airline is on pace to fly more than 1,500 passenger flights over the pole this year, which would beat its record of 1,402 set in 2005. “The next closest passenger airline in terms of polar flyovers was Continental Airlines, with 796 last year,” the Tribune writes. With 515 fights, Air Canada was third.

United, which the Tribune says flies more Asian routes than any other airline, first began heavily using the polar flights in earnest in 2000, when it flew 253 such flights. Why now? Commercial flights over the North Pole region became available in the 1990s, once Russia agreed to open up its air space to commercial airlines. And the trend has picked up in recent years, allowing airlines a shorter, faster option to connect North American and Asia. Weather, as you might expect, also plays a role. When winds are really strong, it's more advantageous to fly a polar route, where there's no wind," explains Mike Stills, manager of international operations flight dispatch at United.

Venezuela has put off its threat to restrict U.S. airline service after progress in talks with U.S. officials, Reuters/CNN reports. Venezuela had planned to halt to nearly all service on U.S. airlines to the South American nation in retaliation for a decade-long restriction by the USA on flights by Venezuelan carriers to U.S. airports. The U.S. cited safety concerns when it put the restrictions in place in 1995, but Venezuela claims improvements have been made since then and argues the restrictions should be lifted. Venezuela will hold off on any action until April 25, giving the U.S. Federal Aviation Administration time to issue the results of a safety audit of Venezuelan airlines that it will conduct this week. American, Continental and Delta would all be affected by the proposed Venezuelan restrictions.

American, Continental, United and US Airways are all forecast to earn full-year profits this year, CNN/Money reports. But despite the projected profits for those four carriers –- none of which have seen an annual profit since 2000 -– the industry as a whole will lose $2 billion in 2006, predicts John Heimlich, chief economist for the industry trade group Air Transport Association. On a positive note, however, he adds that an industry-wide profit is possible in 2007. As for the uptick expected at some carriers this year, Heimlich says: "We've got more seats that are filled and we're getting higher fares for them. That's your best case scenario. If fuel was at $40 a barrel, we could be minting money right now." And if profits at the perennial money-losing traditional airlines sounds odd, things could take an even odder twist in 2007. "In 12 months we'll be talking about the problems with the low-cost carriers, not the (old line) carriers," says industry expert Mike Boyd.

The international politics of who can fly where has provided some of the more interesting aviation stories this week.  On Wednesday, the European Union issued its long awaited "black list " -- 92  carriers, mostly African, that are banned for safety reasons from EU airports.  Today, The Associated Press reports a tentative resolution in the dispute that threatened to bar U.S. flights to Venezuela.  Had President Hugo Chavez' government followed through with the threat, it would have inconvenienced travelers and nicked the income of Continental, Delta and American.
-- Tom Fogarty

Venezuela's airline association urged the U.S. Federal Aviation Administration (FAA) to visit "as soon as possible" following Venezuela’s threat to restrict U.S. airlines' flights to the South American country, reports the Houston Chronicle. Last month, Venezuela’s civil aviation authorities said they would ban flights on Delta and Continental and restrict flights on American. The move, which is now scheduled to take effect March 31, comes in retaliation for the FAA’s decision to restrict Venezuelan carriers’ flights to the USA over safety concerns. Venezuela claims those concerns have been fixed, and say it’s time for the FAA to revisit its decision. "We want ... to reiterate our willingness to do whatever we can to facilitate and stimulate dialog between the two airline authorities," the country’s aviation agency says.

Delta Air Lines will add 12 non-stop destinations increase service to five others from New York JFK, the airline announced this morning. Delta COO Jim Whitehurst says the move is part of an effort to turn JFK into a hub that can funnel connecting passengers not only to Delta’s growing international destinations, but also to its cities within the Northeast and mid-Atlantic -– regions where the carrier already has a strong presence. Of the 17 cities seeing new or increased service, 15 will be in the Northeast and mid-Atlantic. The majority of the new flights will be on regional jets or turbo-prop (propeller) aircraft. Whitehurst says that will not only help Delta feed its rapidly growing schedule of international flights at JFK, but will also allow better connecting options. From the Northeast, for example, “we can take people over Atlanta, but it’s very circuitous to go (on Delta’s connecting flights) to the mid-Atlantic,” Whitehurst says. Once the JFK expansion is completed this summer, those passengers will be able to connect via JFK instead.

But Whitehurst also made the point that the domestic expansion at JFK dovetails with the carrier’s rapid international expansion there. “Obviously, feeds (from the new cities) are a big part in supporting that operation,” he says. As for Delta’s other hubs, Whitehurst says none are expected to be sacrificed significantly in order to grow the JFK operation. He did acknowledge, however, that there could be some “thinning” on routes with high numbers of daily flights.  Whitehurst also downplayed competition within the New York market, where JetBlue already has a JFK hub and Continental has one in Newark. American also has a big presence at JFK. “We need to look at where our customers want to go,” he says.

What do you think of Delta's decision to build a big hub at New York JFK? Share your comments with other Today in the Sky readers.

UPDATE: Click on "read more" to see where Delta's new JFK flights are going to.

With restrictions loosened on flying between the two countries, China has become one of the newest battle grounds that big U.S. carriers are competing for, according to the Chicago Tribune (free registration). One of the cities currently in the spotlight is Shanghai, which is where American Airlines will add non-stop service to from Chicago O’Hare. Those flights begin April 2 and will go head-to-head with United Airlines, which also offers non-stop service on that route. AA is offering a $625 round-trip fare to promote its new service. ” United Airlines, which has enjoyed a monopoly on Chicago-to-China service, has dropped its economy-class ticket price by more than half to match American's,” the Tribune writes.

Northwest and United had been the only U.S. carriers with rights to fly to China, while three Chinese carriers were authorized for flights to the USA. But a 2004 agreement between the USA and China expanded flying rights between the countries, and U.S. carriers were quick to take advantage. In addition to American’s new flight, Continental last year began Newark-Beijing service –- winning out over Delta, which had hoped to add service from Atlanta. And a report from Forbes/AFX says that United has applied to begin daily non-stop service between Guangzhou and San Francisco. If approved, that would make United the first U.S. airline to offer non-stop service from the U.S. mainland to south China. Adding to the mix, Reuters reported Friday the Continental is hoping to gain approval to start Newark-Shanghai service next March. "Asia is a battleground now," says New York-based travel analyst Bob Harrell.

The Houston Chronicle writes that the airline’s “aggressive international expansion is triggering business opportunities that go back to the very roots of the airline industry — carrying mail.” In 2005, Continental’s mail-related business rose 3% and generated about $50 million in revenue –- with the airline’s new Beijing-Newark route playing a big role in boosting those numbers. The Chronicle writes that “for an airline that had $2.8 billion in revenue in 2005, that's not a big deal. But when looked at from the amount of cargo business the company had that year, $257 million, it is significant.” In January alone, Continental flew more than 11,000 pounds of mail each day for China Post, something that helped generate revenue of more than $500,000 in the U.S-China mail market for the month. Continental says it hopes to capitalize on other mail-related opportunities elsewhere in the world. "Our internal slogan is, mail means money to Continental," says Rick Banks Jr., Continental's managing director of postal affairs.

As it usually does, Hawaiian Airlines posted the best on-time arrival rate in January, the latest month the statistics are available from the federal Bureau of Transportation Statistics. Likely buoyed at least in part by a Hawaii’s typically calm weather, Hawaiian's flights arrived on-time 95.9% of the time for the month. Rounding out the top five for on-time arrivals were Southwest (84.4% on time), Frontier (82.5%), US Airways (81.1%) and Continental affiliate ExpressJet (79.6).

Hawaiian Airlines was the nation’s least likely carrier to cancel a flight in January, the latest month the statistics are available from the federal Bureau of Transportation Statistics. The carrier operated all of its scheduled flights, not canceling a single one. JetBlue had the second-best rate, canceling just 24 flights -– or 0.2% of its schedule service. Frontier came in No. 3, canceling just 0.3 % of its scheduled flights (22 total flights). Rounding out the top five: Continental canceled 0.3% of its January flights, while American canceled 1%.

Continental Airlines is rated that nation’s “most-admired airline” according to the March 6 issue of Fortune magazine. Continental ranked first in several key categories in the airline rankings, including quality of products and services, quality of management, innovation, and social responsibility. The magazine compiles the "Most Admired Companies" rankings by surveying about 10,000 executives and securities analysts. Coming in behind Continental in the airline industry were No. 2 Southwest, No. 3 American/AMR, No. 4 Alaska Air Group and No. 5 ExpressJet, a partner of Continental. The airline rankings were determined by airline executives and industry observers. But in Fortune’s overall list of most-admired companies -– across all industries -– Southwest placed the highest among all airlines, rating as the USA’s third-most admired company, reports The Dallas Morning News (free registration). The overall winner is GE, which took home the honor for the sixth time in eight years.

The Venezuelan government said it would delay a move that would ban most flights by U.S. airlines until March 30. The ban had been scheduled to go into effect on Wednesday, The Associated Press reports. Venezuela's National Aviation Institute said in a weekend statement that the deadline was pushed back for a month after the affected airlines -- American, Continental and Delta -- protested last week's sudden announcement. The postponement "will allow communication channels to be established between the competent authorities in order to guarantee equal opportunities in air operations for both Venezuelan and North American airlines," the aviation authority said. Venezuela officials said they moved to ban U.S. airlines in response to a Federal Aviation Administration (FAA) restriction on flights by Venezuelan carriers that went into effect in 1996. In issuing that edict, the FAA claimed Venezuela didn't meet international safety standards. Venezuelan officials say the that the nation's airlines have improved safety standards since 1996 and that the restriction should be lifted.

With relations already chilly between the White House and Venezuela, the Hugo Chavez-led government said that it will prohibit flights from Continental and Delta and will restrict flights by American Airlines, AFP reports. The head of Venezuela’s national aviation agency said that move was made to protest Venezuelan airline bans enacted 10 years ago by the U.S. Federal Aviation Administration due to safety violations.  Venezuela contends that the FAA has failed to recognize safety improvements made since the bans were enacted. Continental flies to the Venezuelan capital of Caracas from both Houston and Newark, while Delta flies there from Atlanta. American flies there from several U.S. cities, but it is unclear which of their flights will be “restricted.”

Continental will add capacity on both domestic and international routes in 2006, according to The Associated Press. The airline plans to boost overall capacity by 8%, with domestic routes expanding by about 4%. "A significant portion of our domestic growth is in response to incursion of low-cost carriers in our hub," says airline president President Jeff Smisek. "We will not let any of our competitors take our customers on price." Still, Continental’s capacity expansion comes while other rivals are reducing their number of available seats for sale. Many industry observers say capacity must be reduced if the sector as a whole is to return to profitability. By the end of 2006, 47% of Continental's business will be in international markets.

Several recent merger rumors have included Continental, but maybe they shouldn't. "We have a very strong preference at Continental to remain independent," Continental President Jeff Smisek is quoted as saying to Reuters. "A consolidation transaction disturbs all of that in a way that could cause irreparable harm.” Smisek also was blunt with his opinion on Delta's 2005 SimpliFare initiative that was meant to boost traffic by simplifying fares. "I still think simplified fares are stupid, (and) I think Delta got what it deserved," Smisek tells TheStreet.com.  He added that Delta's move to end Saturday-night stay requirements for passengers to get a lower fare was "criminally insane." Delta filed for bankruptcy after the initiative was introduce, thought it likely would have filed without the initiative. They seem to be working for some legacy airlines, however. TheStreet writes that "American has benefited from its simplified fare structure, which has enabled it to lure back business travelers who had fled for low-cost carriers."

While we’re speaking of Continental, the airline says it will be back to pre-Katrina flight levels in New Orleans by May. The airline currently offers 99 flights a week from the city’s Louis Armstrong International Airport, down only slightly from the 111 it offered prior to Katrina. "Some airlines have come back very strong and others have not, depending on the carrier," airport spokeswoman Michelle Duffourc tells the Houston Chronicle. One of those that hasn't restored service as quickly was Southwest. "They have 13 flights a day and had 60 before the storm," Duffourc says. "They haven't come back as much as we hoped or expected." But the airport might not have to wait much longer for a ramp-up by the discount giant. Two days after the Chronicle’s story ran, Southwest announced its summer schedule -– which includes six new New Orleans flights. Among the added options are non-stop flights to Baltimore, Chicago Midway, Fort Lauderdale, Las Vegas and Phoenix. Southwest already offers eight daily round-trip flights to Houston. Meanwhile, who’s flying to New Orleans? "The mix is very different than what it was before, as it was at least 80% tourism and convention business," Duffourc says. "Now it is one-third tourism, one-third relief and recovery and one-third families coming back and forth."

You’re weren’t alone if an airline lost your luggage last year. USA TODAY reports that airlines lost about 10,000 bags a day on average in 2005, the industry’s worst performance since 1990. As factors, the paper cites “a surge in the number of passengers, airline budget cuts, backed-up flights and tighter inspections of luggage.” The worst mark went to US Airways, which had 9.62 reports of lost luggage for every 10,000 passengers –- a surge of 81% over the previous year. Delta lost fewer bags per person, but lost the most overall (573,419) of all U.S. airlines. Even Southwest saw its rate of lost luggage jump 27%, though the carrier still ranked better than 12 of the 19 airlines reporting data in the category. At the top end of the spectrum, Hawaiian Airlines had the best mark with 2.95 complaints of mishandled luggage for every 10,000 customers. AirTran (3.45) and Independence Air (3.54) were ranked No. 2 and No. 3, respectively. Of legacy carriers, Continental had the top lost-luggage rate with 4.12 complaints per 10,000 customers, which ranked the airline No. 6 out of 19.

If you’ve flown a traditional airline anytime in the past year or two, you probably know that you no longer get free meals in coach class on most flights. Instead, “today's airline food is a collection of packages in a box and has morphed from a loss leader to a bit of a moneymaker, or at least a revenue-neutral service, on most major carriers,” writes the Chicago Tribune (free registration). The latest change comes from United, which is introducing its “Right Bite” snack-box option. The airline describes it as a heart-healthy boxed meal that includes a selection of items that do not contain artery-clogging trans fat. It sells for $5, as do other United boxed meals, but putting together the healthier meal was more complicated than you might imagine.

In addition to considering the taste of the food, the Tribune said United had to be careful with the packaging. The Transportation Security Administration was concerned about tuna containers with a potentially sharp peel-away lid that could be used as a weapon. Smell, of course, was also considered. Regarding airline meals, the Tribune notes that “not all airlines have followed the lead” of United and other major carriers that have axed free in-flight meals. Continental is the last traditional airline that still serve meals on flights. “We have all along, and we haven't wavered from that policy," said spokeswoman Julie King. "We also haven't pulled blankets and pillows off the aircraft. We think it's a strategy that will pay off for us in the long run."

Continental reported a fourth-quarter loss that was narrower than a year ago, even as fuel costs were significantly higher, according to USA TODAY. The airline said cost-cutting efforts offset the higher fuel costs, but Continental's stock plunged after it warned of a "significant loss" in the first quarter of 2006."They came in about where expected, maybe a little better, and it's no surprise," said Raymond Neidl, an analyst for Calyon Securities. "That's not what counts. What counts is going forward. They verified what we thought, that the first quarter will have a significant loss. The rest of the year remains a little more hazy concerning what happens." Explaining the company's pessimistic first-quarter outlook, Continental CEO Larry Kellner cited fuel and aggressive moves by rivals. "The price of oil still hovers at record high prices, JetBlue has invaded our Newark hub, Delta is using its bankruptcy advantage to expand into our profitable international markets and United Airlines, flush with $3 billion in exit financing and greatly reduced costs, is coming out of bankruptcy," he's quoted as saying by The Associated Press.

While most news about traditional U.S. airlines has been bleak for the past few years, Continental Airlines has largely bucked that trend, the Houston Business Journal reports. It notes that the airline’s shares have “skyrocketed into 2006, flying in the face of steep fuel costs.” What has analysts so bullish on the Houston-based carrier? Higher fares, for starters. Standard & Poor's stock analyst Jim Corridore says he thinks Continental will see an estimated 10-15% increase in airfares during 2006, something that could push the carrier into profitability. Moderating fuel prices also have industry observers feeling bullish about Continental. Along with American, Continental is the only “legacy” carrier not to have filed for bankruptcy since 2001. (Continental has filed for bankruptcy twice, most recently in 1991.) Continental has also bucked the trend among traditional airlines by retaining most of its perks like free meals and pillows.

While JetBlue may have had the lowest on-time rating in November, the carrier had a nearly perfect record for canceled flights, according to the latest numbers from the federal Bureau of Transportation Statistics. The New York-based low-cost carrier canceled just two flights (0%) for the entire month -– perhaps helping to explain the airline’s low on-time rating. JetBlue has said in the past that it would rather hold flights late on the ground as opposed to canceling them altogether. Continental and Frontier had the second- and third-best cancellation rates, each canceling just about 0.1% of the flights in November.

Three of the nation’s five most-frequently delayed flights were on Southwest Airlines, though all three of those flights were to or from New Orleans -- where operations were struggling to return to normal in November. Southwest Flight 2030 from New Orleans to Houston Hobby was the most delayed, arriving on time just 3.33% of the time in November, according to the latest numbers from the Bureau of Transportation Statistics. The second-most delayed flight was Southwest Flight 3462 from Houston Hobby to New Orleans, arriving on time 6.67% of the time. Continental Flight 1197 from Boston to Newark arrived on time  7.41% of the time in November, and was followed by 8.33% on-time rating Continental’s ExpressJet Flight 3020 from Greenville, S.C., to Newark. Rounding out the five most frequently delayed flights was Southwest Flight 3107 from New Orleans to Houston Hobby, which arrived on time 11.54% of the  time in November.

The pastor's wife who was booted off of a Continental flight to Vail on Monday is now telling her side of the story, the Houston Chronicle reports. Victoria Osteen's account differs with FBI statements that say she was asked to leave the flight after a spat with the flight crew. Mrs. Osteen, whose husband is the pastor of Lakewood Church, posted a "Letter from Victoria" on the church's official Web site Wednesday. In the letter, Mrs. Osteen says its was her choice "to remove myself from the situation" that prompted the incident on a flight from Houston to Vail, Colo.

“Regardless of how some have portrayed the situation,” Osteen writes in her letter, “please know that it was truly a minor misunderstanding and did not escalate into what you saw or read in the news. Contrary to those reports it was my choice to remove myself from the situation. Nonetheless, it was a most unfortunate event and I truly regret that it happened.”  In previous reports, however, the Chronicle quoted FBI Special Agent Luz Garcia as saying the Osteens were asked to leave the aircraft following "an altercation" and added that Mrs. Osteen "failed to comply" with instructions from a flight attendant. Reports say that the dispute centered around a spilled liquid on Mrs. Osteen's first-class seat that was not cleaned to her satisfaction.

Three U.S. airlines say they want the government to get more information about the ownership for Virgin America before reviewing its application to begin service, The Wall Street Journal (subscription required) reports. The San Francisco-based company  hopes to begin operating as a domestic low-cost carrier next year. U.S. law requires all such carriers to be “U.S. citizens,” meaning foreign interests cannot own more than 25% of an airline’s voting stock; currently, 25% of Virgin America stock is held by British entrepreneur Richard Branson’s Virgin Group. However, Continental has filed a motion with the Department of Transportation noting that domestic carriers must be under the "actual control" of U.S. citizens. Some have wondered out loud how much control Branson would have over the airline, regardless of the makeup of Virgin America’s stock breakdown. American and Delta have also filed letters supporting Continental’s motion, as has the Air Line Pilots Association, according to The Journal.

Continental Airlines launched service to five new Latin American and Caribbean destinations this past weekend. From Continental’s hub at Houston Bush Intercontinental, the airline now flies non-stop to Bonaire in the Netherlands Antilles and to Punta Cana in the Dominican Republic. From its Newark hub, Continental now flies non-stop to Liberia, Costa Rica and to Curacao in the Netherlands Antilles. And from New York LaGuardia, Continental has added non-stop service to Aruba.

Starting Wednesday, Continental Airlines begins service to Buenos Aires. The flights will operate from Newark to Houston Bush Intercontinental before continuing on to Buenos Aires. Newark customers will have same-plane, direct service to Buenos Aires, while passengers from other Continental cities can connect to the Buenos Aires flight via Houston Bush. Continental will use 174-seat Boeing 767-200ERs on these routes.

Even with the airline industry again expected to lose billions of dollars this year, airline stocks are soaring, reports the Pittsburgh Post-Gazette. For example, the paper points to US Airways, where shares in the merged carrier are up 60% since late September. That’s even though the “old” US Airways is only two months out of bankruptcy and the merged company warned that the combination of the old US Airways and America West Airlines "may not perform as expected" next year. American’s stock is also up about 150% this year, even though the carrier is expected to report a full-year loss. Ditto at Continental, where the airline’s stock has jumped 100% since January.

So, why is Wall Street so bullish on an industry that’s still losing money and has seven carriers currently in bankruptcy? Continued strong demand, rising fares, reduced airline capacity and moderating jet-fuel prices could all combine to undo the “perfect storm” that’s battered the industry since 2001, the Post-Gazette cites one Wall Street analyst as saying. Others, however, argue that airline stocks like US Airways have become overvalued are likely to drop without positive earnings reports.

Merger rumors are likely to begin flying anew after Continental Chief Financial Officer Jeff Misner said on Thursday that a marriage between United and Continental would make a "knock-em-dead combination.” Misner said Continental would prefer to be a standalone carrier, but added that Continental would consider a merger if United offered a "bucket of dough," according to a Bloomberg News report carried by the Chicago Tribune (free registration). "We're not going to sit by and have the world rush by," he added. United says no offer has been made for Continental, with company spokeswoman Jean Medina saying: "We're focused on completing our bankruptcy and exiting in February." Many experts agree that a merged Continental and United would feature a strong combined route network. But, offering a note of caution on mergers, Continental’s Misner said such marriages are often a "terribly disruptive, complicated process."

Airline passenger complaints have soared by 29% so far this year, with canceled flights and baggage problems each accounting for large increases. The airlines receiving the most complaints through the first 10 months of the year were US Airways (1.91 complaints per 100,000 passengers), Delta affiliate Comair (1.7) and Independence Air (1.68). Receiving the fewest complaints per 100,000 passengers were Southwest (0.18), JetBlue (0.29) and Continental partner ExpressJet (0.34). So, overall, why were complaints up? The Department of Transportation says that could simply be because more people are flying, writes Scott McCartney, The Middle Seat Columnist for The Wall Street Journal (subscription required). That, coupled with “massive” schedule changes by reorganizing airlines may have set the stage for the increased unhappiness.

That would be Flight 3007 on Continental regional affiliate ExpressJet, which flies from Continental’s Newark, N.J., hub to Manchester, N.H. The flight was late 96.2% of the time in October, according to figures released Thursday by the federal Bureau of Transportation Statistics for October — the latest month for which statistics are available. In fact, all six of the month’s most chronically late flights were on Continental or its partner ExpressJet, and all were either to or from Newark.

The second-most frequently delayed flight for the month was ExpressJet Flight 2782 from Grand Rapids, Mich., to Newark — late 92.3% of the time. There were four flights tied for October’s third most-delayed flight (late 88.5% of the time). They were: ExpressJet Flight 2355 from Milwaukee to Newark; Continental Flight 1430 from Detroit to Newark; ExpressJet Flight 3138 from Baltimore to Newark; and ExpressJet flight 3060 from Newark to Charlotte. As you might expect, poor weather bogged down operations at Newark throughout much of October.

AirTran Airways flights arrived on time just 74.6% of the time, barely edging out JetBlue for the worst mark in October, according to the BTS’s latest numbers. AirTran spokesman Tad Hutcheson tells me that the airline suffered persistently bad October weather at many of its airports, and noted that the airline focused on holding flights instead of canceling them – even if that meant more delays than normal. JetBlue’s flights arrived on time 75.1% of the time for the month, while Continental’s ExpressJet had the third-worst mark (76.8% on-time). Again, poor weather hammered many of the latter two airlines’ major airports throughout October as well. 

No doubt with the holiday season in mind, Southwest has become the latest airline to unveil a gift card that can be used toward the purchase of airline tickets. Like Southwest, Northwest and America West (now US Airways) sell gift cards on their websites. American Airlines also has a gift card, but it can be purchased only at select retail stores, according to the Albuquerque Journal. Other airlines – including American, Frontier, Continental, JetBlue, United and Delta – also offer gift certificates that givers can have mailed, e-mailed or credited to the recipient. Another option most major carriers offer is allowing customers to purchase frequent-flier miles to offer as gifts. If you purchase such gifts, however, make sure to pay attention to potential "gotchas" like expiration dates or other restrictions. In Business Las Vegas reports that some gift certificates expire after a year, including those sold by JetBlue Airways, Delta, Northwest and United. And there are other potential snags, the publication reports. On airlines where it's difficult to redeem cards or certificates online, customers could get hit with fees up to $10 or more if they have to book the ticket in person or over the phone with a live ticket agent.

On Thursday, Continental Airlines added new non-stop service from its Newark hub to Ponce, Puerto Rico. The carrier offers one daily round-trip flight on Boeing 737-800 aircraft configured with 14 seats in first class and 141 in coach. Continental's new flight comes as the carrier faces competition at its Newark hub from JetBlue, which began service at the New Jersey airport in October. JetBlue will fly from Newark to five Florida cities and Puerto Rico.

When airlines involuntarily bump fliers from their flights, most simply suffer the indignity of trying to find another flight — even though the problem was caused by the airline. But when Continental Airlines involuntarily bumped aviation lawyer Thatcher Stone and his daughter from a flight last Christmas, Stone sued. And on Nov. 10 the court sided with Stone, awarding him $3,100 in damages, reports Keith L. Alexander, the Business Class columnist for The Washington Post (free registration). The judge awarded Stone $1,360 for his non-refundable lodging costs, $1,000 for delays and $750 for the "loss of the use of the contents of his luggage," which was sent to his destination even after he and his daughter were bumped from their flight. The judge also added interest dating back to the date of the bumped flight to Stone's overall damage award. Alexander writes that it's unclear whether Stone's case will set a precedent for future lawsuits, but Stone thinks more customers should fight back when they're involuntarily bumped. "Figure out your costs, put all of that together in a letter, and send it to the airline," he tells Alexander. "If they tell you no, go to small claims court, where you can fight them yourself."

Today in the Sky Reporter Ben Mutzabaugh is out of the office this week on vacation. Instead of the usual Today in the Sky format, Ben will feature a special column highlighting different aspects of the airline industry. Today, Ben takes a look at which airline hub is where. There are a lot of airlines out there, so we'll break it up in two parts. Part one runs today; be sure to come back tomorrow for part two. Today in the Sky will return to its normal format on Nov. 22.

Ever wondered how airlines break down geographically? Which airline has hubs where? And where are the "focus cities" — or cities that aren't necessarily hubs, but play a key role in an airline's route network.

To help you get a handle on where each airline is strong, here's an airline-by-airline list of hubs and focus cities. Think of it as a geography lesson for the airline industry! Today's column covers airlines from AirTran to Frontier. Enjoy ...

AirTran Airways
Hubs: Atlanta, Baltimore/Washington (BWI).
Focus cities: Orlando (45 daily flights), Boston (27), Philadelphia, Chicago Midway (18), Tampa (18) and Dallas Fort/Worth (12).
Additional info: AirTran says its December schedule had 211 daily flights scheduled for Atlanta, and 37 daily flights scheduled for its smaller hub at BWI.

Today in the Sky Reporter Ben Mutzabaugh is out of the office this week on vacation. Instead of the usual Today in the Sky format, Ben will feature a special column highlighting different aspects of the airline industry. Today in the Sky will return to its normal format on Nov. 22.

Always wondered which airline is the USA's biggest? Surprisingly, that answer's not necessarily as easy as you might think. There are different criteria, such as judging a carrier size by its revenue or by the number of passengers it flies.

But one fun set of numbers comes from the federal Bureau of Transportation Statistics (BTS). As its name suggests, the agency monitors many of the nation's aviation-related numbers. One of the subjects it monitors is "domestic enplanements," or the number of domestic passengers boarded by an airline. (Click "Read more..." for the rest of today's column)

Most media accounts focused on how poorly passengers rated airline service in the latest Zagat air travel survey. USA TODAY quotes one participant in the online survey as saying today's fliers are "the uncomfortable served the inedible by the indifferent." On the Road columnist Joe Sharkey of The New York Times (free registration) quotes another as saying today's good airline service means, "We won't bother you if you don't bother us." OK, OK … we know there's a lot to gripe about these days, but who actually did well in the Zagat survey?

That would be perennial top-achiever Midwest Airlines, which earned a score of 21.40 on Zagat's 30-point scale. JetBlue finished second with a score of 19.29. Those carriers also finished No. 1 and No. 2 in Zagat's 2001 survey, the last one Zagat conducted. Midwest Airlines, in case you were wondering, is the carrier perhaps best known for a business-class-type service with freshly-baked chocolate-chip cookies on most of its flights. It has hubs in Milwaukee and Kansas City, Mo. Rounding out the top five were Delta's soon-to-be-absorbed low-fare unit Song, Frontier Airlines and Independence Air. The top-ranked legacy carrier was Continental, which could do no better than a 9th-place showing overall. Discount giant Southwest finished 10th in the overall rankings. Who finished worst? US Airways had the worst rating with a 9.17 score, while Northwest (9.78) and Spirit (10.09) had the next-lowest scores, according to Steve Huettel of the St. Petersburg (Fla.) Times. Anything below a 10 is considered to be a poor score. | Complete Zagat air rankings (PDF file) |

Today in the Sky Reporter Ben Mutzabaugh is out of the office today on vacation. Instead of the usual Today in the Sky format, today's version will feature Ben's analysis of the latest Bureau of Transportation Statistics. Today in the Sky will return to its normal format when Ben returns tomorrow.

More than eight out of every 10 commercial airline flights arrived on time in September, the latest month for which statistics are available from the federal Bureau of Transportation Statistics (BTS). The September number was up considerably over August, when just 75.2% of flights arrived on time. But it was still worse than September of 2004, when 83.9% of flights arrived on time.

As I often do here in Today in the Sky, I'll take a closer at both the good and bad from the latest BTS numbers.

Who has the nation's most-delayed flight: The "winner" of this dubious honor may deserve a free pass this month. Northwest's Flight 1477 was late 100% of the time in September, but that flight operates from Detroit to Hurricane Katrina-ravaged New Orleans. It would be hard to fault Northwest for that particular flight given the woes faced by New Orleans and the city's airport during September. (Click on "Read more..." to see the rest of this item)

Continental became the first U.S. carrier to offer non-stop service between the USA and India when it inaugurated service this week between Newark and Delhi. And it won't be long before another U.S. airline jumps into the fray, according to the Houston Chronicle, which says American Airlines is set to begin Chicago-Delhi service on Nov. 15. Why the seemingly sudden interest in India? Aside from the booming Indian market, the USA and India reached an "open skies" agreement in April that lifted most restrictions on U.S. and Indian airlines wishing to fly between the countries. Meanwhile, fliers on either of those airlines will be treated to new menu options, reports The Star-Ledger of Newark, N.J. The menus on the new Indian flights will be designed to appeal to both U.S. and Indian customers. "Airlines are always griping about how their seats are seen as just a commodity, so they add services to differentiate themselves," says Hugo Burge, president of CheapFlights.com. "It's particularly important on the long-haul routes. The carriers that have been most successful are those that appear to pamper their passengers. People looking forward to the food on a flight is an integral part of that."