Yahoo Finance - In the least surprising development since this morning’s sunrise, the parent company of American Airlines, AMR (AMR) officially filed for bankruptcy. Indicting of American bankruptcy laws, AMR whined that they were at a competitive disadvantage to the other majors due to not having filed for bankruptcy during either the wake of 9/11 or the financial crisis. Pride goeth before the fall indeed.

In the attached video I discuss AMR’s fate with Reuters blogger Felix Salmon. Salmon says the failure of giant airlines is more the rule than the exception. “If you look at the history of all the airlines on the planet earth since the year dot, they’ve lost untold billions of dollars.” he says. “In the aggregate it’s a dreadful business.”

Salmon says we’d be better off not bailing out our flying behemoths. “Let them die and get replaced by a large number of nimbler airlines like they have in Europe where you actually get much lower prices, much better service,” he offers.

It’s the nicest thing anyone has said about European governmental policy in at least six months. But for my money, its wrong. A free market in the U.S. airline industry is illusory, impractical, and impossible. Every aspect of the system except the airlines themselves operate in a Draconian regulatory environment rife with collusion, pork funding and inefficiencies from top to bottom. The regulations aren’t going away and any industry in which bankruptcy is the norm in an industry propped up by both taxpayers and the gullibility of shareholders.

For those who believe a combination of government and private operations results in efficient business, I’ve got two words: Chevy Volt. I’d prefer for the hand of the free market to decide the fate of airlines. Since that’s not ever going to happen we should give nationalization a shot. Put it this way, my train runs on-time, but I haven’t been on a single flight that could say the same for in at least five years.

Salmon has the audacity to disagree. “What we don’t want is nationalized airlines because there’s not a good nationalized airline anywhere in the world and they cost a fortune to taxpayers,” he says. “What we want is lots and lots of private airlines which just fly higgledy-piggledy all over the world.”

Salmon says such a system works in Europe. I’d note that AMR is the 100th airline to declare bankruptcy since 1990. Suffice it to say there aren’t many entrepreneurs ready to start a new company in hopes of being the 101st.

Should the airline industry be nationalized or deregulated? Let us know on our Facebook page or comment in the space below.

NEW YORK (CNNMoney) – United Airlines officially entered the biofuel age on Monday, by launching its first U.S. commercial flight that’s partly powered by algae-based jet fuel.
United Continental Holdings (UAL, Fortune 500) said its subsidiary Continental Airlines was operating the flight on a Boeing (BA, Fortune 500) 737-800 from Bush Intercontinental Airport in Houston to Chicago O’Hare International Airport.

United said this flight makes it “the first U.S. airline to fly passengers using a blend of sustainable, advanced biofuel and traditional petroleum-derived jet fuel.”
Airline industry analysts described the flight has a publicity stunt to portray the airline as eco-friendly, but it sets the stage for wider conversion to biofuels once they become cheaper.
“The idea is to validate the technical feasibility and hopefully create enough demand where the alternative energy sources become economically valid,” said airline industry consultant Robert Mann.
Airline fuel costs spiked in 2008, prompting U.S. carriers to cut capacity by eliminating their least fuel-efficient flights. Most also added so-called ancillary fees for services that were once included in fares, such as checked bags, in-flight meals and pet travel.
The biofuel flights could eventually lead to better fuel price control for the airlines, according to analysts.

“Any of the percentage of the fuel you can transfer from this Wild West aviation fuel market to a contractual, stable agricultural-based fuel source makes this a real win,” said George Hoffer, transportation economist at the University of Richmond in Virginia.
Hoffer said that for the fuel to become widely used among airlines, it will have to drop in price.
Thanksgiving travel: Higher fares, fewer passengers
United said it developed and tested the biofueled-engine in conjunction with Solazyme (SZYM), which develops the algae-based biofuel; Honeywell (HON, Fortune 500); and the U.S. military.
The first experimental biofuel flight in the U.S., which did not include commercial passengers, was conducted by Continental in 2009.
Virgin Atlantic was actually the first airline to put a biofueled plane in the air, with a test flight in 2008. But Virgin has not yet flown a biofueled plane with passengers.

Phoenix Business Journal – Southwest Airlines Co. is joining other low-cost carriers in flying higher in customer esteem while satisfaction with the airline industry at large increases as well, according to a new report.
Westlake Village, Calif.-based research firm J.D. Power and Associates in its annual airline customer satisfaction survey found the industry scored a 683 out of 1,000, up 10 points from a year ago, and the second consecutive increase after three years of declines. That score is calculated using survey data on fees, flight crew, in-flight services, aircraft quality, baggage handling and other factors.
Tempe-based U.S. Airways (NYSE: LCC), the largest carrier at Phoenix Sky Harbor International Airport, ranked last among the seven network carriers with a score of 625.
Southwest (NYSE:LUV), the second-busiest carrier at Sky Harbor, ranked second among low-cost carriers and overall with a score of 769, up from a year ago but still trailing No. 1-ranked JetBlue Airways Corp. (NASDAQ:JBLU).
The full J.D. Power and Associates 2011 North America Airline Satisfaction Study can be found here.

Read more: J.D. Power: Airline satisfaction on the uptick, but US Airways ranks last | Phoenix Business Journal

WASHINGTON (AP) – A new, ultra-fast wireless Internet network is threatening to overpower GPS signals across the U.S. and interfere with everything from airplanes to police cars to consumer navigation devices.

The problem stems from a recent government decision to let a Virginia company called LightSquared build a nationwide broadband network using airwaves next to those used for GPS. Manufacturers of GPS equipment warn that strong signals from the planned network could jam existing navigation systems.

A technical fix could be expensive – billions of dollars by one estimate – and there’s no agreement on who should pay. Government officials pledge to block LightSquared from turning on its network as scheduled this year unless they receive assurances that GPS systems will still work.

The stakes are high not only for the GPS industry and its users, but also for those who would use LightSquared’s network. In approving it, the Federal Communications Commission seeks to boost wireless competition and bring faster and cheaper Internet connections to all Americans – even in remote corners of the country.

LightSquared and the FCC both insist the new network can co-exist with GPS systems. But device makers fear GPS signals will suffer the way a radio station can get drowned out by a stronger broadcast in a nearby channel.

The problem, they say, is that sensitive satellite receivers – designed to pick up relatively weak signals coming from space – could be overwhelmed when LightSquared starts sending high-power signals from as many as 40,000 transmitters on the ground using the airwaves next door.

“The potential impact of GPS interference is so vast, it’s hard to get your head around,” said Jim Kirkland, vice president and general counsel of Trimble Navigation Ltd., which makes GPS systems. “Think 40,000 GPS dead spots covering millions of square miles in cities and towns throughout the U.S.”

One of the biggest risks is to the GPS navigation systems used by about 40 percent of commercial and private planes. Backup systems that rely on ground-based radio signals are not as accurate and have coverage gaps. Some older private planes have no backup at all.

With GPS interference, a pilot “may go off course and not even realize it,” said Chris Dancy, a spokesman for the Aircraft Owners and Pilots Association.

LightSquared’s network could also undermine the Federal Aviation Administration’s multi-billion-dollar program to upgrade the nation’s air-traffic control system, which is based on World War II-era radar technology.

The new GPS-based system is more precise and lets planes fly more direct routes. That will save airlines time, money and fuel and cut pollution. It is also key to accommodating projected increases in airline traffic by enabling planes to fly safely closer together.

Public-safety officials, too, are nervous about LightSquared because they rely on GPS to track and dispatch police cars, fire trucks and ambulances. Many 911 systems also use GPS to help locate people. Disruptions could delay responses to emergencies, said Harlin McEwen, an official with the International Association of Chiefs of Police.

Even the Pentagon has expressed concern as it relies on GPS to guide planes, ships, armored vehicles, weapons and troops.

LightSquared plans to compete nationally with super-fast, fourth-generation wireless services being rolled out by the likes of AT&T and Verizon Wireless. It won’t sell directly to consumers, though. Instead, LightSquared will provide network access to companies including Leap Wireless, parent of the Cricket phone service, and Best Buy, which will rebrand the service under its own name.

LightSquared has its roots as a satellite-phone operator, so its airwaves historically have been reserved primarily for satellite communications. FCC rules adopted in 2003 allowed the company to back up those signals with ground-based wireless service, but only to fill in coverage gaps.

In January, however, the FCC gave LightSquared permission to use its airwaves for a broader, conventional wireless data network. Although the company will continue to offer satellite service, it plans to cover at least 92 percent of Americans by 2015 with high-power wireless signals transmitted by base stations on earth.

Until now, GPS receivers haven’t had much trouble filtering out noise in the adjacent airwaves because it consisted mostly of low-power signals beamed from space. But GPS manufacturers warn that will change once there is a major ground-based broadband network.

Both LightSquared and the FCC say further testing is needed to determine the true extent of any interference. The FCC is requiring LightSquared to participate in a study group with GPS manufacturers and users.

LightSquared won’t be allowed to turn on its network until the government is satisfied that any problems are addressed, FCC spokesman Rob Kenny said.

“We have every reason to resolve these concerns because we want to make sure there is a robust GPS system,”

DALLAS (AP) — United and Continental airlines are reducing flights between the U.S. and Japan because of a drop in demand since the March 11 earthquake and tsunami.

The sister airlines will cut their combined passenger-carrying capacity on U.S.-Japan flights by 10 percent in April and 14 percent in May.

Spokeswoman Julie King said Thursday the airlines will drop a few flights a week between four U.S. cities and Tokyo, and will delay the planned addition of a second daily flight between San Francisco and Tokyo by a month, until April 27.

King said the moves were made “because of the measurable decline in demand for travel between the two countries,” but she wouldn’t put a percentage figure on the drop-off.

The news from United Continental Holdings Inc. came one day after AMR Corp.’s American Airlines said it will suspend two of its six daily flights to Japan next week until late April. Delta Air Lines Inc. said last week it will suspend service to Haneda Airport in Tokyo, although it will keep flying to the other big Tokyo airport, Narita.

Travel to, from and within Japan has slumped as the nation deals with power shortages and fear of radiation leaks from a damaged nuclear power plant.

Hawaiian Airlines said Thursday that Japan bookings for the next month are running nearly 20 percent below expectations. The airline said, however, that it doesn’t plan to reduce flights to Tokyo, and it still expects to launch service in July to a second Japanese city, Osaka.

CEO Mark Dunkerley said Hawaiian, which mostly flies Japanese tourists to Hawaii, would weather the turmoil better than other U.S. airlines that mainly carry business travelers to Japan. He said Japanese tourists were less likely to cancel their trips, while travel to Japan “has dried up dramatically.”

Dunkerley said in an interview that tour operators he met last week on a trip to Tokyo and Osaka were confident that the Japanese travel market will recover soon. He said life in the cities appeared to be returning to normal and the biggest remaining obstacle is that people overseas are afraid to travel to Japan.

King, the United Continental spokeswoman, said United will drop some flights each week between Tokyo Narita and Los Angeles, Seattle and Washington’s Dulles International Airport. Continental will do the same on its Narita-Newark, N.J., route, which will lose seven round trips in May.

United also is switching to smaller planes — Boeing 777s instead of 747s — on its Chicago-Narita route because of the weak demand.

Continental previously announced it stopped flights from Guam to Sendai, Japan, because of damage to the Sendai airport.

Together, United and Continental have 1,000 employees at nine airports in Japan.

Yahoo! Finance – Maxim Group’s Ray Neidl says airlines are in better shape today than they were years ago, meaning higher yields and greater growth potential for the industry. Although airline stock prices could remain “soft,” Neidl expects airlines to beat last year’s strong profits, the veteran airline analyst tells Breakout.
The key factors that have lifted the airline industry in the past two years are cost cuts and capacity cuts; without those measures airlines might not have survived the downturn, Neidl says. In contrast to previous years, all airlines this year have shown “price discipline” — including Southwest Airlines (LUV), which previously has bucked industry-wide pricing trends. Since December 2010, airlines have successfully implemented eight price hikes with little pushback from fliers. In fact, despite higher fares and additional fees for baggage and food, demand from both business and leisure consumers remains strong.
The airline stocks that Neidl particularly likes are the “niche” carries such as COPA (CPA), Alaksa Air Group (ALK), Hawaiian Holdings (HA) and Allegiant Travel Company (ALGT). He says these carriers exhibit strong long-term growth prospects “without upsetting the status quo of the major legacy carriers’ capacity controls.”
Neidl gives one last piece of advice for consumers traveling in the busy spring/summer flying season: Be flexible and shop early. The trend has been, and will continue to be, higher ticket prices —- and with a reduction in capacity, airlines can offer fewer discounted seats.
Have questions or comments? Send us an email. We’re at breakout@yahoo.com.

DALLAS (AP) — Major U.S. airlines are raising the price of some tickets favored by business travelers again, this time by up to $120 per round trip.

Fare experts said Delta started the latest increase on Monday, which was matched immediately by American and a day later by United, Continental and US Airways.

It’s the second big increase in fares in as many weeks. The airlines’ fuel prices have risen 50 percent over the past year. They eliminated many flights when they were losing money in 2008 and 2009, which has given them the power to raise fares now that planes are more crowded and travel demand is rebounding.

JP Morgan analyst Jamie Baker said it made sense for the big airlines to target corporate travelers, who are considered less sensitive to price increases. He said airlines may have raised vacation fares as high as they can without causing a loss of revenue — presumably by driving away budget-conscious customers.

American Airlines spokesman Ed Martelle said the increases covered first-class, business-class and tickets purchased up to seven days before travel. Flights up to 500 miles were boosted $20 each way, those from 501 to 1,500 miles were raised $40 each way, and flights longer than 1,500 miles increased by $60 each way, he said.

“We’re responding to the Delta initiative,” Martelle said when asked why American, a unit of AMR Corp., was raising prices.

Delta Air Lines Inc. confirmed the fare hike but declined to give a reason. United, Continental and US Airways confirmed that they too raised prices.

Last week, United and Continental, owned by United Continental Holdings Inc., led an increase of $20 to $60 per round trip on pricey tickets typically bought by business travelers. Delta and American both matched that hike last week.

Rick Seaney, CEO of FareCompare.com, said that like last week’s increase, the Delta-led boost on Monday was aimed mostly at high-end fares — about $800 per round trip — that typically are bought by corporate travelers, not vacationers.

Baker said low-fare airlines wouldn’t be able to block this increase because the tickets are sold at prices far higher than the discount carriers were already charging.

Airlines also claim that demand for leisure travel will be hurt if passenger fees for security and airport improvements are raised, as President Barack Obama proposed in his budget this week.

The proposed increases would add a few dollars per flight to the cost of a ticket, but Baker said it could reduce revenue especially at airlines such as Southwest, which cater to price-conscious travelers.

SAN FRANCISCO (MarketWatch) — Shares of Boeing Co. (BA 72.48, +2.41, +3.44%) got a 3% bump Tuesday from a combination of “bad” and “could-be-worse” news.

In the “could-be-worse” category, the company said deliveries of its oft-delayed 787 Dreamliner would be delayed once again. It’s the seventh time the company has had to push back the schedule on the all-new jetliner. The new timetable has the company handing over the first 787 to Nippon Airways in the third quarter of 2011, more than three years late. Read about the 787’s latest delivery schedule.

Yet this latest delay roughly matches the time industry analysts figured it would take Boeing to sort out whatever caused a minor fire on a 787 test flight in November. In other words, it could have been worse.

NASA’s white Charger to the rescue
High-powered 2010 Dodge Charger, driven by a “mobile pilot,” literally charges down the runway in a high-speed chase of the ER-2 to call out descent distances to the aircraft. Video courtesy of NASA.

The “bad” news came from Delta Air Lines Inc. (DAL 11.76, -0.99, -7.79%) , and was bad for the airline industry in general. Delta, in its fourth-quarter earnings report, warned that it sees jet-fuel prices rising 5.3% this year. It’s a trend that could force it to trim capacity, which means either flying fewer flights, smaller planes or both. Read Delta’s comments on fuel prices.

Of course, that’s good news for Boeing. Fuel efficiency is one the 787 Dreamliner’s strongest selling points. It burns about 20% less fuel than comparable passenger planes, which in an era of high energy costs helps explain why the order backlog currently stands at a staggering 847. That’s a lot of aircraft, and it’s a major reason investors haven’t bailed on Boeing despite all the delays.

But investor leniency can only last so long. While today’s news created a brief tailwind for Boeing, it doesn’t change the fact that they still haven’t delivered a single 787. In fact, net orders actually fell last year because some airlines can no longer justify the cost, can’t swing the financing or just can’t wait any longer for a plane already three years overdue.

Whatever the reason, 787 cancellations outpaced new orders by 41 to 37 last year. That reduced the order backlog by four, or less than 1%, but it’s a reminder that these delays do nibble away at Boeing’s future earnings.

With a price tag of about $200 million apiece, losing just four 787 orders represents an $800 million hit. That doesn’t begin to count concessions they’ve had to make to suppliers or customer penalties for deferred deliveries. We might hear more about these on Jan. 26, when Boeing rolls out its fourth-quarter and full-year 2010 results.

— Jim Jelter

TOULOUSE, France (AP) — Airbus said Monday it took in 574 net new aircraft orders last year, beating rival Boeing Co. for the third year running as the international aviation market rebounded more strongly than expected from the steepest drop in its history.

The Toulouse-based plane-making consortium said 2010 orders were worth $74 billion at list prices, that it delivered a record 510 aircraft last year, and predicted even more deliveries this year.

A year earlier, Airbus took in just 271 net orders as the global economic slowdown led airlines to cancel or delay existing orders and stop making new ones.

Boeing this month reported that it took in 530 net orders in 2010 and delivered 462 aircraft.

Airbus’ 2010 order book was boosted by a late-December order by Richard Branson’s Virgin America for 60 A320 single-aisle aircraft. Airbus said half of the order is for its new version of the aircraft, the A320neo, which is being designed to save carriers money by being more fuel efficient.

Airbus CEO Tom Enders said the European jet builder will deliver between 520 and 530 aircraft this year, and said orders will be higher than that.

“We’ve made tremendous progress, it makes me more optimistic on 2011 than I was for 2010,” Enders said in a statement.

Airlines that cut back during the downturn are now scrambling to add jets to handle rising traffic as the international economy rebounds. Soaring jet fuel prices are also forcing carriers to look for newer, more efficient planes to replace gas-guzzling older models.

Speaking to reporters ahead of the company’s press conference Monday, Airbus top salesman John Leahy said fuel prices were “a small negative on the horizon” for Airbus.

He called Airbus’ planned A320neo “the solution,” saying the upgraded version of the workhorse single-aisle A320 is planned to launch in 2016, offering 15 percent better fuel efficiency than the current model.

Airbus delivered 18 of its A380 superjumbo last year. It expects to deliver between 20 and 25 this year before ramping up production to three per month in 2012.

Last year Airbus took in 32 new orders for the A380.

Spirit AeroSystems said today it has reached an agreement with Boeing about claims associated with the long-delayed development and production of the 787-8 Dreamliner airplane.

Spirit AeroSystems ( SPR – news – people ) designs and builds the composite forward fuselage, engine pylons and wing leading edge components for the Dreamliner. The company said it has worked with Boeing ( BA – news – people ) to develop a fair and equitable framework reflecting current financial realities in the program, reinforcing the partnership for long-term value creation on the program for Spirit and Boeing.

The agreement provides that the parties will complete formal amendments in the first half of 2011. Spirit said it expects to include any impact of the agreement in its fourth quarter earnings report, planned for February 10.