IT WAS JUST A MATTER OF TIME !

[WorldTraveler]

new boss WN apparently isn't interested in seeing FL continue to serve four cities.

airTran on Tuesday (02AUG11) says it will be terminating service to 4 cities in early-2012, which the airline claimed these are “underperforming” market.

Affected destinations are:

Asheville Canceled from 07JAN12
Atlantic City Canceled from 07JAN12
Quad City Canceled from 07JAN12
Newport News from 10MAR12

http://airlineroute.net/2011/08/03/fl-w11cxld/

 

[signals]

You must have missed this!

But why not cut to the chase

 

[WorldTraveler]

WN's financial report just came out and to see it is an underperformance from LUV's traditional performance is an understatemt of epic proportions.
.
WN's RASM growth for the industry was at the very back of the pack in the industry - far worse than their network carrier peers - and less than half of what DL reported for domestic RASM growth.
.
WN's fuel costs were on par w/ other carriers - no advantage their.
.
Most significantly, WN has said they will be focusing on integrating the two networks and will likely not grow and may even reduce capacity going into 2012.
That demonstrates how great the challenges are for the industry over the coming months and how even WN's business plan is not capable of supporting what WN has done - rapidly grow and stimulate traffic - in the current high fuel environment.

 

[2BlacknBlue]

WN's financial report just came out and to see it is an underperformance from LUV's traditional performance is an understatemt of epic proportions.
.
WN's RASM growth for the industry was at the very back of the pack in the industry - far worse than their network carrier peers - and less than half of what DL reported for domestic RASM growth.
.
WN's fuel costs were on par w/ other carriers - no advantage their.
.
Most significantly, WN has said they will be focusing on integrating the two networks and will likely not grow and may even reduce capacity going into 2012.
That demonstrates how great the challenges are for the industry over the coming months and how even WN's business plan is not capable of supporting what WN has done - rapidly grow and stimulate traffic - in the current high fuel environment.

You haters just continue saying the same thing while WN continue reporting profits for 37 years. This one is 2005:
http://money.cnn.com/2005/04/14/news/fortune500/southwest_oil/





http://www.chron.com/disp/story.mpl/business/6829808.html

...and THAT'S the WHOLE TRUTH!

 

[WorldTraveler]

except the truth THIS year and THIS MONTH is that WN is underperforming the ENTIRE domestic industry in revenue production by a factor of MORE THAN TEN TIMES.
.
And that kind of performance cannot solely be blamed on FL... FL's size is not large enough to drag WN's performance down that badly.
.
The simple fact is that WN managment itself has said they cannot continue to pass along fuel prices and thus they have reached the limit of how much they can increase fares. The fact that their revenue performance has hit the wall in a peak summer month bodes very poorly about their ability to continue with their previous business model. That is why WN management has said they will STOP GROWING and integrate the two networks over the next 12-18 months.

WN is run by smart people... they understand the business and know what has to be done to turn the company around... business as usual from 5 years or more ago won't work.
.
BTW, WN's fuel costs were no different than the rest of the industry in the most recent quarter. There is no WN benefit from fuel hedging any longer.
And LUV's profit margin was far lower than its network carrier peers.

 

[does this plane go to paris]

except the truth THIS year and THIS MONTH is that WN is underperforming the ENTIRE domestic industry in revenue production by a factor of MORE THAN TEN TIMES.
.
And that kind of performance cannot solely be blamed on FL... FL's size is not large enough to drag WN's performance down that badly.
.
The simple fact is that WN managment itself has said they cannot continue to pass along fuel prices and thus they have reached the limit of how much they can increase fares. The fact that their revenue performance has hit the wall in a peak summer month bodes very poorly about their ability to continue with their previous business model. That is why WN management has said they will STOP GROWING and integrate the two networks over the next 12-18 months.

WN is run by smart people... they understand the business and know what has to be done to turn the company around... business as usual from 5 years or more ago won't work.
.
BTW, WN's fuel costs were no different than the rest of the industry in the most recent quarter. There is no WN benefit from fuel hedging any longer.
And LUV's profit margin was far lower than its network carrier peers.

Didn't DL have 9B+ in sales and 160M in profits, 360M if you add specials.

WN had less than 1/2 of the of the sales, 120M in profits and is conducting a Merger, which they paid cash for and I believe that 75M went for merger related costs.

DL stated that they are scaling back 4-5% took 2,000 Vol. Retirements and are getting rid of 120 a/c and closing 24 cities.

WN stated that they MIGHT reduce flights, are closing 4 cities that FL had once a week service, but in their history, have always been overly pessimistic. I think that it plays into their role of under promise and over deliver.

 

[signals]

Yes, folks, WN is really shaking in their boots
Lets check and see!
Article
Article2
Article3
Article4
Article5

Yep, Southwest is really in trouble
I'm guessing that no matter how bad it looks for them, they can still come out ahead of most!

 

[WorldTraveler]

I never said WN was shaking in their boots or that they were a failing company... but since the industry fan base is full of people with preconceived notions and who are afraid to face reality, no matter how it cuts, let's make it clear that we have spent 22 pages with one side convinced that WN was going to inflict mortal damage on DL while I have argued that WN will do its best to establish itself in the ATL market...

but there is also the brutal reality
- that they are pulling off a merger in the midst of record high fuel prices which they have no more protection against than any other airline
- that there is OVERWHELMING evidence of what it takes for network carriers to succeed in competition with low fare carriers - and there isn't a shred of evidence that DL has been pushed out of any of its core markets by low fare carriers BUT
- there is OVERWHELMING evidence that other network carriers - esp. AA - have given up multiple markets that were former hubs and where WN is now the largest carrier - and in some cases, DL has become the largest network carrier in former AA hubs - such as RDU
- and most recently, that WN's own executives have indicated that they do not have the ability to increase fares any more and will have to stop growing, focus on integration, and pull out of certain markets, including markets which FL has operated - and which constitute routes to/from ATL.

So, while the peanut gallery continues to try to deflect the reality that exists in the industry, I will be happy to continue this little thread for decades if need be because the longer it goes on, the more ridiculous the claims will be that were made by those who were convinced that WN would grow ATL beyond anything that exists on the WN system - and in so doing they would wound DL.
.
IN fact what is clear by decades of history in the airline industry is that DL and WN are positioning themselves as the two largest domestic carriers and both continue to grow their share of the domestic market. Even accounting for the WN/FL merger, DL carries more domestic revenue than any other airline -including the combined UA/CO and also generates more domestic revenue passenger miles - while WN carries the most passengers.

so carry on...

 

[eolesen]

Keep on whistling in the graveyard... WN cutting what may have been MRG markets is hardly unexpected.

Where DL stands to take it in the shorts isn't the markets like AVL, ACY, MLI or PHF... It's ATL to DTW, ORD, PHX, and about 10-15 other "connect the dots" markets that comprise the top 20 metro areas and where they already have some market presence.

And, make no mistake here, if WN is reducing capacity, it's not likely to be those top 20 markets that WN pulls back in. That's where the sustainable volume and money are.

The places they'll pull back are going to be lower performing routes between places in the top 20 and places not in the top 20.

But you knew that already.

 

[signals]

I never said WN was shaking in their boots or that they were a failing company... but since the industry fan base is full of people with preconceived notions and who are afraid to face reality, no matter how it cuts, let's make it clear that we have spent 22 pages with one side convinced that WN was going to inflict mortal damage on DL while I have argued that WN will do its best to establish itself in the ATL market...

but there is also the brutal reality
- that they are pulling off a merger in the midst of record high fuel prices which they have no more protection against than any other airline
- that there is OVERWHELMING evidence of what it takes for network carriers to succeed in competition with low fare carriers - and there isn't a shred of evidence that DL has been pushed out of any of its core markets by low fare carriers BUT
- there is OVERWHELMING evidence that other network carriers - esp. AA - have given up multiple markets that were former hubs and where WN is now the largest carrier - and in some cases, DL has become the largest network carrier in former AA hubs - such as RDU
- and most recently, that WN's own executives have indicated that they do not have the ability to increase fares any more and will have to stop growing, focus on integration, and pull out of certain markets, including markets which FL has operated - and which constitute routes to/from ATL.

So, while the peanut gallery continues to try to deflect the reality that exists in the industry, I will be happy to continue this little thread for decades if need be because the longer it goes on, the more ridiculous the claims will be that were made by those who were convinced that WN would grow ATL beyond anything that exists on the WN system - and in so doing they would wound DL.
.
IN fact what is clear by decades of history in the airline industry is that DL and WN are positioning themselves as the two largest domestic carriers and both continue to grow their share of the domestic market. Even accounting for the WN/FL merger, DL carries more domestic revenue than any other airline -including the combined UA/CO and also generates more domestic revenue passenger miles - while WN carries the most passengers.

so carry on...

Nobody said it was you who said anything, WT. You do seem to have a bad case of the DTs though Are the WN spiders crawling all over your beloved Delta? The reality is that YOU fear WN beyond the norm.

You stater your facts, and I have stated what pops up on the Internet. But since you want to play Mrs. Delta, I'll give you an explanation of your behavior...

You keep mentioning over and over again that LUV is run by smart people, well DUH! But you also mention their marketing which I believe many don't see the real impact of their marketing. It's a double-edge sword. On the one side it is geared toward the consumer. Then the other side...may be hard to swallow...is geared to psyche out the competition.

Funny, isn't it? Were you this animate when say, B6 came to Atlanta? Why is Southwest a big deal? Why do markets whose only Atlanta connection is Delta are screaming for Southwest? Why in markets that SW is non-existant are hoping for WN? I think WN has people so pumped up that even if Delta fares were 10X lower, people still would scream Southwest?

Like I said, it doesn't matter to me either way. I just call them as I see them and I see what people want.

Delta seems to be lining itself to get rid of their human element as agents help people use the kiosks more and a pre-recorded message directs people to the boarding process. It's a start!

Just my observations B)

 

[QA4Jet-A]

I fail to see 22 pages of where DL will fail with WN entering the ATL Market. Yes, there have been differences of opinion but no Factual data on your claim! There are those who believe WN will do just fine and those that see differently. I say, let's wait and see how this all plays out after SOC. With the economy as it is, and fuel costs where they are, it's a chess match. WN & FL are now too involved in the Integration Process to worry about WT's predictions!
I happen to be in DAL all week and it is interesting what is going down and forward. And I LUV it! QA!

 

[eolesen]

No, DL won't fail because of WN. But there will be some pain felt, and they're no longer going to have the pricing power they do today in those top 20 business markets.

Why do markets whose only Atlanta connection is Delta are screaming for Southwest?

WN doesn't traditionally go into markets that can't support two or three Wal-Marts, whereas DL will throw an RJ or two there for the network effect. I suspect a lot of those markets begging for service from anyone but DL are going to have to wait a very long time for WN to show up.

 

[signals]

I probably should have said that they were trying for AirTran, but WN is better. I'm hearing from a pretty reliable source, and you shouldn't jump the gun when it comes to WN, that a good possibility for my area is 2013!

Perchance to dream

 

[WorldTraveler]

Rationality should show that WN will figure out how to coexist w/ DL... but there are lots of indications that WN's traditionally strong ability to grow will make even holding onto the status quo that FL has in ATL will be a challenge:
1. WN's ability to generate new revenue has hit a brick wall... they have acknowledged they cannot raise fares any further and their recent revenue performance shows it. Integrating the FL operation into WN requires raising fares because FL is a lower cost producer and has lower average fares. Raising fares and adding capacity are on opposite end of the strategic scale. It is very hard to do both at the same time.
2. WN still has to overcome the very PREDICTABLE and FACTUALLY DRIVEN reality that says that a carrier in a market rarely is able to grow its position in a market if another carrier in the same market has more than FOUR TIMES the capacity OR MORE in the market. Conversely, when a carrier has allowed that ration of FOUR TIMES more service to fall, then a competitor has a much better chance of growing in the market. That rule has been shown to be true in STL, PIT, SLC, DFW, and PIT among others - and it doesn't matter whether the other carrier chose to reduce capacity or whether the dominant carrier used its strength to hammer away at the 2nd largest carrier. DL has more than a 5 to 1 advantage in size over FL at ATL... there is no example of any carrier growing their presence against a size advantage of that size.
3. Finally WN is - not surprisingly - facing some of the same merger related challenges as other carriers, with the pilot integration now potentially proving to be very thorny with the possibility that WN might dismantle FL in order to gain what WN wants w/o allowing FL pilots to gain too much control.... that would be a huge setback to WN's plans for ATL growth... but it won't be the first - or last time - that airline merger plans were modified because of labor issues....
4. WN still has to deal w/ a softening economy and high fuel prices, and WN has no advantage in those areas over any other peer.

Two years from now I believe we will look back and WN will have considered the FL acquisition a success if they were able to bring FL's average fares up to WN's levels and still keep the same amount of capacity that FL currently has in ATL.
.
I consider it highly unlikely that WN will be larger than FL is now three years from now in ATL.

 

[does this plane go to paris]

Rationality should show that WN will figure out how to coexist w/ DL... but there are lots of indications that WN's traditionally strong ability to grow will make even holding onto the status quo that FL has in ATL will be a challenge:
1. WN's ability to generate new revenue has hit a brick wall... they have acknowledged they cannot raise fares any further and their recent revenue performance shows it. Integrating the FL operation into WN requires raising fares because FL is a lower cost producer and has lower average fares. Raising fares and adding capacity are on opposite end of the strategic scale. It is very hard to do both at the same time.
2. WN still has to overcome the very PREDICTABLE and FACTUALLY DRIVEN reality that says that a carrier in a market rarely is able to grow its position in a market if another carrier in the same market has more than FOUR TIMES the capacity OR MORE in the market. Conversely, when a carrier has allowed that ration of FOUR TIMES more service to fall, then a competitor has a much better chance of growing in the market. That rule has been shown to be true in STL, PIT, SLC, DFW, and PIT among others - and it doesn't matter whether the other carrier chose to reduce capacity or whether the dominant carrier used its strength to hammer away at the 2nd largest carrier. DL has more than a 5 to 1 advantage in size over FL at ATL... there is no example of any carrier growing their presence against a size advantage of that size.
3. Finally WN is - not surprisingly - facing some of the same merger related challenges as other carriers, with the pilot integration now potentially proving to be very thorny with the possibility that WN might dismantle FL in order to gain what WN wants w/o allowing FL pilots to gain too much control.... that would be a huge setback to WN's plans for ATL growth... but it won't be the first - or last time - that airline merger plans were modified because of labor issues....
4. WN still has to deal w/ a softening economy and high fuel prices, and WN has no advantage in those areas over any other peer.

Two years from now I believe we will look back and WN will have considered the FL acquisition a success if they were able to bring FL's average fares up to WN's levels and still keep the same amount of capacity that FL currently has in ATL.
.
I consider it highly unlikely that WN will be larger than FL is now three years from now in ATL.

You know WT, the original OP and topic of this thread was how WN had raised fares 39% and how the myth of WN low fares was broken. Maybe with this awful economy that is the limit for now.

I know that you don't want to hear this but Gary Kelly has stated a few times that ATL will be WN's largest city. Right now LAS is the largest city and there was an article in the Las Vegas Review-Journal where he was quoted that LAS will grow. So if LAS will grow and ATL will be the largest city, I see growth. From what I know of the man and the company, he doesn't reveal much of his cards and when he does, he can be more dismal. So while you may not want to believe it and have your spreadsheets surround your computer, I wouldn't put too much stock in the theory that WN ATL will not grow.

Last time I passed through ATL, there were all kinds of posters proclaiming ATL as DL's home town and how all of a sudden that the Red Coats were coming back. Why this attention to the Customer? Is it the dismal view of the Customer has of DL right now? Is is that DL knows of the Customer Service that WN and that the ATL Customer base will want to try out the new guys in town?