IT WAS JUST A MATTER OF TIME !

[WorldTraveler]

Lets not forget the Delta and Legacy tactic, since some have Alzheimer's and are doomed to repeat their groundhog day-lower fares to rock bottom to drive out competition then raise fares to 1011.99%!

Flaw with that theory is that if you don't eliminate the competition it's an ongoing battle. Me thinks that by the time Delta drives Southwest out of Atlanta almost said that with a straight face Delta will have to charge moon fares!

Too many amateurs are viewing the DL/WN situation in ATL as "you must lose in order for me to win" which is why the most likely outcome is that DL and WN will figure out a way to peacefully coexist, apparently something that few on here can grasp is a viable business strategy for both airlines - and has implications for other aspects of life too.
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WN will make all the noise it wants about what it wants to do in ATL, but they will ultimately will do is what benefits their bottom line... they will have major hub operations in the traditional network carrier hubs of ATL, CHI, Dallas, DEN, Houston, PHL, WAS/BWI plus a decent sized presence in major markets on both coasts which have been long dominated by network carriers.
.
What WN lacks that the network carriers have is presence in Canada, Latin America, and the Carribean and Hawaii all of which are relatively easy to do with minor modifications of WN's current business model.
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There is no doubt that WN will grow its presence in ATL - and may increase its share of the market ... but based on the WN model and the competitive responses of DL and other carriers in other markets, the entire market will grow and WN will retain its pro rata share of the new markets.

.
Peaceful coexistence and mutual benefit may not be a concept that many people here understand but it is not only the likely result between WN and DL in ATL but will likely also lead to more benefits for more consumers as well as enhanced benefits to both companies as well.
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There are companies that understand that concept and manage to succeed by taking advantage of opportunities where they exist w/o seeing a need to harm someone else in order for themselves to win.

 

[2BlacknBlue]

Too many amateurs are viewing the DL/WN situation in ATL as "you must lose in order for me to win" which is why the most likely outcome is that DL and WN will figure out a way to peacefully coexist, apparently something that few on here can grasp is a viable business strategy for both airlines - and has implications for other aspects of life too.
.
WN will make all the noise it wants about what it wants to do in ATL, but they will ultimately will do is what benefits their bottom line... they will have major hub operations in the traditional network carrier hubs of ATL, CHI, Dallas, DEN, Houston, PHL, WAS/BWI plus a decent sized presence in major markets on both coasts which have been long dominated by network carriers.
.
What WN lacks that the network carriers have is presence in Canada, Latin America, and the Carribean and Hawaii all of which are relatively easy to do with minor modifications of WN's current business model.
.
There is no doubt that WN will grow its presence in ATL - and may increase its share of the market ... but based on the WN model and the competitive responses of DL and other carriers in other markets, the entire market will grow and WN will retain its pro rata share of the new markets.

.
Peaceful coexistence and mutual benefit may not be a concept that many people here understand but it is not only the likely result between WN and DL in ATL but will likely also lead to more benefits for more consumers as well as enhanced benefits to both companies as well.
.
There are companies that understand that concept and manage to succeed by taking advantage of opportunities where they exist w/o seeing a need to harm someone else in order for themselves to win.

...yeah, right.

http://www.portfolio.com/business-travel/2010/10/04/how-southwest-got-the-better-of-delta-with-airtran-purchase/index.html

 

[signals]

Too many amateurs are viewing the DL/WN situation in ATL as "you must lose in order for me to win" which is why the most likely outcome is that DL and WN will figure out a way to peacefully coexist, apparently something that few on here can grasp is a viable business strategy for both airlines - and has implications for other aspects of life too.
.
WN will make all the noise it wants about what it wants to do in ATL, but they will ultimately will do is what benefits their bottom line... they will have major hub operations in the traditional network carrier hubs of ATL, CHI, Dallas, DEN, Houston, PHL, WAS/BWI plus a decent sized presence in major markets on both coasts which have been long dominated by network carriers.
.
What WN lacks that the network carriers have is presence in Canada, Latin America, and the Carribean and Hawaii all of which are relatively easy to do with minor modifications of WN's current business model.
.
There is no doubt that WN will grow its presence in ATL - and may increase its share of the market ... but based on the WN model and the competitive responses of DL and other carriers in other markets, the entire market will grow and WN will retain its pro rata share of the new markets.

.
Peaceful coexistence and mutual benefit may not be a concept that many people here understand but it is not only the likely result between WN and DL in ATL but will likely also lead to more benefits for more consumers as well as enhanced benefits to both companies as well.
.
There are companies that understand that concept and manage to succeed by taking advantage of opportunities where they exist w/o seeing a need to harm someone else in order for themselves to win.

Hmmmm...if I didn't know better, I'd swear you were waving a 'white flag'! Did you borrow it from Charlotte?

I known regional airports where Delta is the only means to Atlanta...apparently a growing market! Thus Dumta gets to set its price

Peaceful coexistence is the cry of the defeated. As an independent observer, y'all fear LUV regardless what rhetoric you feed yourselves! We outsiders aren't buying it and see a yellow line down Atlanta Queen's back!

 

[signals]

...yeah, right.

http://www.portfolio.com/business-travel/2010/10/04/how-southwest-got-the-better-of-delta-with-airtran-purchase/index.html

Thank-you! B)

 

[signals]

Hmmmm...if I didn't know better, I'd swear you were waving a 'white flag'! Did you borrow it from Charlotte?

I known regional airports where Delta is the only means to Atlanta...apparently a growing market! Thus Dumta gets to set its price

Peaceful coexistence is the cry of the defeated. As an independent observer, y'all fear LUV regardless what rhetoric you feed yourselves! We outsiders aren't buying it and see a yellow line down Atlanta Queen's back!

PS Peaceful coexistence is possible as long as WN didn't leave a book entitled "To Serve Delta"!

Because we all know how that ends! IT'S A COOKBOOK!

 

[WorldTraveler]

once again, we can check back in a few short months and see how well WN's arrival goes (since it is obviously in ATL despite the fact that its subsidiary will be doing the work for many more months).
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the rhetoric in the article is no different from the people that have wished for DL's failure here - full of emotion, short of facts, and the few facts that have been presented are used to draw inaccurate conclusions... such as....

1. Do you really think any airline in any part of the country signs an agreement that says "let's build X new gates and leave them empty so someone can come in... and we'll foot the bill until they are occupied.... " please.... DL has done what every other airline has done which is to take every available gate .... not surprisingly, WN has done the exact same thing at its - oh wait, HOME - airport. And yet at times DL and FL would do what was in each's own best interest which might be - AGAINST someone else.... what a shocker that a company would protect itself, even if it meant helping someone else.. if the greater benefit for "me" is greater, then it makes no difference who my actions also help... again, people here have no concept of doing what is MY best interests even if it helps someone else.
2. "DL should focus on its int'l operation and leave the domestic operation".... I guess the 10 miles between ATL and professor know-it-all's office is a little too much for him to have done a little research to find out that FL's operation in ATL today is smaller by double digit percentages from its highs in the mid 2000s... and WN has to build on the base that FL has left for them...
3. Yet even the quote which says that WN will "erode DL's pricing power" didn't bother to explain how - since just like here - emotions and a lack of facts seem to overlook the fact that DL is already fully competitive with FL.....

.
we can continue the discussion as long as anyone wants to but I have yet to see any substantive data that even comes close to logically explaining how WN will hurt DL in order to accomplish what WN needs to do....
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But I do enjoy all the people putting their opinions on the thread - and I also like the fact that threads on this forum are never closed so we can go back and see who was right.... which I will certainly do in a couple years....

since, after all, the point of this whole exercise is to figure out out this whole industry really works, right?

 

[signals]

once again, we can check back in a few short months and see how well WN's arrival goes (since it is obviously in ATL despite the fact that its subsidiary will be doing the work for many more months).
.
the rhetoric in the article is no different from the people that have wished for DL's failure here - full of emotion, short of facts, and the few facts that have been presented are used to draw inaccurate conclusions... such as....

1. Do you really think any airline in any part of the country signs an agreement that says "let's build X new gates and leave them empty so someone can come in... and we'll foot the bill until they are occupied.... " please.... DL has done what every other airline has done which is to take every available gate .... not surprisingly, WN has done the exact same thing at its - oh wait, HOME - airport. And yet at times DL and FL would do what was in each's own best interest which might be - AGAINST someone else.... what a shocker that a company would protect itself, even if it meant helping someone else.. if the greater benefit for "me" is greater, then it makes no difference who my actions also help... again, people here have no concept of doing what is MY best interests even if it helps someone else.
2. "DL should focus on its int'l operation and leave the domestic operation".... I guess the 10 miles between ATL and professor know-it-all's office is a little too much for him to have done a little research to find out that FL's operation in ATL today is smaller by double digit percentages from its highs in the mid 2000s... and WN has to build on the base that FL has left for them...
3. Yet even the quote which says that WN will "erode DL's pricing power" didn't bother to explain how - since just like here - emotions and a lack of facts seem to overlook the fact that DL is already fully competitive with FL.....

.
we can continue the discussion as long as anyone wants to but I have yet to see any substantive data that even comes close to logically explaining how WN will hurt DL in order to accomplish what WN needs to do....
.
But I do enjoy all the people putting their opinions on the thread - and I also like the fact that threads on this forum are never closed so we can go back and see who was right.... which I will certainly do in a couple years....

since, after all, the point of this whole exercise is to figure out out this whole industry really works, right?

Yes the proof will be in the pudding and lets see what happens in a couple of years. My bet is on Southwest inflicting pain on the almighty D-god!

Apparently B6 still holds a grudge that they were sent back home with their tails between their legs. They resent the fact that Delta is coexisting in JFK! Maybe LUV and B6 can buddy up and well, wishful thinking.

 

[tech2101]

There is no doubt that WN will grow its presence in ATL - and may increase its share of the market ... but based on the WN model and the competitive responses of DL and other carriers in other markets, the entire market will grow and WN will retain its pro rata share of the new markets.

.
Peaceful coexistence and mutual benefit may not be a concept that many people here understand but it is not only the likely result between WN and DL in ATL but will likely also lead to more benefits for more consumers as well as enhanced benefits to both companies as well

I think that the above is the most likely scenario of all that have been presented. I know it doesn't meet the doom scenario that some would like, but....

 

[southwind]

Yes the proof will be in the pudding and lets see what happens in a couple of years. My bet is on Southwest inflicting pain on the almighty D-god!

Apparently B6 still holds a grudge that they were sent back home with their tails between their legs. They resent the fact that Delta is coexisting in JFK! Maybe LUV and B6 can buddy up and well, wishful thinking.

Sounds like someones still wearing their Mickey Mouse ears, after leaving Disney World !

 

[signals]

Sounds like someones still wearing their Mickey Mouse ears, after leaving Disney World !

It was just wishful thinking.

So back to the WN raising fares by 39%, did Delta raise fares? Don't answer because my guess is that WN fares still meet or beat Delta. We all know that numbers lie and can be manipulated to anyone's advantage.

So when's Delta's Mission Accomplished party? I think that you have never taken off your Mickey Mouse ears, Pot!

 

[WorldTraveler]

glad to return to a substantitive discussion.

I don't see any data that shows that WN raised fares by 39% but I do see from average fare data for the US that WN's fares have increased a whole lot faster than other carriers.
Likely reasons:
1. Remember that WN benefitted greatly from its fuel hedging strategy in the early 2000s; those fuel hedges allowed WN to price well below what other carriers could charge. The reason WN grew as quickly as they did in cities like DEN and PHL was directly related to their fuel hedge positions in the early part of the 2000s... not surprisingly, they went after carriers that were weak in BK and largely did not have hedges. As the fuel hedge benefits for WN rolled away, they had to raise fares to more viable levels.
2. As WN's growth moved away from deep discounting to establish market share in large business markets (quite different from its traditional strategy of focusing on non-competitive airports where IT was the dominant carrier), its strategy moved to making money in those key business markets - where fares are higher than in smaller more heavily leisure dominated markets, esp. on the east coast. WN's average fares in PHL over 4 years grew by 30% and in BWI by more than 20% - faster than WN's average fare growth for its system. WN's desire to get into big east coast business markets via FL is because those markets have higher average fares.
3. WN is flying longer average stage lengths and passenger trip distance is increasing- revenue is expected to grow. WN acknowledged like everyone else that the post 9/11 airport hassle pushed alot of passengers on shorter trips into their cars... plus the efficiency of aircraft travel increases with longer trip distances.

It's no surprise that WN's average fares have gone up faster than the industry due to the expiration of its fuel hedges, its transformation from fuel-hedge driven growth to market fare driven growth, and its growth on the east coast where there are more business travelers and the limited airport capacity helps keep fares higher.

BTW, in nearly all markets where FL and WN compete now (MKE, BWI, etc), WN already has an average fare premium of 15-20% over FL.... they know there is great opportunity to get more revenue out of FL's system - even on comparable routes.
FL's average fares in ATL are below what WN gets in comparable east coast markets - partly a reflection that FL connects too many passengers and has too small of a local market based on the size of its network.
Fares in alot of markets will go UP as WN eliminates a competitor as well as in ATL as they use the FL assets better.
WN may increase their market share by several percent points but average fares are likely to go up which will help WN and DL - and every other carrier in ATL.
Remember that WN's costs are higher than WN's and they have to price to reflect their costs; the network carriers priced below costs for too long and are either dropping markets, merging, or reworking their strategies to remain in markets they can profitably serve or get out of those markets. WN is no different.

People don't appreciate how much low fare competition is being eliminated by the merger between FL and WN and by the likely failure - or signficant restructuring of Frontier - whcih WN has helped to push to the breaking point.
If it was the network carriers that went through huge transformation in the 2000s, it will be low fare carrier segment that is transformed this decade.
It is very doubtful that we will see near as big of a difference in fares between low fare carriers and network carriers in a few years, esp. as WN's costs become more "legacy like" - remember it just started retiring people with 30 years of service a couple years ago... but the pace of those retirements will increase. Wn's workforce is becoming more and more senior.

Finally, keep in mind that other carriers including FL obtain revenue from fees while WN does not... the sum total of WN's average fare increases can be seen in its ticket prices... for other carriers, you need to take those revenue increases and spread them over their system - you will see their average fares go up. Other carriers, including the network carriers, have obtained alot of their fare increases through fees... if you allocated fee revenue to fares, you might see that WN's average fare increases don't look as large in comparison.

 

[signals]

glad to return to a substantitive discussion.

I don't see any data that shows that WN raised fares by 39% but I do see from average fare data for the US that WN's fares have increased a whole lot faster than other carriers.
Likely reasons:
1. Remember that WN benefitted greatly from its fuel hedging strategy in the early 2000s; those fuel hedges allowed WN to price well below what other carriers could charge. The reason WN grew as quickly as they did in cities like DEN and PHL was directly related to their fuel hedge positions in the early part of the 2000s... not surprisingly, they went after carriers that were weak in BK and largely did not have hedges. As the fuel hedge benefits for WN rolled away, they had to raise fares to more viable levels.
2. As WN's growth moved away from deep discounting to establish market share in large business markets (quite different from its traditional strategy of focusing on non-competitive airports where IT was the dominant carrier), its strategy moved to making money in those key business markets - where fares are higher than in smaller more heavily leisure dominated markets, esp. on the east coast. WN's average fares in PHL over 4 years grew by 30% and in BWI by more than 20% - faster than WN's average fare growth for its system. WN's desire to get into big east coast business markets via FL is because those markets have higher average fares.
3. WN is flying longer average stage lengths and passenger trip distance is increasing- revenue is expected to grow. WN acknowledged like everyone else that the post 9/11 airport hassle pushed alot of passengers on shorter trips into their cars... plus the efficiency of aircraft travel increases with longer trip distances.

It's no surprise that WN's average fares have gone up faster than the industry due to the expiration of its fuel hedges, its transformation from fuel-hedge driven growth to market fare driven growth, and its growth on the east coast where there are more business travelers and the limited airport capacity helps keep fares higher.

BTW, in nearly all markets where FL and WN compete now (MKE, BWI, etc), WN already has an average fare premium of 15-20% over FL.... they know there is great opportunity to get more revenue out of FL's system - even on comparable routes.
FL's average fares in ATL are below what WN gets in comparable east coast markets - partly a reflection that FL connects too many passengers and has too small of a local market based on the size of its network.
Fares in alot of markets will go UP as WN eliminates a competitor as well as in ATL as they use the FL assets better.
WN may increase their market share by several percent points but average fares are likely to go up which will help WN and DL - and every other carrier in ATL.
Remember that WN's costs are higher than WN's and they have to price to reflect their costs; the network carriers priced below costs for too long and are either dropping markets, merging, or reworking their strategies to remain in markets they can profitably serve or get out of those markets. WN is no different.

People don't appreciate how much low fare competition is being eliminated by the merger between FL and WN and by the likely failure - or signficant restructuring of Frontier - whcih WN has helped to push to the breaking point.
If it was the network carriers that went through huge transformation in the 2000s, it will be low fare carrier segment that is transformed this decade.
It is very doubtful that we will see near as big of a difference in fares between low fare carriers and network carriers in a few years, esp. as WN's costs become more "legacy like" - remember it just started retiring people with 30 years of service a couple years ago... but the pace of those retirements will increase. Wn's workforce is becoming more and more senior.

Finally, keep in mind that other carriers including FL obtain revenue from fees while WN does not... the sum total of WN's average fare increases can be seen in its ticket prices... for other carriers, you need to take those revenue increases and spread them over their system - you will see their average fares go up. Other carriers, including the network carriers, have obtained alot of their fare increases through fees... if you allocated fee revenue to fares, you might see that WN's average fare increases don't look as large in comparison.

Now we can get down to the nitty gritty of it. I don't believe WN is out to drive Delta out, but it will be a force to recon with.

In 2008 was when WN hedged the fuel. It was also a time when US almost committed suicide with their $2 Cokes! I remember WN was aggressively going after US. I heard other skirmishes with other airlines, but Delta was never a WN target. Delta, as far as I could see was not a WN MO.

You brought up how WN takes advantage of BK situations, yet it was US that attempted a hostile takeover of Delta while in BK, and correct me if I am wrong, WN never targeted Delta at that time.

When F9 was in BK, Republic Holdings had a bid, and WN put in a higher bid. Unfortunately a BK judge gave F9 to Republic. This explains why WN is going after F9!

The only reason I can see why WN started targetting DL(if that is what it is), it's probably due to the CR*p that started with the US slot swaps and fighting WN from being part of it!

Don't know how long talks with FL went on, but it coincidentally occurred shortly after.

Just my two cents B)

 

[WorldTraveler]

your two cents are worth a lot more than that...
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WN's biggest fuel hedge benefits came in the early part of the 2000s, well before 2008. Many of the network carriers had to unwind their fuel hedges in the early 2000s because of poor credit ratings due to huge losses which pushed their costs up even higher as they had to buy unhedged fuel - which ultimately forced some of them into BK - or kept them there longer.
WN's fuel hedge gains came because they had a long-term fuel hedge portfolio which allowed them to lock in fuel prices that were similar to what airlines had in the pre-2000s time frame at a time when fuel was 2-3 times as high....
BTW, fuel hedges always involve a winner and a loser.... lots of companies bet a lot of money in the opposite direction of WN and lost - it is also quite unlikely that WN or anyone else would ever obtain the benefit from fuel hedges that they did in the mid-2000s as their hedges were paying out big dividends.
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WN didn't go after F9 because they had vengeance... they went after F9 because WN wanted a piece of DEN and they knew full well how damaging the deep discounts were to ALL the airlines - UA shrunk its presence considerably, F9 was losing money - and is now having to significantly restructure just to stay in the game; only WN had enough money to withstand the battles in DEN but they wanted a way to cut their losses and yet maintain their presence in DEN.
WN bid for F9 solely because they wanted to stop the bleeding in DEN by buying out a competitor.
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Yes, BK provides the opportunity for companies to go after one another... but WN simply had no strategic interest in network carriers - they had 4 they could have picked up if they wanted to... the network/int'l business is just not what WN does. WN has succeeded because it knows its business model and has stuck with it, only modifying that model after great thought and analysis.
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WN's interst in ATL and DL in particular is because of DL's position on the east coast. IN order to get into ATL, WN has to deal with DL... but there are alot of other players on the east coast that are weaker and higher cost.... and who in all likelihood will cede more marketshare to WN than DL will.

.
As I showed, WN has more benefit to be gained from getting average fares up in ATL; expanding its presence from smaller, niche type markets that can handle only a couple flights per day to ones that can support the typical WN minimum number of flights; and in connecting ATL better to WN's nationwide network esp. in the west. WN's impact on DL will be limited, though, since many of those markets already have low fare carrier structures in them.
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WN's greatest impact with the FL merger will be to increase fares for all carriers as it effectively forces F9 to restructure and buys FL, leaving B6 as the only large, viable low fare carrier. In the process WN's market share will increase nationwide but its average fares will increase even faster.

 

[2BlacknBlue]

your two cents are worth a lot more than that...
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WN's biggest fuel hedge benefits came in the early part of the 2000s, well before 2008. Many of the network carriers had to unwind their fuel hedges in the early 2000s because of poor credit ratings due to huge losses which pushed their costs up even higher as they had to buy unhedged fuel - which ultimately forced some of them into BK - or kept them there longer....blah, blah,blah...

"Southwest, which just purchased AirTran Airways, led all airlines in passenger satisfaction, rising to a score of 81 to match its largest gap ever compared to the rest of the industry."

 

[WorldTraveler]

"Southwest, which just purchased AirTran Airways, led all airlines in passenger satisfaction, rising to a score of 81 to match its largest gap ever compared to the rest of the industry."

that's all great but can you show that great customer service translates into more profitability - or greater market share? No, you and no else can, because there is no link that can be isolated from other factors.
There are examples of airlines that have bad customer service and still manage to make lots of money and there are examples of airlines that do a great job of customer service but lose money - but those are admittedly a smaller group.
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WN runs a good airline and no one doubts that they will make a lot of customers in ATL happy... but FL ran a pretty good operation and did a decent job with customer service as well.
.
You still can't say that customer service alone will help WN win... again because WN is no different in SLC than tney will be in ATL, yet they haven't increased their market share there in a decade - and DL has maintained the size of its passenger base there despite the decline in the number of passengers carried by the network carriers nationwide over the past decade.

I don't have any doubts that DL wants to improve its customer service scores - as do other carriers... but ultimately airlines are a business. When customers quit spending money or when they no longer provide the fare premiums that have distinguished the network carriers from the low cost carriers, then they will change.
Let's not forget that CO and now UA/CO mgmt has undone alot ofr things that made CO one of the most admired network airlines ... and yet CO and CO/UA along with DL have been posting above average profitability for quite some time.
.
Let's also note that CO and DL have spent and are spending alot of money on "hardware" upgrades to their fleets - CO via new aircraft and AA more recently with 738s, DL via cabin upgrades - but they all appear to believe those things are more valuable and generate more revenue and reduce costs better than throwing in services that customers are willing to pay for, even if they don't like to.
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I don't like the US Postal Service or the IRS but they both manage to do a reasonable job....
doing a job well and being liked are two different things.