Rise Of The Lcc's

[46Driver]

Has anybody been checking to see how large the LCC's are planning on getting?

Southwest to 550+ 737's, Jet Blue with 200 Airbus's and 200 Embrauers, AirTran with 85 717's and 100 737's, Spirit with 100 Airbus's, and Independence Air with 55 Airbus's and 85 CRJ's. Almost forgot, there is also ATA, Project Roam, and whatever Richard Branson is cooking up.

Things are really going to get interesting for all of us.

 

[Just Plane Crazy]

LCC's aregiving the big six a run for their money. And I am certain that we haven't seen the end of it. I am predicting that within the next 12 month we will at least see 3 - 4 new LCC's popping up.

ANd the established ones will start to go international. I heard of a roumor that Southwest is looking at the B7E7. This could have two reasons, they need a biger aircraft for some domestic routes or they want to go international.

At the end we will end up with only three alliances (STAR, One World, Sky Team) that fly seperate brand names and LCC's.

 

[WO/drone]

I agree, BIG changes for the indusrty as a whole. So called legacy carriers are saddled with an inefficient cost structure and older higher paid employees. The new LLCs will have to operate for quite a few years before their costs are up as high. Plus they are not saddled with in house maintenance, not that I agree with outsourcing, but it is here to stay. Anyway the newer aircraft from Boeing have a lot of longevity built in, Airbus we will see, and the new Embraers have no record as of yet (the closest thing to a civil electric jet). HANG ON!!!!!

 

[46Driver]

Delta's CEO was talking to his pilots about consolidation in the industry. He predicted that in 5 to 10 years, there would only be 2 legacy carriers remaining: American and Delta (he hoped...) Figure that Northwest and Continental are slowly being pulled into Delta's orbit, American has already absorbed TWA - that leaves Alaska, United and USAir unaccounted for???

One would expect the LCC's to do the same thing. Southwest is big enough to go it alone. However, how the rest shake out who knows. My guess is that the remaining LCC's would merge into just two other LCC carriers, which ones, who knows, but it is going to be a dogfight. However, with Southwest becoming that large, the other LCC's are going to try and have to match that through both growth and mergers.

Just in my humble opinion.

PS: My apologies to Frontier - I forgot to name them in the post above as yet another growing LCC.

 

[Just Plane Crazy]

46 Driver
According to my understanding AS is joint at the hip with AA. So they are of the market.

STAR is not going to stay put and give away the US market. What ever happens UA, U, HP or one of the LCC's will represent STAR. I am not so sure that UA or even U are going to vanish. Let's stay optimistic and look at how they will change.

WO/drone
And I agree with your opinion that the LCC's don't have all the baggage the Legacy Carriers have. Outsourcing is a big issue.

Here is a definition of what outsourcing is:

Provide customers with the best ongoing solutions for meeting their business needs while maintaining a commitment to saving them money and delivering the highest service levels !


And trust me I know about outsourcing!

Airlines should concentrate on getting PAX from one place to another in a safe, relaible and affordable manner. They should concentrate on what they know and let other experts handle what they know best. This dosn't mean that they should blindly outsource maintenance. There are rules to outsourcing and in most cases companies violate these rules and that is why things go wrong.

LCC's have learned their lessons and they try to avoid mistakes other airlines made. Not that they are immune but they are aware.

Regarding Boeing and Airbus, I believe that both companies have made aircrafts with longevity. Bombardier and Embraer are in a different market and have been making A/C for a while and they are still flying. The same with Dornier/Fairchild. I would be more worried of the aircrafts that are now introduced from China and Russia as well as Japan. They are the newcommers with not much experiance and they are going to tackle the market harder than any other manufacturere.

 

[mweiss]

According to my understanding AS is joint at the hip with AA. So they are of the market.

They're not really joined at the hip with anyone. They have as tight a relationship (albeit different) with NW as with AA.

It's hard to really understand his definition of "legacy" carrier, anyway. What makes a legacy carrier legacy? Is it age? If so, how old do they have to be? WN predates deregulation, for example.

There are rules to outsourcing and in most cases companies violate these rules and that is why things go wrong.

Bingo! Of course, outsourcing often means lower costs, sometimes lower wages, which gets people's panties knotted.

 

[jimntx]

Here is a definition of what outsourcing is:

Provide customers with the best ongoing solutions for meeting their business needs while maintaining a commitment to saving them money and delivering the highest service levels !

No, that is not a definition of outsourcing. That is a goal of outsourcing. Outsourcing is giving a company employee's job to someone outside the company who will do it for less money and/or no benefits.

And, trust me, I, too, know about outsourcing.

 

[mweiss]

Outsourcing is giving a company employee's job to someone outside the company who will do it for less money and/or no benefits.

Well, since you are apparently a stickler for precise and accurate definitions...

Outsourcing is giving a task that used to be performed within the company to another company. That's it. Nothing more.

Sure, many companies that handle outsourced work do so by paying workers less money and forgoing the benefits. But that is not a requirement by any stretch.

Ford Motor Company outsourced their coal mining. And their iron mining. And their steel production. All good things, because other companies did it better.

 

[jimntx]

Well, since you are apparently a stickler for precise and accurate definitions...

Outsourcing is giving a task that used to be performed within the company to another company. That's it. Nothing more.

Sure, many companies that handle outsourced work do so by paying workers less money and forgoing the benefits. But that is not a requirement by any stretch.

Ford Motor Company outsourced their coal mining. And their iron mining. And their steel production. All good things, because other companies did it better.

I was not trying to be a stickler; though, god knows one is needed in this day and age of liaisoning, and journaling, etc. It's just that what was given as a definition could be the meaningless vision statement of any corporation out there that during the early 90's spent a small fortune and countless hours producing such pablum.

I mean go back and read that "definition" then think of at least 10 business situations it could be applied to. It could be applied to the decision by Office Depot to stay open after midnight.

And no, paying the workers of the outsourcing company less is certainly not a requirement, but can you name me a situation where outsourcing occurred and the workers who got the work were paid more than the workers who lost the work? How many companies have you run across that put in the annual report that they outsourced the IT department because they found someone who could do it for 20% more than the in-house department?

Lastly, did Ford Motor Co. outsource the mining and steel making, or did they just simply sell off those parts of the company? I may have missed it, but I don't remember any reference to those operations in the last annual report.

 

[mweiss]

And no, paying the workers of the outsourcing company less is certainly not a requirement, but can you name me a situation where outsourcing occurred and the workers who got the work were paid more than the workers who lost the work?

No, but to be honest I haven't done any real research on it. But imagine for a moment if US were able to outsource their ground staff to WN. The employees would be paid more, but the costs would go down.

Lastly, did Ford Motor Co. outsource the mining and steel making, or did they just simply sell off those parts of the company? I may have missed it, but I don't remember any reference to those operations in the last annual report.

That's because they usually only mention it in the year in which it occurs, and you'd have to go back nearly 70 years to find it. I believe they sold the mining rights and the steel manufacturing (to Carnegie? I forget), but you don't bother holding onto assets that you don't need anymore when you outsource the work.

 

[k2air]

Boeing's market share is eroding yet again. Spirit announced an order combination of Airbus A319 and A321 aircraft....

So long 717, and you might as well start furloughing 737 program staff. Even the LCC carriers are supporting the Airbus family; Jetblue, EasyJet, Frontier....

 

[Just Plane Crazy]

It's hard to really understand his definition of "legacy" carrier, anyway. What makes a legacy carrier legacy? Is it age? If so, how old do they have to be? WN predates deregulation, for example.

The Legacy carriers are:

American
Continental
Delta
Norhtwest
United
US Airways


And this defination was not crated by me.

 

[Just Plane Crazy]

Well, since you are apparently a stickler for precise and accurate definitions...

Outsourcing is giving a task that used to be performed within the company to another company. That's it. Nothing more.

Sure, many companies that handle outsourced work do so by paying workers less money and forgoing the benefits. But that is not a requirement by any stretch.

Ford Motor Company outsourced their coal mining. And their iron mining. And their steel production. All good things, because other companies did it better.

I was not trying to be a stickler; though, god knows one is needed in this day and age of liaisoning, and journaling, etc. It's just that what was given as a definition could be the meaningless vision statement of any corporation out there that during the early 90's spent a small fortune and countless hours producing such pablum.

I mean go back and read that "definition" then think of at least 10 business situations it could be applied to. It could be applied to the decision by Office Depot to stay open after midnight.

And no, paying the workers of the outsourcing company less is certainly not a requirement, but can you name me a situation where outsourcing occurred and the workers who got the work were paid more than the workers who lost the work? How many companies have you run across that put in the annual report that they outsourced the IT department because they found someone who could do it for 20% more than the in-house department?

Lastly, did Ford Motor Co. outsource the mining and steel making, or did they just simply sell off those parts of the company? I may have missed it, but I don't remember any reference to those operations in the last annual report.

Companies outsource because they realize that other compamnies can do the same or a better job for less money.

Outsourcing is done because the company that you outsource to is specialized in that one task, they can do it faster, cheaper and in most cases better, since that is all they do. You go to an CPA to do you taxes, so you are outsourcing.

Just because we always have done it in house dosn't mean that we always have to do it and with the change of time we have to adjust too.

In the old west you had a doctor who took care of every body and every thing. Horses, fever, tooth ache etc. Today we go to a lot of different Doctors and specialists. In the change of time airlimes might have to concentrate on things they should know best and let some other taks be perfomed by specialists.

 

[jimntx]

JPC, I applaud your incisive grasp of the obvious.

 

[Just Plane Crazy]

Boeing's market share is eroding yet again. Spirit announced an order combination of Airbus A319 and A321 aircraft....

So long 717, and you might as well start furloughing 737 program staff. Even the LCC carriers are supporting the Airbus family; Jetblue, EasyJet, Frontier....

Boeing killed the B757 and B717 them self. And since Airbus has a better concept and apparently a better aircraft with its A318/319/320/321 family it is not surprising that airlines will rather buy these aircrafts.