Song or More Room?

[Oliver Stone''s Apprentice]

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On 1/29/2003 10:15:47 AM 767jetz wrote:

a low cost airline within an airline operating today that is successful and on it's way to making a profit, and helping the mainline. It's Air Canada.

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It is so profitable for Air Canada that both UBS Warburg and Raymond James downgraded their outlook on the stock this week...

Tango or Jazz might be profitable on paper, but you have to take a step back and look at what it does to Air Canada as a whole. It's killing yields and revenue for the parent carrier.

Having a LCC within a HCC usually ends up undermining the profitability of the parent, which is pretty much what happened with CALite, Shuttle by UA, and Metrojet.

 

[mga707]

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On 1/29/2003 417 PM KCFlyer wrote:

Sorry - I don't think the "airline within an airline" concept is going to work. IMHO, it's going to add another layer of management, it holds the potential of alienating some of your "medallion" passengers (kind of like CO Lite hacked them off by just booking them on a flight, only to discover that it was a "lite" flight and not a "mainline" flight, along with the "mainline" amenities).

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Not too many remember it--although I'll bet KC does--but the "airline within an airline" concept predates even 'CALite' by over a decade: As their days looked ever more ominous, Braniff (Mk 1) tried the concept in the fall of 1981, splitting the operation into "Braniff Premier" (regular) and "Braniff Express" (no-frills).
Didn't work back then, either. As has been pointed out, self-cannibalization occurs.

 

[FrugalFlyer]

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On 1/29/2003 4:33:44 PM eolesen wrote:

It is so profitable for Air Canada that both UBS Warburg and Raymond James downgraded their outlook on the stock this week...

Tango or Jazz might be profitable on paper, but you have to take a step back and look at what it does to Air Canada as a whole. It's killing yields and revenue for the parent carrier.
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Westjet is putting the hurt on AC pretty good these days.

I heard / read a week or so ago that westjet and ac zip were having fare wars in western canada - ridiculous fares of ~$40 1-way calgary - ??? (funny thing was that for quite a few of the destinations the taxes and airport fees were more than the fare)

 

[FrugalFlyer]

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Exactly. Better utilization of crews and equipment. Why create more bureaucracy. An airline with in an airline? Stupid. One consistent seamless product with Value pricing. The advantages over the others is the greater route network of cities, The more room in coach and upgrades we have to offer.
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I don't think the concept would fly well with employees. How would employees / unions feel about working a full-service JFK-Europe-JFK trip one week followed by a week of working the NorthEast-Florida cattle cars? A-scale for USA-Europe flights but B-scale (or C-scale)for NE-FLA flights?

 

[KCFlyer]

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On 1/29/2003 6:28:07 PM mga707 wrote:

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On 1/29/2003 417 PM KCFlyer wrote:


Not too many remember it--although I'll bet KC does--but the "airline within an airline" concept predates even 'CALite' by over a decade: As their days looked ever more ominous, Braniff (Mk 1) tried the concept in the fall of 1981, splitting the operation into "Braniff Premier" (regular) and "Braniff Express" (no-frills).
Didn't work back then, either. As has been pointed out, self-cannibalization occurs.

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Didn't they call it "Texas Class"???

 

[FrugalFlyer]

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On 1/29/2003 1034 AM G4G5 wrote:

The problem with AC model is they too have created LCC's

Tango and Jazz
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Actually, AC Jazz is the regional outfit.

AC Tango and AC Zip are the LCC's.

(and lets not forget AC Jetz - the charter division)

 

[FrugalFlyer]

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On 1/29/2003 417 PM KCFlyer wrote:
Sorry - I don't think the "airline within an airline" concept is going to work. IMHO, it's going to add another layer of management, it holds the potential of alienating some of your "medallion" passengers (kind of like CO Lite hacked them off by just booking them on a flight, only to discover that it was a "lite" flight and not a "mainline" flight, along with the "mainline" amenities).
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I think that the airline within an airline concept may work if it is properly managed (i.e. not like metrojet). I think the original intention for these LCC's is to use them on routes like NE-FLA (tourist destinations). It probably turns out that this strategy works (lcc breaks even or makes small profit)but then management starts to put the LCCs all over other routes which leads to disaster.

 

[mga707]

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On 1/29/2003 6:40:48 PM KCFlyer wrote:

Didn't they call it "Texas Class"???
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Yes, IIRC the single-class aircraft were indeed marketed as "Texas Class".

 

[DLFlyer31]

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On 1/29/2003 417 PM KCFlyer wrote:

luv2fly, could you explain how this is going to help Delta? I mean, it's a low cost, point to point carrier, but ATL isn't being shut down is it? How're they gonna cut costs there when this airline within an airline steals passengers from it?
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Not luv2fly, but I'll try to answer a few of the questions. Yes, it is a low-cost point to point carrier specializing in serving high volume routes. Pax in markets like NYC/BOS do not want to route through ATL to get to Florida. They want cheap nonstop service. If DL does't provide it, then someone else (JBLU) will.

However, someone who lives in NYC/BOS and want to go to MOB (Mobile, AL), they will have to route through ATL because JBLU isn't going to fly JFK-MOB.

The low-fare carriers aren't much different. If you live in BDL and want to go to MCO, WN will fly nonstop. However, if you live in BDL and want to go to OKC,ABQ,RNO,PDX,MSY,etc, WN will route you through a major connecting point (WN doesn't like to call them hubs)like BWI or MDW.

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How will you sell your "elite" flyers, who demand first class on a "Song" flight from a city? Will "Song" go straight to Orlando, but mainline route the elite thru Atlanta?
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Most elite fliers I know already fly DLX, a product with very few frills, so I don't see any reason why they wouldn't fly Song. Many elite fliers often get stuck in DL coach, so Song might be a pretty nice improvement.


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Will passengers be able to accrue "Song miles" that can be redeemed for "Sky miles"? Any impact from a bunch of low cost passengers getting free tickets to Europe on Delta mainline?
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Song passengers will accrue SkyMiles though the details haven't been fully released yet. Of course, there is always the risk of people using those miles to get free trips to Europe. However, DL can capacity control those as they already do.


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Will Delta still have a plethora of fares between "less popular" cities, but the difference in advance and walk up remain over $1,500?
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That is kind of a different issue. DL has tested new fare structures however the feedback has been mixed. The simple structure works well when you can make money off even the cheapest advanced purchase fares as WN,JBLU,etc do. However, when you have a higher cost structure it becomes more complicated.

 

[Oliver Stone''s Apprentice]

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On 1/29/2003 6:52:00 PM FrugalFlyer wrote:

Westjet is putting the hurt on AC pretty good these days.

I heard / read a week or so ago that westjet and ac zip were having fare wars in western canada - ridiculous fares of ~$40 1-way calgary - ??? (funny thing was that for quite a few of the destinations the taxes and airport fees were more than the fare)

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Westjet was also downgraded, along with Air Canada. They've gotten into a war of attrition, and both hope to be the last one standing...

 

[funguy2]

The original Midway did the same thing with Midway Metrolink (biz) and Midway Express (MDW-Florida).

I guess the only airline within an airline concepts that have worked have been outside of the USA... British Airways created and sold Go. Then there is AC Tango and Zip (why they need TWO is beyond me... I think it has more to do with convincing folks that AC is not a monopoly).

At any rate, the success in the USA so far has been elusive.

 

[FrugalFlyer]

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On 1/30/2003 208 PM funguy2 wrote:
Then there is AC Tango and Zip (why they need TWO is beyond me... I think it has more to do with convincing folks that AC is not a monopoly).
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I don't know for sure why 2 LCC outfits at AC. I know they originally started with Tango and wanted to exapnd it but unions said no. IIRC, there was some litigation as to whether AC can proceed with Zip, but I guess the courts said they can.

Also, for whatever reason, Zip interlines with mainline AC whereas Tango does not. Also, Tango is more point to point whereas (at least for now) Zip is Calgary based (i.e. ZIP = WestJet killer)

 

[TWAFA007]

Aloha,

DAL is going to have a tough time selling their Song. Delta Express was selling seats from JFK-FLL for an average price of $82. While JBLU ave. was 108. Yet everyone wants to fly JBLU. The demand is so high that JBLU will, at peak season, fly 16, yes SIXTEEN!, flights a day there and they had a %83 load factor for '02. Thats the highest of any airline. Why is that?

ALOHA, 007

 

[AAmech]

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On 1/29/2003 12:43:38 PM winedndined wrote:

perhaps because the full service airlines operate a hub and spoke model which many say is no longer efficient and able to compete with the point to point system?

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Ol Bob Crandal made a good statement the other day saying "experts" who say the hub and spoke system is broken have no idea what they're talking about! And he's right. Why else would WN have hubs in PHX, DAL, HOU, BWA and elsewhere? Because it WORKS!!! Adding connecting traffic to flights can make unprofitable routes profitable and turn profitable routes into gold mines!

 

[AAmech]

I think Zip is more of a regional with mostly RJ's and Tango is full size planes flying further distances.