As a disclaimer, I have no particular love for Frank Lorenzo, because he bought my airline and I wound up on the street as a result of it.
That said, he
was a visionary. And being a visionary is mutually exclusive from being ethical, admired or seen as a good leader.
He was certainly the first airline to do a wholesale rejection of labor agreements...
He was the first in the airline industry to move assets away from a higher cost subsidiary over to a lower cost subsidiary.
I believe he was also the first airline to spin off its reservations system into a separate subsidiary (SystemOne).
Again, hardly what I'd call admirable events, but they were visionary in that he saw the potential business value in pursuing ideas that nobody else had ever thought of or acted on.
FrugalFlyerv2.0 said:
The article also states that F. Lorenzo introduced non-refundable fares. I thought that was a creation of Crandall and Carty and SABRE and AA (in order to put PeoplExpress out of business)?
n
Non-refundables had existed in different forms for a while. Lorenzo might have been the first to push them across the board for advance purchases at TXI -- since they were state regulated and not under the CAB, they could do that where the legacy airlines couldn't.
What AA developed to put PeoplExpress out of business was yield management.
I worked at PE up until the end, and our capacity controls sucked. Q was just about anything booked 14+ days, V had some capacity controls within 14 days, and K was the unrestricted walk-up. I don't think there was anything preventing an entire flight from selling out at a Q fare.
We were essentially ticketless -- payment was made inflight, and there was no connection between what price you'd been quoted in the reservation vs. what you were charged onboard, so lots of people wound up getting undercharged along the way.
Because of the onboard ticketing, there was no risk in making a reservation and no-showing. So PE would overbook like crazy... 130% of capacity on the narrowbodies was the norm, and on the 742's, it wasn't uncommon to have an AU of 800, yet we'd still get nonrevs on.
AA had much better controls -- rather than match every seat at PE's prices, AA would watch bookings and only sell a subset of seats at PE's prices, which left space on the peak flights for more expensive fares.
