Dave's Friday Phone Message

[A319FA]

Dave discusses the Revenue and Pricing issue in detail. Can't change the pricing structure without changing the cost structure.

The company would lose about .02 cents (unit revenue) if we lowered our fares to the Jetblue and America West standards. Would immediately lose about $1.5 Billion in revenue if we lowered fares without changing our cost structure.

He mentioned the Time magazine article that compared HP and US. Again, we would make money if we had their cost structure.

60% of our fares are booked via Travel agents versus Southwest which targets their customers directly over the Internet.

I apologize if I missed anything.

 

[BoeingBoy]

Another AWA idea that "can't work here because of our costs"

see link to story

 

[PITbull]

Well, there is Dave's validation in letting Labor know...its all up to labor again.

I gather and speculate that the business plan will first state that Labor costs MUST go down in order to compete with the LCCs.

I gather the new and improved "competition" buisness plan for 2004 will show Labor how that the 2 rounds of concessions totaling $1.2 Billion is not enough to compete. It will once again imply that the customer demands simplified, consistant lower fares, but that the pricing structure can only work IF Labor pays or subsidizes the price difference through our wages, benefits, and work rules.

As Dave said at the very beginning of his message: "EVERYTHING IS ON THE TABLE". Translation: Everything we gave in the past is Null- and -void; we now start from scratch.

In short form: HE WILL CHANGE THE COST STRUCTURE FIRST; BEFORE HE CAN ADDRESS THE REVENUE MODEL!

Don't you just love it? Does the world think we forgot what we just went through and still are enduring. We are going to take another dose of What????????????


Markmywords,

So much for the great performance weekend. Told you that this managment is in the back room plotting on what more they can knive from Labor in order for them to address anything else. WHICH THEY SHOULD HAVE BEEN DOING THIS PAST YEAR WITH THE COST SAVINGS WE GAVE THEM already!

So, now I am no longer on YOUR thread. I ask management: "what have you done for us lately"?!

 

[MarkMyWords]

PitBull -

I agree with you 100%, but who didn't know it was coming? You and I both know that Dave is coming back for more and I don't blame any employee or employee group for being mad. I'm mad.

One year Wolf wants parity plus one with the big 4 to make things work. He gets it and it blows up in his face. Dave wants our costs more in line with the carriers that are our "peer group". He gets it and what happens? Nothing. Now he wants our costs more aligned with the LCC's? Bulls###! Where will that bar stop? When it hits the floor and there are nothing but contract employees left? No way. The buck stops here. If Dave and his gang want to take pay cuts and lead by example, so be it. Hands off my wallet already!

 

[Art at ISP]

The problem is that Dave doesn't get it. I for one never suggested that they had to transform the entire airline to a low fare structure (desirable but not realistic). There must be some moderation on the high end. How much revenue are you going to lose from last minute travelers who decide to drive or are literally forced to take other carriers? Dave, a simplified fare structure, if done correctly, can result in higher AVERAGE fares, therefore more margin. Take a market where fares run from $49 one way to $295 one way. You can probably get away with $59 as a bottom, but the top should be no more than $199. A last minute traveler can perceive some value at the high end, but he's not being gouged. If you go from 80 different fares in a market to 5 or 6, I think you'll find that more customers buy in the middle of the range, rather than the bottom. AVERAGE fare goes up.

Of course in order to command a premium, you have to offer a premium product. With the exception of the fine people who work for US Airways (you know how I feel about you), the product itself is equal to or poorer than the LCC's. Domestic First is really more like coach plus when compared to other carriers. I am not going to gripe or harp, but it should be better than it is. It's a perception thing.

The cost structure is what it is--there is no way that labor is going to give any more-nor should they. There are other ways to cut costs--ie. the rolling hub concept, which would allow increased frequencies with the same fleet, thereby lowering unit costs. I am sure there are also some work rule changes which could be obtained to the satisfaction of BOTH management and labor which would cut some additional costs. One thing Dave could do is take a page from Herb--the employee is NOT the enemy--they are your most valuable resource. If you have a happy workforce you have happy customers, and therefore more of them.

Alot of the recent expenses were incurred by management mistakes, such as the disaster of many added repairs to ship 700. If the energy was focused on improving things rather than hosing the employees this could become a great airline again, and it should.

While Dave makes a point or two, he is only seeing part of the picture--I don't think anyone asked him to make the fares EQUAL or LOWER than the LCC's but they can't stay where they are. What you lose from the top end will come back in higher averages, and people who are either not flying or flying other carriers will come back if they are getting value for their dollar.

Enough said. I hope everyone had a Happy Thanksgiving, and I look forward to seeing my friends in PHL tomorrow.

My best to you all.

 

[cavalier]

PitBull -

I agree with you 100%, but who didn't know it was coming? You and I both know that Dave is coming back for more and I don't blame any employee or employee group for being mad. I'm mad.

One year Wolf wants parity plus one with the big 4 to make things work. He gets it and it blows up in his face. Dave wants our costs more in line with the carriers that are our "peer group". He gets it and what happens? Nothing. Now he wants our costs more aligned with the LCC's? Bulls###! Where will that bar stop? When it hits the floor and there are nothing but contract employees left? No way. The buck stops here. If Dave and his gang want to take pay cuts and lead by example, so be it. Hands off my wallet already!

Look at TWA because we are following their lead into the airlines that were abyss. TWA employees took it in the shorts twice, from TWA then at AA until they were no more than distant memory. It’s easy to follow TWA’s lead, it’s another story entirely to resurrect a dying horse with the name of U on it. I personally am getting off at the next watering hole, if we make it that far.

 

[PITbull]

Mark,

WE as employees will do everything within our reach, and power to beat the hell out of any airline (LCCs) that comes into our turf. This management needs to stay out of our way. We don't trust them, we don't want them, and we are not working for the same goal. Their goals are blatantly extreme and self motivated and self serving.

Its not that we won't give, WE CAN'T GIVE.

Here is a scenerio and example: We work for a bakery 7 days a week as employees. The owner says at the end of the day, whatever bakery goods are left that the customer did not buy, we as employees MUST pay for them. In return, we can come back to work the next day, keep our jobs, and try harder to sell the baked goods the next day.

How does the employee get ahead? Someone please help me with this equation before I lose my mind!

 

[USAirBoyA330]

Well, Dave and friends might as well be talking to a wall because if he thinks ANYONE is going to give up one more red cent, then he is delusional. It won't happen so just hang it up Dave. Enough is enough.

 

[CaptBud330]

I listened to Dave's message and I got some different feelings. I didn't hear hin say one word about additional monetary givebacks. He does mention the way we produce our product. Certainly each of us can see the waste. We can identify many sources of inefficiencies. We're quick to point out the shortcomings of other departments, but God forbid we do anything to make each of us more productive. I recall a couple of personal instances that come to mind. During a walk around when I was still a First Officer, I pulled the gear pins and stowed them in the pouch in the cockpit. I was notified that a greivence was filed by a mechanic because I did HIS job. He got paid an additional 4 hours. I guess it would have been his fault if we had taken off with the gear pins still in...I don't think so.
On another occasion, I personally asked the flight attendents to help clean the cabin because we were way behind schedule. If we all pitched in, our customers would make their connections. The Flight Attendants refused and sat in the back of the plane reading while a sole utility man and I cleaned the 757.
I am certain we all have those similar stories. The sooner we all realize we are all on the same boat and start working together, then we may prevent this ship from sinking.
I'm not a Dave's fan club member by any means. But look objectivly at the way we do our jobs the listen to his message again.

 

[oldiebutgoody]

Cost and revenue won't make any difference as long as the Daves continue to make the employees the enemy. Any given employee can have a huge impact, either positively or negatively, based on their attitude. Lower costs are primarily achieved through more efficient operations, and they can ONLY be efficient if the workers have positive attitudes. I'll bet that once the stock price gets below $5 that Siegel and crew will be canned, but UAIR will still be saddled with probably the WORST board of directors in the history of the airline industry. I hope UAIR is in business in a year, but I have serious doubts. :down:

 

[PITbull]

Capt,

Ok...I listened to it again.....

I'm sorry, but what part of "everything is on the table" don't you quite understand?

If management wants productivity changes in the form of working smarter, and harder....you don't need to change any contract provisions. We arlready are doing it. Look around you man. F/as are at FAA min. and the ticketing folks have been replaced with machines. Our jobs have been outsourced to the w/o, and your pension is gone. We've given $1.2 billion in cost savings, and are definitely "doing MORE with LESS'.

So, run that by me again without giving me exceptions, and please tell me how management can work smarter and harder?

 

[USAirBoyA330]

CaptBud330:

As a F/A I can tell you I will never lift another finger to help utility clean. One turned me in a few years ago for "helping" and all I got was grief. He got paid extra because I was "taking his job." That's what I get for trying to pitch in and move things along.

 

[PITbull]

USA330,

The point is you were doing his job. Grievance was rightly filed. Just as you would not want someone doing your job or having your job outsourced to the regionals, it runs along the same line. Respect each others jobs, honor their contract. We have 32 stations that we assist in cleaning, we honor our contract, and others.

 

[BoeingBoy]

My earlier post was deleted for length but here's the gist:

Dave apparently mentioned how ATA's fare structure would cost too much to implement here and the percentage of bookings thru travel agents.

ATA has done the following:

Instituted a program of allowing ANY coach pax (no matter the ticket price) to purchase an upgrade to 1st class within 4 hours of departure. The cost ranges from $50 to $250 depending on stage length. They give the employee selling the upgrade $5. ATA originally estimated they would make $2-3 million per year. Now looks like $25 million. All from selling upgrades to f/c seats that would otherwise go empty.

Spending $2.5 million to develop a reservation system tie-in for travel agents. Agents using the system would get a commission (which we don't pay) and ATA would save fee charged by the 3rd party res system operators (Sabre, etc). They hope to increase business traffic, since travel agents tend to book a higher percentage of high fare flyers than are booked thru other means (online, for example).

Our management doesn't think outside the box, they beat the employees over the head with it.

 

[PITbull]

Boeing,

That is actually a nice idea. Why have first class seats go empty, when you can upgrade folks for a nominal fee. And those agents who push the idea, get a small commission. Nice. Thats an idea that has potential for our carrier to make millions specifically first class selling, where SW has no first class. We'd burn'm in the dust.


Send this idea to flyonthewall, he was lurking here today.