Don't Fly Ted

[Just Plane Crazy]

I wonder, was Mr. Kaine paying for these F/C seats himself, or were they paid for by the people flying him out to speak and make presentations?

It dosn't matter who paying, it just matters that someone is paying for F seats. I think it is arrogant to make such assumption and as novaqt said that he should use private aircrafts.

 

[novaqt]

JustPlaneCrazy:

novaqt
Just think of the time when UA wanted to create a seperate airline just for the business traveller. Do you remember how every one was screaming against it. Now you are tellingn the customers go fly with someone else. Go to the competetion.

Market demand right now and for the next few years is forecasting that the corporate accounts are not willing to pay for first class or even business class for their road warriors. Companies are paying for economy and upgrades to business class for their road warriors. The demand for first class is simply not there. Very few first class tickets are being sold. Frequent flyer's are using their miles to fly first class and the rest of first class is being filled with pass travelers. So as you can see, unless companies are willing to pay for first class, it is in danger of disappearing until the demand returns. Some individuals will buy business class and use their miles to upgrade to first. As far as Avolar was concerned, it would never had succeeded because Birkshire Hathaway has the corner on the market and those with ample wealth fly around in their own corporate jets, i.e. actors, the Donald, etc. Please be careful not to take my words out of the context in which it is written. If the website author has to have first class, then he might want to consider a corporate jet, since the LCC's (Southwest, etc.) do not have first class.

Also, please use spell check on your computer when you post.

 

[NVFlyer]

It's nice flying TED IAD - FLL direct. With two infants, a connection is out of the question.

I find it rather peculiar this guy is pimping his own website. Sounds like a marketing stunt to me!

Bad move Scotty!

 

[avek00]

The modern domestic F cabin is not meant to generate revenue as a standalone product (the major exception being transcon flights). Rather, the F cabin serves as a vital MARKETING and promotional tool to lure frequent-flyers to an airline.

 

[Cosmo]

Heck, no major Star Alliance carrier currently has a business model worth emulating.

So what major oneworld or SkyTeam carrier "currently has a business model worth emulating"? Why?

 

[Cosmo]

Rather, the F cabin serves as a vital MARKETING and promotional tool to lure frequent-flyers to an airline.

As you point out at every opportunity, United is in Chapter 11 bankruptcy. Perhaps they have concluded, based on an analysis of historic passenger and revenue data in all of the carrier's markets, that the best way to maximize network revenues is to remove first class seating and thus have 18 more seats to sell in leisure markets like FLL, MCO and LAS. After all, isn't maximizing the revenues produced by United's assets a worthwhile, and indeed necessary, goal to assist the carrier in emerging from bankruptcy?

 

[FWAAA]

So what major oneworld or SkyTeam carrier "currently has a business model worth emulating"? Why?

I'd say that British Airways has a model worth emulating - after all, they are on target for a 600 million pound ($1 billion) profit this fiscal year. 😱

http://www.economist.com/business/displayS...tory_id=2535961

The analysts are forecasting that BA's profits for the year ended March 31 may be near the record set in 1996. I'd take that if I were UAL or AA. B)

 

[avek00]

I'd say that British Airways has a model worth emulating - after all, they are on target for a 600 million pound ($1 billion) profit this fiscal year. 😱

http://www.economist.com/business/displayS...tory_id=2535961

The analysts are forecasting that BA's profits for the year ended March 31 may be near the record set in 1996. I'd take that if I were UAL or AA. B)

I'd use oneworld's BA, IB, and QF along with SkyTeam's AF/KL as exemplars of business models that are working. All five of the aforementioned carriers have adapted/are adapting their domestic/regional operations to compete with LCCs while simultaneously preserving (and indeed IMPROVING) their long-haul offerings.

 

[avek00]

As you point out at every opportunity, United is in Chapter 11 bankruptcy. Perhaps they have concluded, based on an analysis of historic passenger and revenue data in all of the carrier's markets, that the best way to maximize network revenues is to remove first class seating and thus have 18 more seats to sell in leisure markets like FLL, MCO and LAS. After all, isn't maximizing the revenues produced by United's assets a worthwhile, and indeed necessary, goal to assist the carrier in emerging from bankruptcy?

While markets like MCO, FLL, and LAS are dominated by leisure traffic, all three of those markets also have significant business/premium traffic (conventions, etc.). UA could very well end up shooting itself in the foot if whatever premium traffic exists on the likes of ORD-FLL/MCO/LAS abandons UniTED in favor of full-service competitors.

 

[Cosmo]

I'd use oneworld's BA, IB, and QF along with SkyTeam's AF/KL as exemplars of business models that are working.

While those are fine carriers that have all made a great deal of progress recently (although I believe that KLM is still losing money), IMHO it's not really an "apples-to-apples" comparison. All of those carriers derive a much larger percentage of their system revenues from long-haul international operations that have little, if any, direct LCC competition. Indeed, it's to such an extent that United couldn't possibly match their ratios without massively shrinking its domestic operation, which would likely have the perverse effect of ruining the economics of the carrier's long-haul international service and thus cause United to disappear completely. Moreover, the scope of the domestic LCC competition faced by United and other U.S. carriers dwarfs that seen by four of the above carriers -- all but Qantas -- on the domestic networks from their hubs (of course, KLM doesn't even have a domestic network). Even regionally throughout Europe, BA/IB/AF/KL don't see the concentrated LCC operations faced by United and other U.S. carriers. And let's not forget BA's fortress hub at LHR where there is no LCC competition while United sees such competition to at least some degree at all five of its hubs, and that competition is growing. So while the business models of BA/IB/AF/KL/QF are working for them, and United should absolutely strive to make the profits now being recorded by some of those five carriers, I believe there are enough differences in the scope and type of their operations and competition vs. United's so as to make a direct comparison of their respective business models not very meaningful.

All five of the aforementioned carriers have adapted/are adapting their domestic/regional operations to compete with LCCs while simultaneously preserving (and indeed IMPROVING) their long-haul offerings.

What part of this is United not doing? United lowered its CASM across the board through the bankruptcy process by 20-25 percent to generally improve its competitiveness, then lowered its CASM a further 12-15 percent in domestic leisure markets through "Ted" to meet the growing LCC competition. And in the near future, "Ted" might be applied to some Mexican and Caribbean destinations as well. Internationally, United is narrowing its focus to routes from its hubs which can be supported with vast connecting traffic flows (and thus dropping unprofitable MIA-GRU/EZE service), and it's returning to several long-haul business routes that the carrier had abandoned in recent years (ORD-KIX, ORD-EZE, IAD-ZRH and SFO-PEK). And from nearly everything that I have read (which is admittedly second-hand information since I haven't flown one of United's international flights recently), United's inflight service has also improved in the past year. So clearly, United is making significant progress in the international arena as well.

Of course, this is all JMHO. YMMV!

 

[Cosmo]

While markets like MCO, FLL, and LAS are dominated by leisure traffic, all three of those markets also have significant business/premium traffic (conventions, etc.). UA could very well end up shooting itself in the foot if whatever premium traffic exists on the likes of ORD-FLL/MCO/LAS abandons UniTED in favor of full-service competitors.

How much of this "business/premium traffic" actually pays for a first class seat on a DEN-LAS or IAD-MCO flight? My guess is that the answer is "very few", with the availability of E+ seats likely to satisfy nearly all of them for what will be mostly 2-3 hour flights on "Ted". It remains to be seen whether United will be ahead or behind financially with "Ted" if a relatively few disgruntled passengers decide to take their other United business to different carriers because they couldn't get a first class seat on a DEN-LAS "Ted" flight. But we should give this experiment some time to see if it works for United.

And let's not forget that United is beginning to go in the other direction on some RJ flights by adding first class seats on some CRJ-700 flights in new or resumed markets like IAD-AUS and DEN-RDU. And while such first class service won't be confused with that available on transcon or international flights, I suspect it isn't much different from what a passenger would receive if those flights were operated by United's own B737s. Of course, this is a somewhat experimental test of revenue generating potential as well, although without the likelihood of a negative passenger reaction. So it seems to me that United is really trying to offer the level of service that will meet the segmented demand in each market. JMHO.

 

[mweiss]

What remains unclear is the amount of additional utility a potential customer gains from being in FC versus being in E+. If that number is high, then the elimination of FC could drive the customer to competitors, assuming they have a solid FC product.

The question should never be "Did they buy a ticket in F?" The question should be, "Do we get a higher margin with this customer in F than with not having an F product?" Given that most corporations won't allow their employees to buy tickets with F on them, selling a Y ticket at an F price and putting the customer in F can alleviate that...provided there's an F into which to put the customer.

 

[Ukridge]

Cosmo - Excellent summation and description of the LCC status in Europe. With few exceptions the LCCs are not yet serving the 'major' continental (as well LHR as you mentioned although Stansted is working well for many) airports but rely on sleight-of-hand wording to make it look as if they do. Frankfurt-Hahn is quite a distance from Frankfurt and in fact, LH through the German state of Hessen, was embroiled in litigation against the use of the name Frankfurt in the LCC's advertising. Charleloi vs. Bruxelles for example, is a little more realistic but still bespeaks a lack of proximity to the major business/cultural centers. In fact, it is rumoured that Air France was a moving force behind the legal enquiry as to whether the vulgarians from RyanAir were benefiting from monies put forth by the city. It will be interesting to see what happens at aerodromes with more room to grow and accept flights. I think in this case of Paris DeGaulle and I have read that Munich could accept LCC flights as well.

 

[avek00]

What remains unclear is the amount of additional utility a potential customer gains from being in FC versus being in E+. If that number is high, then the elimination of FC could drive the customer to competitors, assuming they have a solid FC product.

The question should never be "Did they buy a ticket in F?" The question should be, "Do we get a higher margin with this customer in F than with not having an F product?" Given that most corporations won't allow their employees to buy tickets with F on them, selling a Y ticket at an F price and putting the customer in F can alleviate that...provided there's an F into which to put the customer.

Given that every other major airline now offers unlimited complimentary upgrades for at least the top-tier elites, I'm willing to argue that maintaining an F cabin is of great utility to the AIRLINE, not to mention the FFs/big spenders.

 

[Busdrvr]

"Given that every other major airline now offers unlimited complimentary upgrades for at least the top-tier elites, I'm willing to argue that maintaining an F cabin is of great utility to the AIRLINE, not to mention the FFs/big spenders."

Really?! NWA, CAL and DAL offer unlimited upgrades to their International First Class Cabin?