Fees represent 100% of profitability

[Hope777]

http://travel.usatoday.com/flights/post/2010/12/us-airways-fees-profit/134447/1?loc=interstitialskip

 

[MerlinMagician]

So even though the majority of the employees at U are the lowest paid in the industry without these fees we would not be profitable. What does that say about all the concessions taken by the employees and 2 bankruptcys that kept U here today. We still have a fundamentality flawed business plan base on the backs of the employees.

 

[UPNAWAY]

If they paid us more we would make money on the flying?

 

[SparrowHawk]

If they paid us more we would make money on the flying?

I think the implication was that if WN can be profitable for like 35 years in a row, have no fees and have the best paid workers in the industry and along comes US Airways with some of the highest fees in the industry and lowest paid workers that somebody has a flawed business model.

 

[Glucose Intolerant]

If they paid us more we would make money on the flying?

If we replaced the so-called experts in TEMPE - could we make more money on the flying?

Survey says:

YES..... and probably even pay the employees

 

[SpinDoc]

If we replaced the so-called experts in TEMPE - could we make more money on the flying?

Survey says:

YES..... and probably even pay the employees

Okay kids. Apparently, most of you missed the lessons that have been posted ad nauseum on this forum over the past 10 years, so here are the facts.

1. US Airways has domestic and international routes. Southwest does not. Complexity of schedule costs a lot of money.

2. US Airways operates more than 8 different aircraft types ( on the mainline side). Southwest operates 1 aircraft. Complexity of aircraft types and crews costs a lot of money.

3. US Airways owns very little of their assets and must pay high lease fees. Southwest owns outright about 80% of their assets. They don't have the same obligations to pay leases or loans on their equipment.

4. US Airways prices their tickets based on a flawed pre-deregulation business model. Southwest generally prices their tickets below US Airways and the other legacy carriers (though not always) because their costs are lower.

I'm sure there are many more reasons why comparing US Airways to Southwest is a moot point, but I am sure others on here will have their $.02 to add.

 

[USFlyer]

2. US Airways operates more than 8 different aircraft types ( on the mainline side). Southwest operates 1 aircraft. Complexity of aircraft types and crews costs a lot of money.

Actually, I think there are only 5 aircraft types, unless I'm missing one:

A330
757/767
A319/A320/A321
733/734
E190

And, WN actually operates more than one aircraft type, something they readily admit:

737-300 (175) / 737-500 (25)
vs
737-700 NG (350)
And, soon the B717

 

[Glucose Intolerant]

Okay kids. Apparently, most of you missed the lessons that have been posted ad nauseum on this forum over the past 10 years, so here are the facts.

1. US Airways has domestic and international routes. Southwest does not. Complexity of schedule costs a lot of money.

International operations also generates a great deal more revenue than domestic when done correctly - unless your talking about PVR and SJD

2. US Airways operates more than 8 different aircraft types ( on the mainline side). Southwest operates 1 aircraft. Complexity of aircraft types and crews costs a lot of money.

We are down to less than that:
Airbus 319-320-321 All one type
Airbus 330-300 and 330-200 All one type
Boeing 757-200/767-200 All one type
Boeing 737-300 737-400 All one type
Embraer 190

Aside from the junk wagons out west getting parked and the 737 on the east scheduled to be parked - thats 5

3. US Airways owns very little of their assets and must pay high lease fees. Southwest owns outright about 80% of their assets. They don't have the same obligations to pay leases or loans on their equipment.

How many times have Tempe restructured debt and the fleet allocation? 5 years post so-called merger who's fault is that again?
Airbus was an investor in this train wreck and we are the launch customer on the A350 - They can't refinance the 75/76 and 73s at better rates?
Maybe not the 757s but it seems they have parked more than acquired since merger.

4. US Airways prices their tickets based on a flawed pre-deregulation business model. Southwest generally prices their tickets below US Airways and the other legacy carriers (though not always) because their costs are lower.

Maybe out WEST - but definitely not back east. This airline had one of the highest yields on the lowest load factors in comparison to other airlines. Now our business model du jour has US Airways with the highest load factor and the LOWEST YIELD of ANY airline. Pick up a current copy of ATW and look at the stats for yourself.

Our labor costs are the lowest in the industry and they have been since the inception of AWA, and US bankruptcies earlier this decade. If we are paying too much for everything else then that falls at the feet of our management team. The ones that are not part of the lowest paid airline employees at US Airways, in fact just the opposite.

5. (the one you left out) A management team that is invested in seeing the company do well and not just at the expense of the employees and passengers. Your right - we can't compare SWA on that one.

Pick another airline to compare.

 

[Onestep2flt]

This is a fundamentally flawed business plan. I thought that US Airways was in the transportation business. I am not necessarily against all fees. Example being snack items and what not. However, it is an airline and not a quickie-mart. Why the airlines continue to tell the public they can not charge for what a seat is worth because nobody would pay for it is nonsense. Some may not like the comparison to Southwest but it is competition none the less. Sometimes Southwest is not the cheapest game in town for certain routes. (I guess they charge customers what their seat is worth. There business has continued to grow this year because they are marketing themselves as an airline. They get you from point A to Point B in a timely efficient manner and don't fill your head with lofty expectations they can't deliver on. They obviously are doing something right and it is fair to compare all choices when it comes to traveling.

Some problematic issues to consider with fees. I have to pay for every bag I check just to have it lost somewhere in the system. Charging to speak to a human when booking is something I can't understand either. You might have a complicated last minute booking issue and after an hour trying to get it to work the computer wont let you book for whatever reason. Guess what you have to do? You have to speak to someone on the phone. When you reach somebody on the phone after waiting for an hour you are speaking to someone offshore that is not a US employee and does not have the ability to fix the issue. Have to speak to a supervisor of some sort. After a couple tries and another hour on the phone you finally get it straitened out. Why not just allow me the choice between talking to the human in the first place without the fee. They just set themselves up for failure time and time again. If I am expected to pay a fee to even buy the service I called in the first place (transportation) I would expect it would be figured into the cost of my ticket. To me phone conversation is part of the sale. Nothing wrong with booking on the web, but sometimes the human interaction is just a part of doing business. When I do pay the fee most times I don't even speak to a US Airways employee. This is another plus for Southwest. No fee to speak to an actual Southwest employee.

Again some fees are necessary. Change fees for my convenience for example. Changing my dates or my city pairs. Those are fees that are necessary and justifiable.

Someone might say that all the airlines are doing this now. I remind them that Southwest does not. I think it is more than fair to compare them to any choices for travel. Now, if I am going to Europe then yea there is no comparing there. Say Pittsburgh to Orlando, yep I can compare. Seems a major airline that used to serve those two cities wants me to connect through Philly or Charlotte. Southwest will do it non-stop for just a few bucks more. Figure after the charges for the two bags I check for the two weeks of meetings I just saved about $120 for my bags alone. Southwest could loose my bag just as easily as US but I didn't have to pay $120 for the privilege!

Anyway, from all the info that is out there, US Airways labor costs are lower than most all the US competition so if you are making money solely on fees something is wrong with the business plan.

 

[Travelpro72]

Copy, paste and send that last post to those in Tempe. Need the address?

 

[john john]

Copy, paste and send that last post to those in Tempe. Need the address?

It is call giving the front line worker the tools and support to do their jobs.
Fees are problematic. US management makes the front line workers live and die by them

 

[luvthe9]

So even though the majority of the employees at U are the lowest paid in the industry without these fees we would not be profitable. What does that say about all the concessions taken by the employees and 2 bankruptcys that kept U here today. We still have a fundamentality flawed business plan base on the backs of the employees.

Don't believe the story for one minute. You have been on the planes, you have seen the traffic in the terminals. You have, seen your paycheck. This is a fabulous story fabricated in light of contract negotiations. Believe it at your own risk.

 

[Onestep2flt]

Don't believe the story for one minute. You have been on the planes, you have seen the traffic in the terminals. You have, seen your paycheck. This is a fabulous story fabricated in light of contract negotiations. Believe it at your own risk.

Isn't special how the profit just happens to be almost to the penny what the fees supposedly were. Just think, that means you broke even on actually transporting people. Maybe the quickie-mart thing is not a bad idea. When the cashier rings up the sale, they can just suggestive sell an airline ticket. "That pineapple is $3.99, but for $399.00 we will throw in a ticket to Hawaii!" Make sure you put the pineapple in your carry-on though, cause it will cost you an extra $50 bucks if you check it. Think of all the extra money they can make on top of the fees!

Travelpro, Is it extra to write a snail mail? Or, Do I have to e-mail it to the high school intern that is too busy sexting to hit the spell check on the canned reply?

 

[BoeingBoy]

Isn't special how the profit just happens to be almost to the penny what the fees supposedly were.

Not quite that close. Total ancillilary fees were about $8 miillion more than the net profit for the 1st 9 months of this year (which include some fees that have been around a long time) while the checked bag fees were about $100 less than the 9 month net profit.

Jim

 

[autofixer]

What's the point of this thread? Fees are only revenue. Fees were attached to ticket prices because customers are hyper-price sensative after being conditioned to pay under operating cost for 20 years. The idea behind fees is you only pay for what you need. If you carry on a bag you don't pay, etc. Back to my point, fees are revenue. Revenue minus costs equal profit (Econ. 101).