jetBlue vs. UA on the IAD-OAK route, article today's WSJ

Jeff G

Member
Aug 20, 2002
65
0
40% is probably a legitimate long-term target for JetBlue's labor costs. However, it's going to take awhile to get there. Both the pay rates and the percentage of senior employees will rise in time, but won't match those of established carriers for at least ten years. A lot can happen in those ten years, but for the time being, JetBlue is going to maintain a cost advantage.
 
Aug 20, 2002
1,423
90
Valhalla
www.usaviation.com
Page B1. Summarized, operating identical equipment/crews on this route costs jetblue $14,546 one way while cost to UA is $23,690.
Read the article. Yeah, labor costs were 47% of UA revenue (last quarter) while only 25% for jetblue. I''ll bet UA had more added rev on the plane (cargo, mail etc).
But instead of going head-head why doesn''t UA codeshare?
Otherwise the market shares are clearly drawn -- if you''re going to fly domestic you''ll be on one of the low-cost carriers. If you want to fly overseas you might be on UA (or a flag carrier).
 

Busdrvr

Veteran
Aug 20, 2002
2,217
0
[blockquote]
----------------
On 9/9/2002 2:31:49 PM Jeff G wrote:

Congratulations, it's a girl!
----------------
[/blockquote]

LOL

The JetBlue captain makes $6,800 a month.

Please tell me that's a misprint

Even lodgings for the crews in Oakland are different — United pilots’ hotel rooms cost $42 more a night on a walk-in basis.

Motel 6? UAL does pay significantly lower than the walkup rate

The United flight had 23 empty seats out of 138. The carrier served a hot meal and showed a free movie. The JetBlue plane had 15 empty seats out of 162. No meal, just snacks. And JetBlue’s much-ballyhooed satellite-television system was on the fritz, a faux pas that prompted the airline to give the passengers $5 vouchers good for future travel.

There's the biggest diff. 115 pax on the UAL jet 147 on the JBlu jet. At the reported average ticket price of $166, that diff is $5,312. Plus add $8 per pax diff in Food cost. But hey, Jet Blu gave out $5 vouchers for the lack of entertainment on the 5 hour flight WHOO HOO!!. Don't spend it all in one place.
 

Busdrvr

Veteran
Aug 20, 2002
2,217
0
[blockquote]
----------------
On 9/9/2002 1:50:38 PM whatkindoffreshhell wrote:

Page B1. Summarized, operating identical equipment/crews on this route costs jetblue $14,546 one way while cost to UA is $23,690.

Read the article. Yeah, labor costs were 47% of UA revenue (last quarter) while only 25% for jetblue. I'll bet UA had more added rev on the plane (cargo, mail etc).

But instead of going head-head why doesn't UA codeshare?
Otherwise the market shares are clearly drawn -- if you're going to fly domestic you'll be on one of the low-cost carriers. If you want to fly overseas you might be on UA (or a flag carrier).
----------------
[/blockquote]



As Jetblu gets older, their labor costs will go up (if they last more than 5 years, and if the majors don't lower labor costs to the point that there is no upward room for JBlu wages). Pan Am Tried to be a almost entirely intl carrier, didn't work. If you don't think JBlus labor cost will go go up, consider this. SWA operatinge more expensive equipment (they didn't get teaser loan rates), still has labor cost near 40% of total costs. FRNT used to very cheap labor rates, so did Valujet (airtran). They will go up
 

Busdrvr

Veteran
Aug 20, 2002
2,217
0
[blockquote]
----------------
On 9/9/2002 2:18:20 PM Jeff G wrote:

40% is probably a legitimate long-term target for JetBlue's labor costs. However, it's going to take awhile to get there. Both the pay rates and the percentage of senior employees will rise in time, but won't match those of established carriers for at least ten years. A lot can happen in those ten years, but for the time being, JetBlue is going to maintain a cost advantage.

----------------
[/blockquote]


And at the end of the ten years, Jetpink starts operations with significantly lower wages. The more things change, the more they stay the same.
 

Jeff G

Member
Aug 20, 2002
65
0
Congratulations, it's a girl!
 
Aug 20, 2002
1,423
90
Valhalla
www.usaviation.com
JetBlue is in making the rules on this lane and they will win. How well do you think jetBlue would do in a market where UA makes the rules, say like international?

The low-cost carriers will dominate the domestic market. Get used to the idea. Just as surely as WalMart has knocked the stuffing out of the department stores.

SW now gets 46% of bookings from the website. Nobody else is even close. Their distribution cost must be phenominal!

The fat lady ain't singing yet, but she's a-hummin!
 

Jeff G

Member
Aug 20, 2002
65
0
[blockquote]
----------------
On 9/9/2002 2:37:25 PM Busdrvr wrote:

The JetBlue captain makes $6,800 a month.

Please tell me that's a misprint
[/blockquote]

No, it's not a misprint. It's accurately reported obsolete information. Even then it's low-ball. Their source was Air Inc., which explains a lot. The correct figure is about $10000 a month for second year pay.

[blockquote]
Even lodgings for the crews in Oakland are different — United pilots’ hotel rooms cost $42 more a night on a walk-in basis.

Motel 6? UAL does pay significantly lower than the walkup rate.
[/blockquote]

I think you nailed it. Nobody pays a walkup rate on a contract basis. We're staying at a decent midscale hotel in Oakland. Forgot the name. It seems like $42 is the difference in walkup rates between the two, but in actuality the difference is probably $20 or less for the contract rate, given United's superior buying power.

[blockquote]
The United flight had 23 empty seats out of 138. The carrier served a hot meal and showed a free movie. The JetBlue plane had 15 empty seats out of 162. No meal, just snacks. And JetBlue’s much-ballyhooed satellite-television system was on the fritz, a faux pas that prompted the airline to give the passengers $5 vouchers good for future travel.

There's the biggest diff. 115 pax on the UAL jet 147 on the JBlu jet. At the reported "average" ticket price of $166, that diff is $5,312. Plus add $8 per pax diff in Food cost. But hey, Jet Blu gave out $5 vouchers for the lack of entertainment on the 5 hour flight WHOO HOO!!. Don't spend it all in one place.
[/blockquote]

LOL. Still, it's a decent gesture to actually credit you any amount for a missing freebie. When was the last time United credited all the passengers, without asking, when the IFE was out of service?
 

MiAAmi

Veteran
Aug 21, 2002
1,490
0
www.usaviation.com
[blockquote]
"The United flight had 23 empty seats out of 138. The carrier served a hot meal and showed a free movie. The JetBlue plane had 15 empty seats out of 162. No meal, just snacks. And JetBlue’s much-ballyhooed satellite-television system was on the fritz, a faux pas that prompted the airline to give the passengers $5 vouchers good for future travel."

Looks like there is room for both airlines in this market
 

jbu320

Member
Aug 21, 2002
93
0
Visit site
[blockquote]
----------------
On 9/13/2002 11:41:06 PM MiAAmi wrote:





The carrier served a hot meal and showed a free movie. The JetBlue plane had 15 empty seats out of 162. No meal, just snacks. And JetBlue’s much-ballyhooed satellite-television system was on the fritz, a faux pas that prompted the airline to give the passengers $5 vouchers good for future travel."


Looks like there is room for both airlines in this market


There is probably room for more than these two. It's just a concept we haven't seen in
a while. Compensation for inconvenience. IMHO the glitch in Live TV was one not seen
often onboard JB's A/C. Thus, further reason for the acquisition of the provider for enhance-
ment of the product delivered. Any ID on the 'hot meal' served and how many folks actually
got a hot meal? Not sure it would be worth the extra $ for the slippery chicken.
 

MiAAmi

Veteran
Aug 21, 2002
1,490
0
www.usaviation.com
I know on AA's JFK-OAK non stops the loads have been really good. Like WN I think JetBlue can open a market up. Now there is traffic for both Jet blue and AA. People like options. When there is only one carrier in a market people tend to gripe about everything with that carrier. When they have options it changes peoples perspectives a little.