Nwa Launches $50. Biz Fare Increase

[North by Northwest]

"Charge $2000 for that fare and you will succeed in driving more and more passengers into the arms of JetBlue, SWA, and others who have figured out how to make money without gouging their customers"

JetBlue (I love'em, great group of employees/great domestic product)/low wages (how else do you think they can afford to spend billions in capital for new aircraft and offer you those fares), junior work force.

SWA (love'em as well. Keeps everybody [domestically]on their toes)/ Excellent fuel hedging (without which it would have been in the red)/ basic domestic operating model/ limited domestic coverage.

Why do you think the commodity of an airline seat should be any different than any commodity.

You continue to ignor the laws of common business practices, supply and demand. I believe you do this in order to justify your perspective of "why should I pay a high price to fly as a business person. When Susie Q pays less for the same seat going to the same destination) I've answered that before. Susie Q doesn't demand to have the option of going at the spurr of the moment because of many frequencies based on her business demand. American business' must pay for the expense that major airlines incurr to provide that luxuary/ business need (in many cases). If we all adopt that model...I promise you, this economy will NOT like it.

 

[DLFlyer31]

Match or exceed our RASM...then you and all the rest can tell us how you know best, and how you will set the fares to your benefit. There is one thing NW management knows how to do...MAKE MONEY. SW's ace was their brilliant forsight to put in place a top notch hedging plan. Outside of that Northwest's operation (RASM) is second to none.

[post="277143"][/post]​

RASM for the 1st Qtr 2005:

CO 8.98
AA 8.96
NW 8.94
DL 8.81
UA 8.51

NW's RASM is nothing to brag about. In fact, considering NW's route network, your RASM is pretty disappointing. Sorry, but if NW was such an expert at making money, you wouldn't have lost $450 million in the first quarter.

NW refused to raise fares early on in the game with the hopes of starving out other competitors. Unfortunately, this strategy has failed and now its time to pay the piper. Ditto for DL.

 

[Flying Titan]

NxNW -
I have read carefully what you have written - and don't believe I've ignored any of your points. At no point did I say that a business traveler should be expected to pay the same as a leisure traveler. As I also pointed out, historically, it has been the case that business travelers have paid triple (or slightly more) on average the fare paid by leisure travelers. As the multiple rose dramatically, the legacy airlines opened the door for the competition that is now eating their lunch. Business travelers who wanted nothing to do with LCCs turned to these alternatives out of economic necessity, not choice.

As we post in this thread, you continue to promote this business model which has proven to be a complete failure. As you pointed out, ALL of the legacy carriers are hemmoraging cash. There's no way around this simple fact. The fare structure you are advocating is the very business proposition that has been soundly rejected by the consumer. Given the reality of this basic set of business facts, a new design is required.

Again, moving the needle on the $69 o/w DCA-DTW fare is where the solution is going to be found. If legacy carriers can't find a way to solve the $69 question, then some of them are going to simply disappear.

 

[North by Northwest]

"NW's RASM is nothing to brag about. In fact, considering NW's route network, your RASM is pretty disappointing. Sorry, but if NW was such an expert at making money, you wouldn't have lost $450 million in the first quarter."

NW RASM is better than "Simpli dummy's RASM's"... Considering DL route network..your RASM is pathetic, and yes we are an expert when you compare a BILLION dollar loss to a $450 Million (considering the wages being paid compared to our competitors). DL has been operating for how long now with concessions from ALL of it's employees?

Northwest is by far not perfect...but we have CLEARLY weathered this storm better than ANY of our primary competitors that is a FACT. More importantly that is a testament to the hard work and sacrifices that we made long before the big jam.

Bragging denotes cockiness...that I am not. I am humbled (by the skill of all NW people) and make NO apologies for having survived this long on cunning and forsightedness.

We marched to our own beat while the BANKRUPT carriers and the now under paid carriers bragged about the stupid new planes they flew (with NON revenue generating IFE) and mockingly jeered about the "ol'DC'9s NW wisely kept. That very smart move has allowed us to enjoy these wages for just a little while longer (than everyone else)...I think we are wise enough to see the big picture down the road and will rise to the challenge.

 

[LGA Fleet Service]

We shall see how things turn out.

 

[Dizel8]

NxNW,

Sorry to chime in, however, let us not forget, that NWA was days from closing the doors untill KLM decided to prop you up nor should the "loan" from the state of Minnesota be forgotten.

Then of course, your CEO pointed out that NWA would never release passenger data, laughing at jetblue, yet lo and behold, he had to admit NWA had done exactly the same thing only a few months later.

Now the big talk is NWA going CH.11, because they are facing the very same problems everyone else has been going through.

Nothing wrong with being a fan of ones employer, but hubris is never a good thing and as the saying goes, point fingers at others................

NWA, while smart, is not immune to the problems facing us all.

As for your service, I remember asking a dutch KLM agent at JFK about what she thought of NWA and their service level, she simply rolled her eyes and said some unflattering things which I shall refrain from repeating.

Be proud, but realize you do not live in a vacuum!

 

[North by Northwest]

NxNW,

Sorry to chime in, however, let us not forget, that NWA was days from closing the doors untill KLM decided to prop you up nor should the "loan" from the state of Minnesota be forgotten.

Then of course, your CEO pointed out that NWA would never release passenger data, laughing at jetblue, yet lo and behold, he had to admit NWA had done exactly the same thing only a few months later.

Now the big talk is NWA going CH.11, because they are facing the very same  problems everyone else has been going through.

Nothing wrong with being a fan of ones employer, but hubris is never a good thing and as the saying goes, point fingers at others................

NWA, while smart, is not immune to the problems facing us all.

As for your service, I remember asking a dutch KLM agent at JFK about what she thought of (perhaps you ment your own airline US) NWA and their service level, she simply rolled her eyes and said some unflattering things which I shall refrain from repeating.

Be proud, but realize you do not live in a vacuum!

[post="277244"][/post]​

Frankly, you really should not be "chiming in" considering the reputation that you come from. As for your supposed "KLM" insult...If memory serves me correct ALL of your airline associates appeared embarassed to be associated with the "LGA Bay flying submarine". So I suggest you be careful about your chimes.

Furthermore, since you clearly spend your off time enquiring about NW service and financial affairs you should know that KLM was part of the problem (the corporate raid). But I am sure you got your first hand info from "your KLM Agent".

Let me say this...your KLM story is a lie. It is a lie because there has never been KLM agents at JFK since the alliance. They are Northwest agents. Norhtwest handles ALL NW/ KLM ground operations in N. America. Moreover, how would ANY agent know what NW service is like on board...they work the ground Einstein.

So, although you intended to "chime in" with an insult, you simply made clear your character. Great customer service over there.

Night all... it's been lively today. Another day another roller coaster!

 

[NAPAUS]

NxNW,

Sorry to chime in, however, let us not forget, that NWA was days from closing the doors untill KLM decided to prop you up nor should the "loan" from the state of Minnesota be forgotten.

Then of course, your CEO pointed out that NWA would never release passenger data, laughing at jetblue, yet lo and behold, he had to admit NWA had done exactly the same thing only a few months later.

Now the big talk is NWA going CH.11, because they are facing the very same problems everyone else has been going through.

Nothing wrong with being a fan of ones employer, but hubris is never a good thing and as the saying goes, point fingers at others................

NWA, while smart, is not immune to the problems facing us all.

As for your service, I remember asking a dutch KLM agent at JFK about what she thought of NWA and their service level, she simply rolled her eyes and said some unflattering things which I shall refrain from repeating.

Be proud, but realize you do not live in a vacuum!

[post="277244"][/post]​

Boy aint that the truth. How quickly the employees of NW forget what happened not so very long ago. The summer strike, the bailout from MN and KLM. Now they seem to be pontificating about the BK of US and UA ...time to pay the piper NW. You have a good product these days, but u are NOT immune, just like all the other legacy carriers. Just ask ur budds at Delta, yet another group that believes they too were invincible! I wish NW the best, its a good airline with great employees! Best of Luck!

 

[WorldTraveler]

This discussion sure got the NW board humming. Based on activity on other boards, this board will be very busy at least through this summer since discussion ALWAYS increases when doom is impending at a particular carrier.

Newsflash: pricing in the airline industry has nothing to do with costs or profits. It is all about market forces, as has been established. However, don’t doubt for a minute that the LCCs are pricing the way they are because they know what costs are at the legacies and they desperately need to see a few legacies go by the wayside if the LCCs are to successfully deploy their hundreds of new aircraft that will be delivered in the next couple years.

Touting RASM is not as meaningful as how it relates to cost to generate that ever-elusive profit. Since all network airlines are losing money (as has been acknowledged), I’ve created the term LASM (loss per available seat mile) to compare unit losses between the five legacy carriers (not sure why US is already considered dead but I’ll play along).

RASM CASM LASM (loss/ASM) CASM change (05 vs 04)

CO 8.98 10.36 1.38 7.0 %
AA 8.96 9.92 .96 4.5
NW 8.94 10.97 2.03 7.2
DL 8.81 9.98 1.17 -3.9
UA 8.51 10.89 2.38 2.6

As you can see, N by NW, NW is beat only in their ability to lose money at a unit level by bankrupt UAL. The only meaningful basis for comparing airlines is at the unit level (ASM) not the size of their absolute losses or profits. Unit losses are the BEST predictor of future viability since it shows how quickly the money will be consumed; at this rate, NW will be in bankruptcy or burning furniture before very long. Yes, DL is hocked to their eyeballs but perhaps that is a strong motivator for its people to finally turn that once proud company around.

You'll also notice that DL is losing money on a unit basis at a rate almost as low as AA which has been regarded as having effected the best turnaround in the industry - and DL's turnaround just began. DL is targeting unit costs with 10% of LCCs and is using Song (with costs estimated at 20% lower than mainline) to compete against B6, the biggest threat to network carrier routes. I'll remind you of B6's big flop in ATL where it thought it would take on DL and was run out of town in months. Even AA has not continued to pursue JetBlue with the intensity DL has.

You can read more about my analysis of the industry based on first quarter results on the UA forum under the past and future topic. You’ll also see that NW is losing more money over the Pacific on a unit basis than any other airline is in any international region. In fact, NW’s unit losses over the Pacific are bested (or is it worsted) only by UA in the domestic arena. That vaunted NW Pacific operation is not working as it should – probably because of a lack of investment in it for years. The A330 will help reduce costs but does little to allow NW to grow into profitable routes that overfly Japan as other carriers are now doing. The 787s are years away from showing up for work.

At the same time, the legacy carriers are no longer acting as the block they once were. What makes sense for AA is not necessarily best for DL which is not necessarily best for NW.

N by NW, you and I have exchanged words which you have later retracted. I suggest you re-evaluate your comment about NW weathering the storm better than any other carrier or that DL is doomed. NW loses more money for every seat mile flies than any airline except UA (of the five mentioned) and is highly leveraged; I wouldn’t exactly say that NW is well positioned for anything other than the bankruptcy that you seem to wish upon everyone else, esp. DL.

As with most companies, NW has had some very grand moments and some very difficult ones. This is now a very difficult period for NW and, based on the lack of decorum with which you and NWA have treated other airlines during their crisis moments, you and NWA should expect to be beat senseless until you and your bosses figure out how to make NWA profitable again.

IN the meantime, the NW forum on USAviation will be very exciting again.

 

[Bigsky]

I guess we are jumping way off the topic now that everyone realizes a pricing cap in this environment is Simply Stupid. I also do not believe that NWA will file for Chap 11 protection.

cheers

bigsky

 

[WorldTraveler]

A cap indeed makes sense as part of the wholesale restructuring that DL initiated. Not only does the cap keep the maximum fare from growing to levels that INVITE LCCs, it also keeps consumers and businesses believing that fares are reasonable and they no longer have to rely on travel agents and negotiated fares to find the best deals. Every legacy carrier will report dramatic growth in ticket sales on its internal website this year and Simplifares is a big reason that growth is possible.

I for one do not believe NW will file for C11 anymore than I believe DL will - because there is nothing that can be accomplished inside of BK that cannot also be done outside of bankruptcy - except for terminating pension plans which NW and its labor unions do not apparently want to pursue.

 

[Dizel8]

"Frankly, you really should not be "chiming in" considering the reputation that you come from."

I have no affiliation with the submarine company you refer to, but I suppose I should refer to you as the "valet airline". Mudthrowing is soo much fun, right?

"Furthermore, since you clearly spend your off time......"

Nope, just got tired of you berating every one else!

"Let me say this...your KLM story is a lie. It is a lie because there has never been KLM agents at JFK since the alliance. They are Northwest agents. Norhtwest handles ALL NW/ KLM ground operations in N. America. Moreover, how would ANY agent know what NW service is like on board...they work the ground Einstein."

Hmm, blue KLM uniform, dutch name on tag,native Dutch speaker etc, etc. As for how she would know, well, I sure she got the pleasure of dealing with those who had flown on NWA.

 

[Fly]

Here he goes again.

US and UAL are in BK.....NEXT is Delta. Get over it already World. Just because you don't want it doesn't mean it isn't going to happen. Delta has only one union and they can't seem to cut costs (why is that?) If NW ends up in bk, it won't be until after Delta has been standing knee-high in it for months.

At least he's loyal :blink:

 

[WorldTraveler]

glad you dropped by, Fly.... saw you lurking and hoped you'd come in.

YOu and your pilot friends seem to miss the inescapable truth - UA's costs are still too high and haven't come down enough to be viable despite two years of trying. The same disease afflicts other airlines too so we'll see how well they get their costs down. Frankly, I think NW will figure it out but we'll have fun bashing them in the process.

 

[North by Northwest]

"As you can see, N by NW, NW is beat only in their ability to lose money at a unit level by bankrupt UAL. The only meaningful basis for comparing airlines is at the unit level (ASM) not the size of their absolute losses or profits. Unit losses are the BEST predictor of future viability since it shows how quickly the money will be consumed; at this rate, NW will be in bankruptcy or burning furniture before very long(Wanna BET?). Yes, DL is hocked to their eyeballs but perhaps that is a strong motivator for its people to finally turn that once proud company around. "

"In fact, NW’s unit losses over the Pacific are bested (or is it worsted) only by UA in the domestic arena. That vaunted NW Pacific operation is not working as it should – probably because of a lack of investment in it for years (you could've fooled the Japanese...but of course YOU know better than they. cause you're WORLD WANNABE" [sniker] The "Dreamliners" are only two years away. Lots of point to point coming from DTW to S. America/ Europe.

What facts are you referencing...CAUSE IT SURE AIN'T the NWA quarterly report. Revenue increased from 04-05 from 554-592 for the SLOW 1st quarter. So as MUCH as you would like to believe and make others believe...NORTHWEST's Pacific Division is STILL KICKING A$$. As the Delta priest you seem to be "don't hate us cause we will SURVIVE". You don't have a clue about our Pacific product. So you can take your tired worn out 767's and use'em for some more Simpli ignorant fare across the Atlantic.
"You can read more about my analysis ( you really have a sense of immense self importance)of the industry based on (BS) first quarter results on the UA forum under the past and future topic. You’ll also see that NW is losing more money over the Pacific on a unit basis than any other airline is in any international region. " Prove it with a link vs. your "made up BS" I suggest you reference the page number in the quarterly report of NW. We would love for you to educate me on how we are losing money across the Pacific. Will be waiting..."N by NW, you and I have exchanged words which you have later retracted" ONLY in your FANTASY WORLD OF DREAMS! You wouldn't qualify for a retracted statement cause most of the crap you rant about is similar to Dizel 8...made up fantasy to warp your perspective of how all airlines will/ are failing and only "Delta" will survive while making history losing $5 BILLION a year. You can pray till the cows come home about NW failure...I wouldn't hold my breath if I would you. Now go add up the next huge loss for brilliant "Simpli Loser Fares".

It cracks me up how badly so many would LOVE to see Northwest fail...dream on. They just can't stand the fact that tough ol'Red has made it this far...paid those HIGH labor costs longer than ANY of them and STILL ain't in BK. Now smoke that up your World wannabe pipe. It is no accident that Northwest has done what it has. It is simply a smart group whom has no interest in being "trendy".

WT, you have gone to EVERY airline board and preached about HOW BADLY they are doing...but Delta. You seem to forget one thing...the HISTORICAL loss title that belongs to DL. The loss of revenue of SSF's rival the impact of LCC's. DL turnaround had better happen soon. Cause it is going to get bloody out here when everyone is out of BK and all have concessions, and you can take it to the Bank that Big Red will be battling tooth and nail.