OK now what?

[phillyguy]

Seems that U will survive for a bit longer - thankfully.
You can reduce costs but at some point you need more customers (not passengers) in the seats!!
You need to publicize the positives to get some confidence back into your customers and potential customers!!
No matter how good the plan is -without revenue it does ot mean much
Keep up the good work !!

 

[cavalier]

Seems that U will survive for a bit longer - thankfully.

You can reduce costs but at some point you need more customers (not passengers) in the seats!!

You need to publicize the positives to get some confidence back into your customers and potential customers!!

No matter how good the plan is -without revenue it does ot mean much

Keep up the good work !!
----------------------------------------------------------------------

YES, that is the sad reality in a nut shell. If people don't start flying as they did only a few years back, the entire industry will be a shadow of its former self. Then we have the Wal-Mart factor making a bad situation worst. Seems I was born both too early and too late, stuck in the middle with millions of other souls.

 

[autofixer]

After restructuring: U CASM-10cents+
SWA CASM-07cents+

Do the math!

 

[phillyguy]

Remember you don't have to compete with SWA head to head [today] just need to be better than DAL, AA, NW, CO and that should help surviaval.

 

[N628AU]

Autofixer...

Third quarter costs were something like 10.9 cents per seat mile. That included many employees still getting severance and before cost savings such as the additional work rule concessions and the new health care plan. Costs will never be at the Southwest level, due to the nature of network carrier with International and interline operations. October posted an operating profit before "one time restructuring charges". Costs by spring may very well be below 10 cents per seat mile.

 

[GadgetFreak]

I think a combination of factors make it vanishingly unlikely that passengers will ever fly like they did a few years ago. By that I mean as many and at as high a fare as they once did. A combination of discount carriers and discount "leasure fares" by the majors has had a permanent change in the fare expectations of too many passengers and their employers. In addition, at least in my business, we are more and more depending on voice and video conferencing and the quality of those is getting much better. So instead of a last minute Y fare we conference. Other meetings are planned in advance and travel is on lower fares. That being said, I think there will be an upturn in passengers as the general business climate improves. I was surprised that the cost difference between Southwest and US was so low actually. I think there is a lot of misunderstanding about how customers think about fares by airline management, not just at US. In addition, I think the majors are making a mistake trying to compete with Southwest in fares. They need to compete in value, and I am optimistic that they can do it. Granted there are a lot of different customers but I think I am fairly representative. I would gladly pay more not to fly Southwest, the question is how much more. Take a typical trip I do, New York to St. Louis. The last time I checked it was $1800 or so in Y. There is no way the company I visit will pay that. I would fly Southwest or conference. But if I buy in advance on USAir, it is about $235, but with a lot of restrictions. The problem as I see it is that there arent a lot of fares in between those two. I think the $235 is less than Southwest. You guys shouldnt be charging me less than Southwest, you have a better product. That trip in my opinion should price at something like $600 first class, $350-$450 unrestricted coach and $250-$300 advance with lots of restrictions. Maybe these have to be changed by $50 to $100 but you get the idea. Perhaps add an advance, no restriction fare somewhere in between. I would gladly chose US over Southwest if if cost 50% more or thereabouts, but not if it cost 6 times as much. Given the cost numbers cited in other posts on this thread, US Air would make a profit if others would chose like me, and I think they would. Look at other sections of the travel industry, they are segmented by cost. I just got back from Tokyo, I stayed in a Club level room in an Intercontinental Hotel. I didnt expect to get Motel 6 service or pay Motel 6 prices. But I dont think it was 6 or 8 times what a cheap hotel would be, maybe 2 or 3 times. It really is about value, not strictly cost.

Just my 2 cents (well, maybe a dimes) worth. In any case, my Cockroach pin and I are with you while you fly. Like I said, I fly USAir because I like it, I like the people on the front Line. Best of luck to all.

 

[autofixer]

But what happens when SWA goes head-to-head with U? Does anyone really think that SWA will not look at PHL or CLT and not start licking their chops (periphial airports)? U is walking away from PIT. How about AirTran and Jet Blue? The world is changed and so is this industry. Avaition Week had several articles on this last month...U is only postponing what will happen. It is a market shift. A new product has entered the market place. Small penetrations at first, until a market share of 22% is attained, and then the massive shift occurs (now)! A La WalMart!

 

[TomBascom]

PineyBob:

In terms of $$$ SWA is hardly ever the cheapest but they aren't far off and they don't ever give you that feeling that you were just robbed.

But the real key to their success is that they are so darned easy to do business with. Buying a ticket from their web site is dead easy compared to trying to do the same thing at usairways.com. Their rules and restrictions are simple, consistent and make sense (some of them, like no stand-by, don't translate well into U's environment -- those are the ones that management generally adopts...) And they don't punish people for going the extra mile to help customers.

 

[GadgetFreak]

US Air shouldnt try to directly compete with Southwest, because the USAir product is better. So what if the discount carriers have some of the market? Yes, Walmart is successful but so is Saks and a lot in between. If I had a choice of head to head with US and Southwest I wouldnt hesitate to pay a fare percentage higher to fly US that was comparable to the cost difference PineyBob is citing. Something like 20% or 30%. LOTS of people will pay that much more for a reserved seat, frequent flyer benefits and better service. The problem is not enough of them will pay 6 or 8 times as much. I chose fares based on value and I think many if not most flyers do the same. I am on an M fare to Paris on UAL next week because I could upgrade it with miles, not because it was the cheapest. If I had a lower fare I could still upgrade but only with an SWU coupon and I chose to save those for other flights with bigger differentials between say a V and a B or M fare. The airline management should give the consumers some credit for making rational choices. If I walk up to a US Air ticket counter and they want $1800 for me to fly to St. Louis (to use my previous example) and Southwest wants $300, well, I will chose SWA because the US fare is a nonstarter for me. But if the US fare were $350-$400, I wouldnt hesitate to pay it. The majors really need to rationalize their fares in the new market, but given these cost numbers they can do that and still make a lot of money in my opinion. There is a sizeable market for better than Southwest service at slightly more expensive than Southwest, and I think that is where the future of the successful majors will be.

 

[GadgetFreak]

PineyBob,
I think we are in nearly complete agreement. Sorry if my posts have been a bit unclear. With the cost numbers you cited, the US cost is about 22% higher than SWA as I did my calculations. If that is correct, there are a lot of travellers who would pay that not to fly Southwest. And I am not knocking Southwest, I flew them a lot when they were starting in the mid 80s and I lived in Austin. I had no complaints, but they dont have the benefits that US or the other majors have. That includes everything from route system to frequent flyer programs. And I really am to old for festival seating. Your Target comparison is a great one in fact. I am saying US should slightly raise its lowest fares, and lower or remove the restrictions on those. And it should lose those ridiculous Y fares. I dont suspect they sell enough of them to make up for the customers they scare away.

 

[TomBascom]

Careful guys -- SWA has pretty darned good service. While there are always exceptions and horror stories in general their customers love them and are extremely loyal. Throwing mud is not going to be a winning strategy. For instance, all they have to do to counter the "cattle call" is show a clip of the "preferred rush" trampling a couple of little old ladies...

The airlines have been misunderstanding SWA and it's appeal for a long time. You're playing right into their hands taking this tact.

Fair fares will work. But it needs to be coupled with additional positive themes that emphasize US Airway's special advantages -- larger planes, better schedules, laptop power, upgrades, dividend miles (hint: take a page from SWA and allow any empty seat to be claimed for an award...), Europe, United and so forth.

 

[Heinrich]

From Norfolk, VA to BWI Southwest is $7 cheaper than USAir with a little pre-planning (2 weeks). Neither myself or my company would balk at spending $7 more to send me on USAir.

I swear I think the myth about Southwest is so cheap because the put these really cheap prices in large bold print - then you realize it's a 1 way fare pre-tax and 9-11 fee etc.

 

[Oliver Twist]

[P][blockquote][BR]----------------[BR]On 12/21/2002 6:44:26 PM GadgetFreak wrote: [/P]
[P]If I had a choice of head to head with US and Southwest I wouldnt hesitate to pay a fare percentage higher to fly US that was comparable to the cost difference PineyBob is citing. Something like 20% or 30%. LOTS of people will pay that much more for a reserved seat, frequent flyer benefits and better service. The problem is not enough of them will pay 6 or 8 times as much. I chose fares based on value and I think many if not most flyers do the same. [/blockquote][/P]
[P]I like that idea. Stop [STRONG]GOUGING[/STRONG] our best customers. We have a great product folks will pay reasonable prices for.[/P]
[P][BR][STRONG]Pineybob says[/STRONG]: In short become the predator instead of the prey.[BR][BR] I say it's about time to [STRONG]HUNT[/STRONG]![/P]
[P][BR]"And Thank You for Your Support"[BR][/P]

 

[Oliver Twist]

 

[dfw79]

Someone finally hit the nail on the head. Value. If there is anything I learned at my previous employer, it is that value is king. You preach value...make the customers believe they are getting the best product out there...they will pay slightly higher rates for the perks. That company was AOL - no better teacher of value anywhere else (regardless of what you may think of them). It's almost a shame Steve Case can't replace Dave. He is very pro employee, very down to earth, and very innovative. He'd probably also could get a deal for free internet for 35,000 of his closest associates.