Service Adjustments

[Bear96]

I agree with PineyBob. Your ideas need to be considered. The customers perception is their reality. We need to keep the level of service to our customers at a high level or at least a perceived high level.

[post="307346"][/post]​

I think you and PineyBob are forgetting that the whole raison d'etre of the merger was to make a huge low cost carrier. The things you seem to be proposing only add to expenses. At the same time, the vast majority of domestic US travellers have made it clear -- over and over again -- that they are not willing to cough up the $ in numbers large enough to justify those expenses.

Seems to me (and maybe I am the one who will end up being wrong!) that you will see more and more amenities disappearing, not being (re-)introduced; and if there is more than one way to do something, the cheapest alternative will be the route chosen.

There are already too many seats out there chasing the ever-dwindling supply of passengers actually willing to pay for the services and the amenities they claim they want. Hopefully the New U won't fall into the same trap.

 

[luvn737s]

It's a shame that they decided to keep the USAirways name. Since it will in no way resemble the old USAirways, keeping the name just set the employees of the old airline up for disappointment. If service class is only used as a perk for FF upgrades, then why invest so heavily in a cost-laden business or first class? If, on the other hand you are carrying a business or first class cabin comprised primarily of full-fare passengers, then maybe you should attract them.

If you can buy a cabin upgrade for $100 you shouldn't expect much more than a comfy chair and a little bite to eat.

Of course if you offered good value, reliably you would probably be booked and not need much of a frequent flyer program.

 

[Bear96]

ANY business that fails to serve the needs of it's customers or even bother to ask what those needs are is ultimately DOOMED to fail.

True enough. But I would add the caveat that a business needs to serve the needs of its customers profitably, meaning the cost of providing those services must be less than (or at least equal to) what the business' customers are willing to pay. Otherwise the business is equally doomed.

The beauty or Danger of the new US Airways is that is is trying to strike a happy medium between the Ryan Air, SWA, Easy Jet, type carriers and the legacy carriers of today.

Agreed. Unfortunately, so far I see more danger than beauty, as frequent travellers seem to think the reborn U will herald in an era of increased perks and amenities, even though the new U management has been clear that they are aiming to be a low cost airline.

It is a fallacy to assume that the high yield road warrior is a vanishing breed. Declining slightly?? YES! Gone? NO!

I am not trying to imply high yield road warriors are a vanishing breed. I am simply pointing out that there are too many airlines with (relatively) high-cost seats chasing the (relatively) few truly high-yield road warriors that are necessary to sustain all those seats to all those cities at all those convenient times these (relatively) few people demand.

As US tweeks it's routes and schedules over the next year or so I think that their is a significant upside for them.

At the risk of heading off into a new topic, I think there will have to be more than mere "tweaking" of the route structure in order for the New U to survive long-term. There will have to be a full-scale revamping to match the assets to the most profitable markets. If in a year or so the route structure still looks like it does today -- merely an overlay of the old U and HP route maps -- I don't think the New U will be around much longer.

My sources tell me that they (US Management) have looked at Alaska Airlines and BMI in deciding how to tailor their offerings. On a side note check out BMI's web site, I happen to think it's one of the better ones out there BMI Web Site

[post="307582"][/post]​

If they are modelling themselves on BMI, they truly are in trouble. BMI can't figure out what they want to be, or even where they want to fly, these days. Spend a few minutes perusing the BMI forum on FlyerTalk for more info. There's more to satisfying customers than a cool website.

 

[US1YFARE]

I don't need linens--just a clean plain.

No glassware necessary--a plastic cup will do.

However, if you are a low cost carrier--then if I pay a premium for first class (and I'm not talking 50 bucks like on Airtran), then you need to provide a premium product.

 

[Bear96]

Bear96,

Here is the challenge for airlines in this new age. First Class must generate enough incremental revenue to cover its cost. NO ONE disputes this. What is kinda interesting is how do you determine if F/C "Pays" for itself?

[post="307666"][/post]​

Yup. And you know what Bob, we probably agree more than disagree on this. (Despite our spats in the past -- 😉 -- and it is nice to have a civil conversation with you for a change, by the way!)

Let's pull back for a moment and look at the "big picture." I have posed this question before, either here or on FlyerTalk, and never gotten a real response. So let me try again.

A lot of frequent flyers, like you, seem to think the fares they pay are sufficient to justify a profitable high level of service (hot meals; nice wine; good clubs; big seats; etc. -- and to all destinations at frequent, convenient times), and seem to assume that there just HAS to be this big untapped market out there of people willing to pay high enough fares to make such services feasible.

This begs the question, Why does it seem to be so difficult to do? In other words, if it is THAT easy, and there is SO much money to be made just "giving the business traveller what s/he wants" in the way of nice perks, why has NO ONE been able to succeed with that business model?

Sure, once in a while we have had a little niche player that offers a flight or two a day to a handful of destinations in true luxury. I forget their names now but one operated out of DAL briefly, another did transcons out of one of the NYC airports, and there have been many others.

So my question is, Why does that business model seem to fail, while the "lowest common denominator" is the only business model that seems to succeed over time?

The conclusion I reach is that despite the frequent travellers who consider themselves to be "high yield" and think the fares they pay MUST be enough to support all the perks they moan about wanting, either ( A ) they really have no idea of the true costs of providing these perks (and consequently the fares they pay really aren't enough to cover those costs), and/or ( B ) there aren't enough of these high yield passengers to provide sufficient volume for airlines to be able to provide these perks to every destination, at all hours of the day, which the high-yield business passenger demands.

And may I emphasize that key issue. There must be sufficient numbers of these high yield passengers to justify frequent service on multiple routes, to match the complex schedules these types of travellers have. Once or twice a day just won't cut it; you need HIGH FREQUENCY or these people -- whose time are in extremely short supply -- will go with the airline that may provide a significantly lower level of service, but at much more frequent and convenient timing. (Like, ahem, Southwest.) This means you have to have sufficient numbers of these high-yield travellers to justify all these amenities, to a vast number of markets, many many times per day. VERRRRY expensive.

Bottom line: The proof is in the pudding. If it is so simple to provide all the amenities y'all claim you want at the fares y'all are willing to pay, WHERE ARE THESE CARRIERS? Why can NO ONE do it profitably?

If it is such a simple, sure-fire failsafe business model to provide all these perks at the "it's the fares, stupid" level of fares y'all seem to suggest, why aren't you out there starting your own airline with this sure-fire business model?

You could be billionaires!

 

[BoeingBoy]

bear,

Great points, as far as I'm concerned. If I may be so bold as to suggest another for your consideration.

In most businesses, direct competitors have very similiar costs. Burger King & McDonalds, Chevy & Ford, Exxon & Mobile, etc. There is differentiation between strata within the same industry - McDonalds & Ruth's Chris (or even Bennigans), Ford & Cadillac, Walmart & Sears (or Needless Markup), etc - but these are not direct competitors.

Prior to deregulation, that cost simularity between direct competitors existed. The stratification of the industry also existed - the "flag" carriers took you to other countrys, the "national" carriers were the only way to fly across the country (or in some cases across several states), and the "regionals" served smaller markets but only within regions of the country. There was some overlap, to be sure, but the CAB kept things on an even keel.

Even for the first 12 - 15 years after deregulation, that cost simularity existed. The "nationals" expanded overseas (the beginning of the end for PanAm, but that's another story) and the "regionals" expanded to cover more of the country - but their costs weren't that much different. At least close enough that product differentiation could offset the difference when there was direct competition between carriers of different strata. There were the upstarts (plus the likes of WN & PSA), with lower costs, but they were mostly niche players with little reach.

Over the last 12 - 15 years, a dramatic change occured, driven by WN primarily but helped along by the likes of Airtran, Jetblue, Frontier, etc - the LCC's. As these formerly niche players expanded, the cost simularity between direct competitors vanished. And that is the predicament the legacies (the former nationals & regionals) find themselves in.

A 2003 ICAO survey of travelers worldwide found that almost half said that price was the most important factor in choosing an air carrier. So what are the legacies to do?

If they charge higher fares than the LCC's to cover their higher costs, they risk losing a portion of that price-sensitive segment to the ever expanding LCC's. Total revenue declines.

If they match the LCC's at the low end of the fare scale but charge FF enough to bring the average fare up to where it covers costs, they risk losing a portion of the high-yield FF segment. Total revenue declines.

A conundrum for sure....

The only solution that I can see is to become as efficient as possible and differentiate yourself from the LCC's so that you can command a somewhat higher average fare. I'll note that US/East has been a miserable failure on the first - system CASM has hardly budged thru 2 bankruptcies - and in large part a failure on the second - in many of the markets where we compete with LCC's, we have the lower average fare.

In theory, however, becoming an efficient legacy that offers perceived value over the LCC's should allow profitability. The key is offering those things that provide enough differentation to enough of the market to produce that somewhat higher average fare. And doing it without producing a cost disadvantage greater than the revenue advantage that differentation provides.

Sounds like walking a tightrope, doesn't it.....

Jim

 

[US1YFARE]

I'm no expert, but I think my fare is paying for all of the lousy fares they sell in the back. When I am paying $1700 for a domestic ticket, I guess, whether or not my expectations are too high, I think I deserve a premium product. If I can buy the same ticket on AA or UA and get a premium product, then they will start winning out. I think UA's FC product is nice--I don't think a lot of it is necessary--but it is nicer than US's FC product.

As a US1, if I don't get upgrade on a $98 fare, oh well, I chose to purchase that fare and I can't expect too much. That's why when I fly to the west coast, I don't purchase the cheapo fares. I purchase A fares usually when I can--but, when I sit in a dirty FC cabin and the amenities are terrible--why would I pay the A fare on US when I can buy the same fare and get better amenities on another airline. I think US's FC product is fine right now--other than the greek scrambled eggs, the food is fine, the service is generally very good--but, if you cut back even further, it's not going to be good.

 

[BoeingBoy]

I'll only cover a few of this....

The last definitive word I've seen was from Robert Crandall so it's dated, but let's use it as a jump off point.. Maybe someone has new info. There was a time when 25% of the revenue came from 15% of the customer base. That base being FF'ers like me. But that still leaves 75% of the revenue and there IMO is the rub.

[post="307727"][/post]​

I don't have any better data, so that's good enough for me.

We know that about $600.00 R/T covers costs pretty much anyplace in the USA. We know this because this is what SWA charges for full fare and they are profitable. We also know they sell the highest percentage of full fare tickets.

[post="307727"][/post]​

Not quite right - somewhat oversimplifying, we know that it covers SWA's costs, not every airline's costs necessarily. Especially when LF is taken into account.

In order for a carrier to be successful it would appear they need to break even on the 85% and the remaining 15% of the customers provide the profit.

[post="307727"][/post]​

Close. Since the fare breakdown is more complicated than 15% paying one fare and the other 85% paying another, what I've said before (along with Art, I believe) is that the lowest fares should be about breakeven with the higher fares offsetting LF and providing a profit. I personally don't see why a legacy airline needs more than 4 or 5 coach fare buckets and a couple of FC buckets, other than for selling interline on carriers that have more.

Airline greed led to the decline in fares more than deregulation did IMO.

[post="307727"][/post]​

I'll have to disagree there - under regulation the fares were regulated, or at least had to be approved by the CAB. Competition was also regulated - iairlines could only serve routes the CAB allowed, and if a route didn't have enough traffic new service wasn't approved. It was more akin to a publically owned utility than anything else that exists today. If we were still regulated like before 1978, you could go to the internet or where-ever for your PHL-LAX flight and all you'd find would be one or two carriers charging almost exactly the same fare.

Is it possible that had the CAB remained in control, they would have allowed SWA and the like to spread out? Anything's possible, I guess, but we'll never know.

In my opinion the legacy carriers, to one degree or another, were slow responding to the changing world around them - and as I said, it mostly happened in the last dozen or so years. When the did start responding, the "solution" seemed to be try to compete a little while then run to where the LCC's weren't.

In the go-go 90's, it worked - at least for most legacy carriers. Then the economy started turning down in 99 or so and 9-11 happened. The legacies shrank by varying amounts (US the most by a fairly wide margin) while the LCC's continued to grow and "suddenly" they were almost everywhere. Before the legacies knew what hit them (figuratively speaking), there was almost literally no where to run domestically.

Can't wait to see what bear has to say.....

Jim

 

[BoeingBoy]

I'm no expert, but I think my fare is paying for all of the lousy fares they sell in the back. When I am paying $1700 for a domestic ticket, I guess, whether or not my expectations are too high, I think I deserve a premium product.

[post="307731"][/post]​

I certainly don't blame you a bit. The problem as I see it, and it's not your fault, is that you're more than likely the only one on the plane that paid that much and probably a good percentage of flights have no one who paid near that. There's probably a handful that paid the A fare, and most everyone else paid a discount fare that may have covered the cost of moving the seat they're sitting in. Throw in a LF adjustment, and on average we lose money. Not because fares like you cite are too low, might I add.

Jim

[Added]

And let me add that you not only have to offset the lowest fares, you've got to offset the people riding the RJ's that didn't pay enough to cover the 15-25 cents per mile cost of moving the seat they're sitting in. Plus the cost of the bags the RJ's can't carry when the weather isn't good - at $50-$100 each to deliver eventually. And on and on.....

Heck, I could almost talk myself into believing you got a bargain, considering all you're carrying on your back.



Jim

 

[BoeingBoy]

Doug's message from the latest 'Plane Deal' released Friday - it seemed appropriate to this thread......

A Message from Doug

Dear Fellow Employees:

This past week the merger between US Airways and America West Airlines became official. US Air ways has emerged f rom bankruptcy and together with America West, formed the nation’s fif th largest airline. Together we have formed one of the most financially stable airlines in the industr y with over $2.5 billion in cash and a reasonable debt load. This should allow us to withstand whatever this turbulent industry may throw at us.

As CEO of the new US Air ways, I wanted to let you know my thoughts about this merger and the road ahead. First, I am extremely excited about our future together. I believe that we are not just building an airline that will survive the years ahead; I believe we are going to build the best airline in the world.

To do that, we will need to embrace the following four goals:

1) We will be a low cost carrier:

Our industry has changed forever. Low cost carriers are expanding rapidly. Larger airlines like Delta and Northwest have filed bankruptcy to get their costs down to our level. Our customers demand safe, reliable and courteous service at a reasonable fare. To be the best airline in the world, we simply must be efficient. We must not waste money on things that customers don’t care about (or aren’t willing to pay for). We must be resourceful and figure out ways to meet our customers’ needs with fewer resources than our competitors.

Importantly, I do not believe this means that our employees need to give more. Both the US Airways employees and the America West employees have made tremendous sacrifices over the years and I do not anticipate further requests for contract concessions or pay reductions. We just need to work together to ensure we’re being as efficient as possible.

2) We will run a reliable airline:

More than anything, customers today want reliability. They want to know that they will be on-time and that their bags will be there when they land. The biggest negative about keeping the US Airways name is that, unfortunately, customers today do not perceive it to be a reliable air line. This must change. Our goal will be to regular ly be in the top three of all major airlines in on-time performance and baggage handling. We can and achieve this goal, and management ’s job will be to ensure you have the tools you need to make it happen.

3) We will be customer-friendly:

While reliability is our customers’ primary need, there are other product attributes that are important to their purchase decision. We will have a product offering that we are describing as “ business casual,†which basically means we will cater to our important business customers, but not in an overly formal way. We will fly to places that people want to fly to and our expanded, combined route network will be very helpful in that regard. We will be a global airline with a large, domestic hub-and-spoke network complemented with the shuttle operation and international ser vice. We will price our product fairly, but intelligently. We will not attempt to gouge passengers as we know this will only invite low-cost competition. We also will do our best to avoid ridiculously low fares that fall below our cost of providing service. In short, we will use the customer-friendly but profitable America West pricing model that we introduced in March 2002 and which has been reluctantly (but not wholly) replicated by every other major airline.

Our product offering will also be “business casual.†We will have first class cabins, airport clubs, in-flight video and an industry leading frequent flyer program enhanced by our inc lusion in the Star Alliance. We will provide our coach customers with the value-added option of purchasing meals on board. And yes, we will give our customers pretzels.

Most importantly, we will encourage our customer contact and front line employees to be professional but not rigid. We will certainly have policies and procedures, but we will encourage you to take care of our customers as you see fit and give you the latitude to do so. We understand that you know how to do your jobs better than we do and we want to be sure that you are given the f reedom to do just that.

4) We will treat our employees with respect:

We cannot do any of the things above without the full energy and effort of each of you. We must pull together and work as a team if we are to reach our goals. America West and US Airways employees must work together and treat each other with mutual respect and a spirit of camaraderie. Most importantly, the company must treat its employees with respect. We will communicate regularly and candidly. We may even use humor on occasion, which serves as a good reminder that while we take our work seriously, we do not take ourselves so seriously. We will listen to each other and respond professionally and respectfully. When the company has news to report, whether good or bad, we will do our best to do so in plain English, not corporate babble, and we will always be honest and open.

If we can do all of these things well – and we will – we will create the best airline in the world; one that customers want to fly and a place where people want to work.

Finally, on a personal note, I’d like to thank all of you for your encouragement and support throughout this process.

To the America West team, thank you for getting us to this point. You are an exceptional group of people and your resourcefulness and spirit are the only reason that America West is here to make this merger happen. The past four years as your CEO have been the most rewarding and enjoyable of my career. Thanks for believing in me as much as I believed in you. It’s been an honor and a privilege to work with you and I'm looking forward to our next chapter together.

To the US Airways team, thank you for giving me a chance. I’ve had the opportunity to meet with many of you already and have been impressed with your spirit and enthusiasm. I understand that you have been through a lot over the past few years and at times have felt betrayed by management. While I wish that you all would believe that we are different and trust us out of blind faith, you do not owe us that. Trust is earned and I, along with the rest of the leadership team, plan to earn yours. I only ask that you give me the chance to do so.

In closing, this past Tuesday was a great day. Thanks to all of you who paused and celebrated our amazing collective achievement. But let’s not think for a second that this is the end of the road. Indeed, it is just the beginning. We have much work ahead, but the people that made this happen can accomplish great things. Working together, we can accomplish anything. Let ’s go show the world how truly amazing the new US Airways is going to be.

Thank you again for your support. I’m honored to be a part of the team.

 

[hp_fa]

We will be a low cost carrier

and

We will be customer-friendly

likely refers to something AWA taught their FA's. That is LAST. Listen, Apologize, Solve and Thank. However, if we do not have the tools to solve it makes it difficult to do more then listen and then apologize for not having green limes and then thank you for having shared your comment with us. (Piney, I used the green limes as an example, not a jab. We have always had green limes on the West side.)

Point number three in the previous message will often conflict with point number one. Often there will be no good resolution, especially with high oil prices and other industry challanges. We can only do the best we can with what we have and the airline is able to afford.

 

[US1YFARE]

well, those screaming yellow whatevers in the snack basket (carmel popcorn) are really good....can we keep them?

 

[Light Years]

and likely refers to something AWA taught their FA's. That is LAST. Listen, Apologize, Solve and Thank.

[post="307831"][/post]​

They teach that at US too. I think that's a pretty standard acronym in any field with customer service duties.

 

[Happy_People]

I hate that LAST... the other day this passenger told me he thought the other fa was rude and since this was one of those guys who shake there glasses at you and want another drink as soon as they finish the one in their hand I said jokingly... "well what did you to to her?" "oh I am just kidding... sir she just had to take your drink away prior to shutting the a/c door."