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On 1/1/2003 8:07:06 AM Busdrvr wrote:
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On 12/31/2002 11:13:10 PM Tango-Bravo wrote:
Busdrvr:
Finally, a point on which we agree! But why the revenue problem for the likes of UA, US and AA? Can't begin to recall all the times you've stated your case for the worlds-apart superiority of the product offered by the Big Six airlines compared to WN and B6.
Seems to me that pax should happily pay a hefty premium for all the perks and frills offered by UA et al. That, unfortunately, is where the real world gets in the way. Since it's a proven axiom that money talks, perhaps the lack of pax who are willing to pay more money to fly with "full-service" airlines is telling us a story quite different from yours about the product offered by the Big Six.
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The business pax IS more than willing to pay a HUGE premium for a UAL experience...when he's using Daddy's credit card. UALs current revenue prob can be traced to two issues, #1 the continued low level of corporate funds avail for business travel and #2 an additional revenue hit associated with the economic security of the airline. Everyone is experiencing the pain of issue #1 and I honestly think, (after talking with buddies who travel extensively (or used to)) that there will be a modest rebound in high yield travel as corporate profits rebound. Issue two is our fault and a result of the bed we made for ourselves. To see emperical evidence, one only has to look at NWA. UAL has traditionally extracted a revenue premium over our pacific rivals. recently that has changed and a lot of the change can be associated with, I think, with a severe tactical blunder that really spun out of control around the end of the 2nd Q. The IAM driving the company to a PEB and the threatened strike (somehow employees with open contracts at CAL, SWA, AMR, and NWA all seemed to have the maturity to either negotiate open contracts without some stupid expectation of being the best paid in the industry or at least delaying new contracts til the companies finances could stabilize) followed by repeated public "chicken little" pronouncements coupled with a complete lack of long term strategy scared away some of the best paying customers. There will likely be some neysayers who will undoubtedly say the revenue drop-off was the result of poor service, but the evidence shows that the revenue was falling off at the same time that UAL's operational statistics were going through the roof. Nov's traffic reports will show UAL as the #1 on-time airline for 3 out of 4 months. Unbelievable when you consider that prior to this run, UAL was NEVER #1. To turn the ship around UAL MUST restore confidence. To do this there needs to be a public sense of cooperatioon between the company and the unions. Unfortunately, the good folks at 141 and 141M don't seem to grasp the concept that EVERY customer they scare away to the competition results in a lower pool of money with which they can expect their paycheck to be cut from.
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Hmmm... First you tell us IT'S A REVENUE PROBLEM, now it's a labor cost problem. Now there are two things on which we agree because it is, indeed, IMO both of these issues that brought UA to its present unfortunate state with a future that is anything but certain.
The revenue problem developed out of the unconscionable and absolutely unsustainable gouging of business travelers who were sure to revolt, and have done so - since before 9/11/01 - in a way that has had devastating consequences on your fine airline along with others. At the same time, yield management was allowed to condition leisure travelers (business travelers were quick to figure out how to beat the majors at their own game) into paying below-cost fares on their demented assumption that business travelers could be counted on to go along with being fleeced to make up the difference.
Labor, understandably, noticed what was happening and expected and demanded, and pulled some shenanigans of its own (ala Summer 2000) to get its "fair share" of a revenue base that was certain to be nothing more than a bubble that would burst when the grossly falsified, overstated earnings of "the new economy" were exposed. The distortion of the reality of what people - including business travelers - are willing to pay for air travel was sure to come to a halt, which began to happen in late 2000 - early 2001.
Management went along (under duress, I must acknowledge) with unprecedented payscales based on unrealistic and absolutely unsustainable fare levels. It was a house of cards that was sure to collapse - I saw it coming even in 1999; it happened even sooner that I guessed it would.
21 PM ual747mech wrote: 
