United Still Committed to Low-Cost Unit

airplt-

Well, I know Airtran had to change its name in order to have any chance of surviving the accident in the Everglades because their name became synonymous with shortcuts and safety violations to the public. I know Airtran got a bunch of their original DC-9's from a third world country from an airline that had a poor history of safety itself. I know that a disproportionate amount of those same airplanes were involved in numerous electrical fires, some of which involved emergency evacuations that were statistically higher than the rest of the industry's. But don't take my word for it, let the statistics speak.

And for the record, I wasn't bashing Airtran in particular. Any airline, including mine, could have an fatal accident regardless of its safety record at any time. I was simply making the point that the public, in general, doesn't care about any airline's safety record, as long as it isn't in the news too much wrecking airplanes. If their accident/incident level stays under the USA Today's radar, it's considered a "safe" airline by the public. Just because an airline is "low cost" doesn't mean it's unsafe. Look at Southwest in particular.


Safety Analysis

While AirTran is now a different airline than ValuJet (after a 1997 merger) with new management, it is important to remember that these very aircraft once belonged to an airline rated by the FAA as being 13 times less safe than any other low-cost air carrier in the country.

Many of AirTran's DC-9 jetliners are from third-world countries and have been involved in numerous serious incidents that make the overall safety of day-to-day operations questionable.

Air Safety Online issued a SafetyCenter Bulletin about this air carrier in January, 2001, after a special investigation revealed questionable maintenance practices.

The recent addition of new Boeing 717 jetliners into AirTran's fleet greatly increases the level of safety -- upgrading AirTran from an F to a C.

AirTran is still rated an "F" in the Air Safety Online/AirSafe.com statistical airline report card.


The following airline safety grades are based upon the number of fatal accidents per million flights that the carrier has flown since 1970.

For each airline, the sum of the full loss equivalent events is divided by the estimated number of flights to determine the estimated fatal event rate. The estimated total flights for each airline are for the period 1970 to present.

It is important to note that it is impossible to predict an airline accident. Any airline, regardless of its safety record, is susceptible to experiencing accidents.

United States & Canada
Airline
Rate
Events
Flights
Grade

Air Canada
0.33
3
4.75M
A

AirTran / ValuJet
5.88
1
0.17M
F

Alaska Airlines / Horizon Air
0.50
3
4.05M
A

Aloha Airlines / Aloha Islandair
0.75
1
1.34M
A

America West Airlines
0.00
0
2.30M
A

American Airlines
0.54
12
17.0M
A

American Trans Air ("ATA")
0.00
0
0.33M
A

Continental Airlines
0.18
5
8.00M
A

Delta Air Lines
0.16
6
20.0M
A

Hawaiian Airlines
0.00
0
0.33M
A

JetBlue Airlines 0.00 0 UNK A
Midway Airlines
0.00
0
0.08M
A

Midwest Express Airlines
3.85
1
0.26M
D

Northwest Airlines
0.28
4
9.20M
A

Southwest Airlines
0.00
0
9.50M
A

Trans World Airlines ("TWA")
0.38
6
8.10M
A

United Airlines
0.37
11
18.0M
A

US Airways / USAir
0.28
8
14.3M
A
 
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On 2/4/2003 1:56:41 PM Segue wrote:

A completely separate entity makes total sense - get a fresh set of employees (management too) that are happy to work even at a lower pay scale and eliminate need for a B scale which never works. A good chance to get beyond the expectations of the past that are no longer relevant in the current environment. Also, mainline UA gets a cash infusion from the sale of assets to the subsidiary.

Even better yet, since low cost carriers are still in favor with investors, the new entity would be much more likely to attract outside capital to sustain future expansion.

As a paying customer I'm pleased with the growth of low cost carriers. A more rational fare structure is what we have been waiting for years for!

Its it any wonder why the most successful businnesses like Walmart (now the largest corporation on the planet) take a sound, low cost model and pass the savings on to the consumer.

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Walmart??? Do you know what Walmart has done to middle class america?

The jobs that made America a working middle-class country are almost gone. Children today are not going to be better off than their parents, or even their grandparents. The jobs of the 21st century are most likely to have low wages, no benefits, and a high turnover, a revolving door into a poverty-level labor market.

The jobs of the 21st century are more likely to be at Wal-Mart than at any other company. With 1,400,000 workers and growing, Wal-Mart will define living and working standards for generations of workers and their families.

Want to see working America’s future? Take a look at a Wal-Mart pay stub.

An average Wal-Mart worker makes about $8.50 an hour with about 32 hours per week. That’s gross pay of $423.76 for the 2-week pay period. On average pay, most Wal-Mart workers cannot afford health insurance. Average pay leaves many Wal-Mart families eligible for food stamps or other welfare programs.

Take a look at the pay stub for a worker with Wal-Mart family health insurance—$192.05 deducted from his or her pay every 2 weeks. That’s about 30 percent going for health insurance.

Wal-Mart has no real pension. The average retiring Wal-Mart worker gets a lump-sum payment out of his or her profit-sharing plan and 401(k) that’s only in four figures. Both are so heavily invested in Wal-Mart stock they’d make Enron blush.

The pay won’t keep a family out of poverty, and the health care plan has deductibles and co-payments so high that the average Wal-Mart family can barely afford to use it. Even with the poverty-level pay and high-priced benefits, you cannot count on the job.

Wal-Mart turns over 500,000—a half-million—workers every year.

At current rates, by mid-century, everybody will be working at, or will have worked for, Wal-Mart. The effect of Wal-Mart is like throwing a boulder in a pond—it doesn’t produce ripples, it produces waves that overwhelm everything in their wake.

Wal-Mart is the largest employer and the largest retailer, which makes it the largest private-sector buyer of goods and services. It sets the wage and benefit standards for the tens of thousands of companies that produce the goods that fill Wal-Mart’s shelves.

If Wal-Mart decides to go on an overseas shop-ping spree, American-based companies shift their production off-shore to meet Wal-Mart’s shopping habits.

If Wal-Mart buys in countries where child labor is prevalent, producers shift investment in pursuit of the lowest wages and the most easily exploited labor.

No one is immune from Wal-Mart or the corporate culture that it creates—a culture in which a high-profit company can condemn workers to chronic economic insecurity. It is a culture in which corporate power is so complete and profits so high that a company can be completely unresponsive, irresponsible, and unaccountable for its actions and its negative effect on workers, consumers, and communities.

Right now, Wal-Mart is a corporate outlaw. But nowhere is the corporate irresponsibility more apparent than on the issue of health care, because more than 40 million working families are uninsured and tens of millions more are underinsured.

At the center of the health care crisis is Wal-Mart, driving costs up, and driving coverage down for all Americans. Two-thirds of Wal-Mart employees do not have Wal-Mart health insurance—that’s about 933,000 workers. The health care costs for these workers do not disappear—the costs get shifted to our employers and to taxpayers.

Wal-Mart itself said it best: Wal-Mart associates "usually get their health care benefits from a spouse or the state or federal government."

Every dollar in health care costs that Wal-Mart shifts drives up the costs for everybody else and drives down coverage for everybody else as employers and workers drop insurance because they cannot afford the cost increases.

When national health care reform was proposed, Wal-Mart opposed it. The retail giant gets a competitive advantage, it lowers its costs and raises the costs of its competitors. Wal-Mart gets away with hijacking the health care system because we let Wal-Mart do it.
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On 2/5/2003 11:55:03 AM ualdriver wrote:


AirTran is still rated an "F" in the Air Safety Online/AirSafe.com statistical airline report card.


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The grade that AirSafe.com assigns is completely arbitrary and bogus, dressed up in what passes for statistics. A single incident can distort the grade for a very long time, and takes no other factors into account. Is an airline with 1 fatality caused by factors outside its control worse than one with several engine incidents which didn’t lead any fatality? Remember when the Concorde went from being deemed safest to the bottom of the heap based on one incident. Was the Concorde a day before the Paris crash so much safer than the one after it?

I’ll agree with you that the DC-9s owned by AirTran had a spotty maintenance history. Nothing against the aircraft, they work well if maintained well.

AirTran currently has 53 717s and 11 DC-9s, and ALL DC-9s are gone by the end of this year. From that point onwards, if not now, I hope that the safety argument against AirTran becomes a non-issue.
 
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On 2/5/2003 10:57:00 AM Segue wrote:

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On 2/5/2003 3:08:29 AM kcabpilot wrote:

Management told us in a meeting tonight that the company is "focused" on the creation of a low cost carrier. They said the name of the new company will be NITED, because U ain't gonna be part of it.

They also listed three priorities:

Reduce costs
address customer needs
provide a "return" on investments

It's funny how they can talk about paycuts and what they're going to do with the profits all in the same breath. It's basically, "we'd like to take money out of your pocket and give it to someone else"

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That's exactly what it is about - pass the savings on to the consumer, and whats left, to the investors. If you really do that, the consumer and investor keep coming back. It's called free market capitalism!



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Segue,
I asked you what you do for a living, well.......what do you do for a living? Silence on this subject will merely re-inforce my assumption that you don't really do anything much other than kibitz on a subject you know little about. Your simplistic assertions regarding sound policy ring hollow and appear as the suggestions of a freshman business
student at metro state struggling with bean counting 101. Again, has anyone ever heard about LEADERSHIP!! Apparently not.
 
Retail has always been on the lowest end of pay scales - I doubt that checkers for any retailer big or small make much more than mimimum wage. I've been there myself working my way through college. Don't expect to get rich working retail, unless you are in sales function like the shoe department at Nordstroms. Turn in retail is traditionally very high, and many workers are either very young or are second income.

Anyway, nobody is forcing those WalMart employees to go to work everyday. I'm sure they are happy to have a job with a stable company in these rough times.

As for as medical co-pay, its getting to be the standard in just about every business sector. Better get used to that.
 
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On 2/5/2003 11:37:51 AM gimbalimit wrote:

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On 2/5/2003 10:57:00 AM Segue wrote:

[blockquote]
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On 2/5/2003 3:08:29 AM kcabpilot wrote:

Management told us in a meeting tonight that the company is "focused" on the creation of a low cost carrier. They said the name of the new company will be NITED, because U ain't gonna be part of it.

They also listed three priorities:

Reduce costs
address customer needs
provide a "return" on investments

It's funny how they can talk about paycuts and what they're going to do with the profits all in the same breath. It's basically, "we'd like to take money out of your pocket and give it to someone else"

[/blockquote]

That's exactly what it is about - pass the savings on to the consumer, and whats left, to the investors. If you really do that, the consumer and investor keep coming back. It's called free market capitalism!



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[/blockquote]

Segue,
I asked you what you do for a living, well.......what do you do for a living? Silence on this subject will merely re-inforce my assumption that you don't really do anything much other than kibitz on a subject you know little about. Your simplistic assertions regarding sound policy ring hollow and appear as the suggestions of a freshman business
student at metro state struggling with bean counting 101. Again, has anyone ever heard about LEADERSHIP!! Apparently not.

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[/blockquote]

I've worked 20 years in organizations large and small - from being a small business owner (retail) to managing in a Fortune 100 company in finance, marketing and operations. I'm now a partner in a boutique consulting firm. Oh yea, two Ivy League masters degrees.

If my opinions sound simplistic its because so many of these posts seem to ignore even the most basic business fundamentals.

It seems that many of you are focused on the past. Business is about the future! You need to recognize that you can't turn the clock back in time, but instead you need to adjust your expectations to the new realities.
 
pk45cu

Hey, I agree. Maybe Airtran is now the safest airline on the planet after their dotted history. Who knows?
 
Segue & Bizman
Having the fares the same levels as the early 80s is not cheap enough for you ? Let me think hmm can I think of anything that I spend money on that cost me the same as the early 80s hmm nope couldnt think of anything except airline tickets.
 
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On 2/5/2003 11:17:54 PM Taipan wrote:

Segue & Bizman
Having the fares the same levels as the early 80s is not cheap enough for you ? Let me think hmm can I think of anything that I spend money on that cost me the same as the early 80s hmm nope couldnt think of anything except airline tickets.
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[/blockquote]

Yes, the consumer is reaping the benefits of deregulation, market competition, more efficient operations and new technology aircraft.

Many things are much cheaper now than they were 10 years ago in real dollar terms.

Electronics, cars, clothing to name a few.
 
Things have to be cheaper these days, since disposable income is being sucked out of the economy--by Corporate Cost Cutting. Since there is less money chasing durable goods and services, supplies are increasing--which puts downward pressure on prices. This could lead to a depression as everything will follow along this course. Macroeconomics 101, I know... The winner: he who borrowed less. Cost Cutting-- good in moderation! BTW, I wouldn't get on an AirTran plane if they paid me to get on it--I was white knuckled enough on an America West flight I took.
 
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On 2/6/2003 1:45:05 PM casual rat wrote:

Things have to be cheaper these days, since disposable income is being sucked out of the economy--by Corporate Cost Cutting. Since there is less money chasing durable goods and services, supplies are increasing--which puts downward pressure on prices. This could lead to a depression as everything will follow along this course. Macroeconomics 101, I know... The winner: he who borrowed less. Cost Cutting-- good in moderation! BTW, I wouldn't get on an AirTran plane if they paid me to get on it--I was white knuckled enough on an America West flight I took.

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[/blockquote]

The degree of "cost cutting" also know as poductivity gains, is a key measure of economic health. The only way a national economy can grow is to either produce (and sell) more goods, or produce the same goods for less cost. Its a good thing and not to be confused with deflation which is negative price growth caused by weak demand.
 
WANTED

Happy low cost workers who do not want health care coverage. Who, when they get sick will crawl off into a ditch and die quietly - leaving their last paycheck unclaimed.

Segue:

Following your logic would it not make perfect sense for everyone in the USA to take a 30% cut in pay? Would that make us a stronger nation? If not so, then how do you draw the line?
 
Segue is absolutely right.

The airline industry is a unique business environment, where safetfy plays a much more pivotal and costly factor, etc.

HOWEVER, the basic business fundamentals still ring true.

Doing business is about embracing new realities. Adapting. Corporate evolution.
 
I'm just wondering where the "fresh set" of employees is going to come from....BTW Segue, if uh, you ever read a business publication, it seems like most businesses are cost cutting in an almost 'trendy' fashion--thereby creating downward pressure on prices. I'll argue that cost cutting in this manner, negatively affects productivity with you any day! I'll admit that some cost cutting does achieve what you say, but the level currently being employed by 'bonus hungry' managers, might be a wee too much. Hey, I'll buy your home off you for 30% less than you paid for it--I mean if you're going to champion lower prices, you might as well jump in first! You're happy, I'm happy!
 
Cost cuts are only a temporary bandage for any business or individual. Businesses do not cost-cut their way to sustained profitability.

All this talk and energy being devoted to UA's new low-cost unit is a disgrace! Why is Tilton and crew taking their eye off the mainline business at the most sensitive point in UA history?

Again I ask: when has UA ever been ahead of the curve? When Dick Ferris bought the Asian routes? C'mon, Dick just liked to be wined and dined by the investment bankers.

Gimbal is correct, LEADERSHIP is required here. Tilton and the current BOD ain't it folks. They didn't have a Plan B after the ATSB rejection and now they are using mirrors to distract attention from the real problem -- mainline revenue.

Sure, Walmart cuts costs. But they also simultaneously grow revenue from the same business model. Walmart represented 25% of the national productivity increase over the past five years (source: TIME) and they didn't accomplish that just by cost-cutting.

Focus, Tilton, focus.

Steve Udvar-Hazy, the CEO of International Lease Finance, which is second-largest aircraft lessor in the world, has ZERO exposure to UA & US. Hazy long ago wrote off these carriers, he called them "corporate misfits".

Prove him wrong guys.