What has more value........

usfliboi

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Aug 20, 2002
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I would say everything that has happened so far to date has been INTERESTING. In my humble opinion. our name USAirways at some point will be gone, whether were sold in bits and pieces, or merged! I think its obvious whats happening! You dont have to be a genius to see that !
 
C

chipmunn

Guest
Gilbertguy:

The short answer to your questions is no. The company must match capacity with demand and mature carrier industry fundamentals are broken. Just look at this week's Aviation Week & Space Technology article.

In the short-term the company must survive this industry-wide financial crisis, but medium to long-term the business plan is sound and projects mainline growth, which could occur in an interesting format.

Chip
 

MCORORES

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Aug 19, 2002
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KCflyer...that makes too much sense. That is more than likely the reason why we have not done it. It amazes me that the biz traveler is our bread and butter but yet we try and stimulate the gravy...the leisure traveler. Gee whiz guess we are turning this into fares which is already peppering most threads...lol
 

KCFlyer

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[P]
[BLOCKQUOTE][BR]----------------[BR]On 11/19/2002 10:52:13 AM chipmunn wrote:
[P]Gilbertguy:[BR][BR]The short answer to your questions is no. The company must match capacity with demand and mature carrier industry fundamentals are broken. Just look at this week's Aviation Week & Space Technology article.[BR][BR]In the short-term the company must survive this industry-wide financial crisis, but medium to long-term the business plan is sound and projects mainline growth, which could occur in an interesting format.[BR][BR]Chip[/P]----------------[/BLOCKQUOTE]
[P][/P]Chip,[BR][BR]Right now, the majors (outside of AA) are attempting to match capacity with demand without doing anything to try to stimulate demand. Even if a value pricing model is implemented as a crutch to get more business (at a profit), it is doing something than cutting the airline back to a regional carrier. Southwest is doing that by lowering their full fares. You certainly don't think that this is a permanent step, do you? Matching capacity to current demand is going to put an even bigger hurt on the airlines when demand picks up and the majors have no aircraft or staff to meet that demand. They will be in a scramble to acquire new aircraft (which will most likely be pulling premium prices), recall staff (if they haven't already decided that they've had enough fun with an airline career), and train new staff. In short - they'll face a cost crunch. And woe be the airline who begins making a profit then tells labor that pay increases can't happen because of all the additional acquisition costs are putting a strain on financials.
 

gilbertguy

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Aug 29, 2002
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US as a stand alone regional carrier......a regional for UA.....or sold off in bits-n-pieces? Is the ultimate goal one of these options or is CCY truly working towards resurrecting this carrier....sadly NO one else stepped up to pull our feet from the fire.....does that say U is a bad investment.......
 

gilbertguy

Senior
Aug 29, 2002
368
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[blockquote]
----------------
On 11/19/2002 11:01:06 AM usfliboi wrote:

I would say everything that has happened so far to date has been "INTERESTING." In my humble opinion. our name "USAirways" at some point will be gone, whether were sold in bits and pieces, or merged! I think its obvious whats happening! You dont have to be a genius to see that !

This is what scares me.....I was hoping to return from furlough (vol) and finish my few remaining years left with a great carrier...but I don't think it is meant to be.....
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N628AU

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Aug 22, 2002
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KCFlyer is correct. Until the revenue side of the business plan is addressed, the hub and spoke network carriers will continue to per perpetuate the ten year boom-bust cycle it seems hell bent on continuing. Regardless of any interesting or unique corporate transactions anyone comes up with, this is the truth. Some booms will be better than others (late 90s), and some busts will be worse (current), but they will always exist. I am keeping my fingers crossed that this place will make it, but at the same time I keeping my fingers crossed this impending furlough for me leads to a career change where I won't have to worry about it.
 

UAL777flyer

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Aug 20, 2002
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KCflyer's comments: Right now, the majors (outside of AA) are attempting to match capacity with demand without doing anything to try to stimulate demand.

That has to be the most ridiculous statement I've heard in a long time. I'm curious KCflyer, do you work for UA? Do you need to read what an airline is doing in the newspapers before you believe they're doing anything? UA, and I'm quite sure every other airline, continually studies and analyzes ways to stimulate demand or steal share from other carriers. New strategy testing is done EVERY day in many different markets. I can tell you that as FACT because I work with the folks in Inventory Management and Pricing who are actively involved in it. So I realize your continued frustration at airline fare levels. And I share that same frustration. But your comments about nobody besides AA doing anything to try to stimulate demand are a joke.

Your opinion on matching capacity to demand is flawed. That is what gives airlines pricing power. When the industry recovers, airlines will get both load factor pressure and pricing power. How? Because demand will exceed supply, giving airlines the ability to shut off low fare buckets. That translates into forcing buy-up and bringing up these garbage fares that are being paid. I fully agree that the business level fares are ridiculous and need to be grossly rationalized. And that will happen. But it takes time. It cannot happen overnight.
 

KCFlyer

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I don't work for an airline. I just buy airline tickets. I pay whatever price within reason that the airline wants to charge me. Right now, they are willing to sell me seats at a loss. More power to them...I'm loving every minute of it. You toss out the garbage fare and I'll buy it. The thing you're missing is that a lot of us are buying those garbage fares when you'd really rather have us buy a profitable fare. You got a problem. YOu despise the garbage fares, yet you are afraid of losing us scum eating garbage fare buyers. Why???? We are costing you money. An example I cited in another thread - someone was looking at a DEN-PHL fare within 7 days. U had it priced at $1,900. They dropped it to $300. Using 10.5 cents as their cost structure, it was costing U $330 to fly it. Don't toss out the garbage fare if you don't want us to buy it. Why not charge $350 and make $20 on the ticket? It ain't $1,500 you could have made on the old fare, but it'd make you some money, and most of us slimy garbage fare buying customers wouldn't think twice about paying for a ticket that made you money. If you charged $500 for that ticket, you'd have made a couple of hundred dollars. But YOU put the fare out there, so please don't complain when someone buys it. Say U charged $350 for that ticket and UAL or NWA offered the same fare for $280. Let them sell it...it hurts THEM, not you. Hell, you'd save fuel costs flying an empty seat versus 250 additional pounds of passenger plus their luggage. [BR][BR]The general public thinks that nobody is foolish enough to sell their product for less than it costs them to make it. Airlines do it all the time. They are trolling for catfish (those repulsive bottom feeders) to fill their planes. Indeed - the last flights I've been on, the planes have been packed. But you're still losing money. Don't use the term garbage fare with disdain, because it's what YOU are putting out there. You claim you can't raise prices on advance fare tickets because the public won't tolerate it. Then the public will have to learn a fast lesson in ECON 101 - If it costs a dollar to make a widget, and the widgets are selling for fifty cents, there soon will be no widget manufacturers. Look at the above example again - $300 and lose money, or $350 and make money (and make that an advance fare - thats far too low for trip less than 7 days out). Is Joe Leisure traveller really gonna pack the wife and kids in the car and DRIVE from Denver to Philly to save $50 a piece? The way the airlines are thinking is YES, they will, so we must drop our costs to be able to profit on a $300 ticket. [BR][BR]I'm sorry I'm such a simpleton when it comes to airline pricing. But from what I do read, it would appear that I'm not alone in wondering why a seat on a plane can vary in price from $250 to $2000 with 50 different fares in between. AA's trying the KISS (keep it simple stupid) approach on selected routes. They announce it to the media. My guess is that it's going to benefit them far more than some experiment that is secretyly tried by the other guys.
 

AirplaneFan

Advanced
Aug 20, 2002
174
0
[BR][BR]
[BLOCKQUOTE][BR][BR]Chip,[BR][BR]Right now, the majors (outside of AA) are attempting to match capacity with demand without doing anything to try to stimulate demand. Even if a value pricing model is implemented as a crutch to get more business (at a profit), it is doing something than cutting the airline back to a regional carrier. Southwest is doing that by lowering their full fares. You certainly don't think that this is a permanent step, do you? Matching capacity to current demand is going to put an even bigger hurt on the airlines when demand picks up and the majors have no aircraft or staff to meet that demand. They will be in a scramble to acquire new aircraft (which will most likely be pulling premium prices), recall staff (if they haven't already decided that they've had enough fun with an airline career), and train new staff. In short - they'll face a cost crunch. And woe be the airline who begins making a profit then tells labor that pay increases can't happen because of all the additional acquisition costs are putting a strain on financials. [BR][BR]----------------[/BLOCKQUOTE][BR][BR]RIGHT ON KCFLYER,[BR][BR]The airlines are trying to manipulate supply to create demand. But thank goodness for competition. The low-fare carriers have enough market share in most places that the majors can't control the price any longer. And as the majors continue to drop service, the minors keep adding planes and routes and building marketshare. For example, SW added new nonstop routes from Chicago this year to Seattle, Oakland, Los Angeles and San Diego. The majors have the hope that when the economy picks up they will be able to come back into those markets and it will be like it was before..... but I believe that it is a false assumption, once market share is ceeded it will be very hard to get back.[BR][BR]What most experts here fail to see that in the past 3 years, low fare carriers have added enough new planes and run them at such a high utilization that you have essentially added the capacity of U into the air traffic system. JetBlue and Southwest have both ACCELERATED aircraft deliveries. And you know that as the majors are discovering the regional jet makers in Brazil and Canada, Boeing and AirBus are prepared to give very favorable terms to the low fare carriers, who are now its bread-and-butter customers.[BR][BR]The country is no longer in a recession, but the majors still can't make any money. The number of passengers haven't gone down that much (6%), but passengers right now REFUSE to pay the prices they were paying just a few years ago. In 1999, everyone was extremely time sensitive with Y2K coming along and were willing to pay a premium to travel at the last minute. But they will no longer pay that premium and you know what .... its doubtful they ever will again in our generation.
 

gilbertguy

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Aug 29, 2002
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KC, you've hit the nail on the head......you raise the low end to make a small profit margin.....but drop the high end to avoid sticker shock.....and make a higher profit.....DUH! Sometimes you need to nickel-n-dime the public to death instead of gouging them......like a leech, you bleed them without them knowing and it's painless....yet you pocket what falls out their pockets into your sofa....
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UAL777flyer

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Aug 20, 2002
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I think despise is not the proper word. But until major airlines can get their cost structures more in line with reality, those low-end garbage fares are not going to work for them. My point was to mainly point out what a ridiculously generalistic comment you made when you said that only AA was trying to stimulate more demand. You don't work for an airline and are therefore not privy to what they may be working on. Your comment was a slap in the face to the very people who beat their brains in each and every day trying to find new fare/pricing strategies that work. However, you're fighting gravity on that one, i.e. crap doesn't roll very fast UP-hill, if you catch my drift. You've still got too many people clinging to the old way of doing things. The revenue situation in this industry is so severe that I feel many carriers are a bit apprehensive to try something bold and new without concrete proof that it'll be revenue positive. It's easy for a carrier like AA to do something and then put their spin doctors to work touting it as a quasi-reinvention of the wheel. They're not presently distracted with bankruptcy court or trying to prevent an imminent filing. That is where most of the corporate focus is for US and UA these days: stabilizing the balance sheet.

Again, I don't want you to misunderstand me. I'll be the first one to stand up and scream high from the hills that we need a more rationalized, understandable fare structure. Why the need for so many fares? Why the need for so many restrictions? I absolutely agree with you there. There simply shouldn't be a mile of distance between the lowest fare and the highest. Just put out a simple 21-day advance, 14-day advance, 7-day advance and walkup fare in the published world. Modify the restrictions. Appeal to when the customer wants to fly. Don't piss him/her off. Those are all the right goals. But you cannot simply achieve them overnight. In order for carriers like UA and US to implement a rationalized fare structure, they have to get their costs in line first. Because this is one of the weakest booking periods of the year. And unless you can generate enough load factor pressure with the net decrease in fares, you won't make money. You'd be trying to overcome too much of a cost disadvantage.
 

KCFlyer

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UAL777flyer - my intent was not to slap anyone in the face with a blanket statement. But if U is still paying a marketing department, then they should have been ahead of AA in trying this experiment. The only people who might find a surprisingly decent fare on the other airlines would be the web surfing nerd (myself included) who stumbles upon it accidently. That's not giving change a fair shake. Changes like that need publicity. [BR][BR]If U were to try the same AA experiment in selected markets, especially a hub market of PIT,PHL or CLT, and touted the change as the second coming, people would notice. That's how you sell airline tickets. Low end fare sales are viewed by even the most casual flyer as a last ditch attempt before folding. A simplification of fares and aggressive marketing in the cities affected could portray the company as really DOING something... Direct the advertising to the corporate community...We've heard you...and we responded. . Yes, it'd cost money to do it, but sometimes you have to spend money to make money, especially when selling something. [BR][BR]The problem is, AA has beat you to the punch...now it looks like they reinvented the wheel and everybody else is seen as a follower. If the marketing department can't be utilized because of bankruptcy proceedings, then they might as well cut costs by eliminating that department. Marketing can be one of the most powerful tools...even in bankruptcy. [BR][BR]One company I worked for had a framed little story on the sales office wall. It was about a guy who just lost a sale, and when asked about it, told his boss You can lead a horse to water, but you can't make him drink. The boss responded with It's not your job to make the horse drink...your job is to make the horse THIRSTY. Trying a bold experiment and letting your marketing deparment run with it is the best way in the world to make the horses in the business travel community thirsty.