Giants May Target Budget Airlines

[FDJ2]

Re: Predatory pricing

Sounds like predatory pricing to me. And you know what happens when an airline does this. That's right, 8 months later the DOJ says "Hey, stop that this instant".

Well I guess that all depends on how you define predatory pricing.

 

[AlbieF15]

American and Crandall hurt Peoples Express with a BETTER PRODUCT--nicer jets, better food, better service at a GOOD price.

I dare say AA, DAL, and United do NOT offer a better product than do Air Tran or JetBlue. TVs in every seat at JB...NICE seats in business class for 25 bucks more at AT...these companies ARE NOT bargain basement carriers with 20 year old 727s. In fact, the 717 is about the nicest ride for a 1-2 hour jaunt I've seen, and the JB TV makes the time pass by pretty fast.

Customer service? YGTBSM! The majors may be getting "religion" now, but in the gridlock days of 2000 they were all notoriously horrible. The good service by the upstarts in the 2001-2003 period has generated a product loyalty that the majors gave up when they started maginalizing service.

Also...you want to do "predatory pricing" while asking Uncle Sam for handouts/loans/guarantees, etc? You can bet your local politicians will get an earful from the LCC leadership on that issue--doesn't seem fair to ask for tax dollars on one hand and then drive another company to its knees (and create lost jobs) while the taxpayers subsidize your endevour.

Will the majors rebound some and compete for markets? I say absolutely. However--look at the SWA and JetBlue market cap. Getting in a race to lose money to make the other guy blink will be the death of the major that tries--the LCCs can outlast you and raise capital, increase market share, and keep their customers in such an environment. United and AA largely drove away the walk up business customer after the 2000 stock bubble burst, and winning them back is going to take a lot more than just a lower fare.

Of course...I may be wrong. I fly AF jets and cargo for FDX...so what the heck do I know.

 

[greyhound]

Exactly

Majors need to remember that the service is another thing customers look at when purchasing a ticket.
On a LCC, I get good prices with good attitudes and service.
At a major, I'm afraid to ask how much it costs and afraid to ask customer service for information.
Over at LAX the other day, I asked a simple question to a Delta skycap. Where to check-in for an international flight?
He said "over there, can't you read"
Yes I can read but I thought it would be faster if I just asked instead of searching the whole terminal. SHEESH.......

 

[FDJ2]

Market capitalization does not equal cash. DAL cash far exceeds JBLU's. If DAL is able to install TVs in it's Song product, aswell as the internet connections, pay per view and other high tech gizmos, the Song product will provide more inflight choices than JBLU. Song will be able to offer a superior frequent flier program, superior inflight entertainment and a broader market at an equivalent price. JBLU maintenance cost, according to Forbes Magazine, will soon start increasing to the tune of 25%/aircraft or approximately $1.6million per year per aircraft as their fleet comes out of warranty. These will be interesting times.

 

[General Lee]

Greyhound,

Do we even employ those skycaps? I don't think so. But, that was rude. I would have said something to one of the ticket counter people---we don't need people like that talking that way to our customers. I would have told him something also....

Bye Bye--General Lee

 

[dispatchguy]

Let me get this right. The major airlines, whom are all ready bleeding red ink, are going to slash fares and induce a fare war to drive the low cost carriers out of business.

Didnt UAL do that to Western Pacific - slash the fares out of DEN to the point where WP couldnt make a dime, and WP went tangu-uniform?

Where's WP now?

 

[General Lee]

WP is gone. We fly some of their planes now I believe. I think the larger LCC's--Southwest, Airtran, and Jetblue already have name recognition etc, and it would be harder to "hurt" them. The newer LCC's without name recognition will be the targets I believe, and I think that's what the article said.

Bye Bye--General Lee

 

[Pickle]

Predatory pricing part deux, LCCs

General Lee said: "AA kept flying those routes for about 6 months to appease the FEDs, and then stopped."

YEs, AA did knock Legend out of Love Field, but I was also referring to Northwest the "Kings of Predatory Pricing" and their pp endeavor into RNO to take on Reno Airlines (remember them?) and also what they are doing in MKE to Midwest right now.

General Lee also said: "I think the larger LCC's--Southwest, Airtran, and Jetblue already have name recognition"

There is one LCC who is glaringly ommited form your list, a carrier that is bigger than all of those mentioned save SWA. It is ATA, the "Biggest Airline You've NEVER Heard Of." (tm)

I coined that phrase. Y'all can feel free to use it though, just make sure my royalty checks show up on time.

 

[greyhound]

General

I think you are right about the skycaps not belonging to Delta.
But I am sure you will agree that they represent "Delta" no-matter who they get their check from.
At SWA, you get a SWA employee.
Probably because SWA knows it's own employees take better care of their customers.
My wife flew Delta to GDL on your 737-800's(I believe).
Everything else was fine.

 

[General Lee]

Greyhound,

You're right, they do represent Delta, and they should be talked to. Customer service is very important and some of these guys don't get it. I'm glad the rest of her trip was fine.


Pickle,

I wasn't leaving ATA out on purpose. I am sure people are starting to recognize them more and more each day--especially in Chicago. The whole point of this article to me is that the newer ones with less name recognition might have initial problems if the Majors launch a price war at their hub city. It is all speculation though.

Bye bye--General Lee

 

[Pickle]

AT what?? AT who?

General Lee:

No, please don't think I was getting on you about leaving ATA out of your list, it was actually aimed at how you never hear of ATA in the media or in articles about LCCs. ATA has replaced the old VP of Marketing with a new guy. I do notice lots of ads here in Chicago on the radio, also on baseball games on ESPN and other shows on other networks.

But, no, that was not aimed at you.

 

[FLB717]

General,

You said Delta run JBLU out of ATL. We sort of they are still here. But I really believe they retreated slightly (they will be back) not only because Delta dumped a crap load of capacity on the the routes but they had to try and take AAI pax also. I believe if AAI was not on ATL LAX then they would still be here but bigger.

As far as Preditory Pricing, yeah Delta does it all the time. It just has a smaller impact than on a carrier like the future ACA or if someone tried to kill Spirit. Spirit would live but they would take a much harder hit than AAI or JBLU. And lets face it you want power? If LUV paid off all debt they would still have nearly 1 BILLION in cash.

 

[General Lee]

FLB717,

Hey, I didn't mean to leave you guys out (Ryan actually), and I know that Airtran has good feed onto those flights. So, maybe both of us ran them out---and we really did. Sure, they might be back, but probably not on the LGB route, and they just started OAK---with a 6am departure out of ATL (who wants to wake up super early for that? The TVs wouldn't help because you would sleep through the whole flight) and it returns as an allnighter. I think they will eventually return with some FLL flights to ATL, maybe JFK, IAD, or BOS. Who knows? I am sure it probably hurts our bottom line, but we are going to have to figure out a way to compete--and right now that is Song on a lot of their routes. Let's see how it goes when we get all 36 of our planes up and running, and the TVs installed. We shall see---and I am not forgetting about you guys at Airtran....

Bye Bye--General Lee

 

[FLB717]

Hey it ok we have Ryan, you have DCI. Of course ryan leaves in 1.5 years.. Whens the DCI contract up? Thats a joke

 

[General Lee]

FLB717,

Never. But, they do provide good feed and make profits for us in this rough time. Hey, you guys are getting into the RJ game too---Look at PNS, TLH, MEM, GSO, and RDU. I have a feeling that you might be seeing more RJs too. It's all about economics.....right????

Bye Bye--General Lee