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How to destroy your airline

AlbieF15

F15 Ret/FDX/InterviewPrep
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Aviators,

Just got done reading the AA thread, and it is getting hot in there. "Angry little troll", "idiot", etc. are being tossed around a bit too much as guys go back and forth--especially on the regional/mainline battle.

I'll offer 2 cents on what I see happening in my favorite Major down south...and the trend started well before 9/11. Then I'll offer a sad prediction of what I see happening next...

The issue of Major verses Regional has gotten a lot of press, so I won't beat it do death here. I will say that seeing an mainline MD-88 on the FLA panhandle is rare, and that the ATRs and RJs are the dominent airframe. We know that a mainline MD88 guy has gets paid more than those ATR/RJs, but I think there are issues that airline mgt is missing in their quest to cut costs, especially if your regional company's CSAs and flight management does not provide the level of service that customers expect for their money.

The interesting phenomenon that I see in ATL frequently, and saw again at DFW last night, is that when flights to several cities within 50-80 miles of each other are scheduled in the same bank, and there are a lot of empty seats on any one of the flight, one of the flights "breaks". Now--before anyone goes off on me making unbiased accusations, let me assure you the PERCEPTION of the paying customers in the lounge area is that this is a deliberate action. I have seen this happen so many times that is does give some credence to their suspicions. Regardless of the validity of the claim--many folks are upset and very suspicious of my favorite major's feeder/code share partner.

Frequently when this happens, the paying pax has 2-3 options.
*Accept going to original destination, often 12-24 hours later (saw this at DFW last night).
*Fly to nearby city (if seats available) and get bussed/taxied/shuttled to destination (painful at times)
*Say "h@ll with it" and drive (seen this several times in ATL

Common thread to all options--they are BAD and irritate the daylights out of paying pax. Angst, frustration, and a committment to NEVER fly said company again if at all possible develops.

Guys--we go back and forth here on the board about what a pilot is "worth" in wages, but if your company continues to alienate passengers, here is what will happen next.

First--your high dollar flyers, tired of security hassles, poor customer service, cancelled flights, etc. will gravitate towards fractionals, company planes, and charters when able. Although dollar for dollar airlines are cheaper, the company can justify its use of other options for both security and time management reasons. It can also consider such travel an incentive or perk for its frequent travelers, who probably consider avoiding airlines as a very attractive company benefit.

Next--your "backpack" and coach travelers just suffer. However--when competition shows up that offers good customer service, you can no longer win back your customers by "price matching" the new competition. JetBlue fares to MCO from JFK were MORE than Delta Express--but JB was full and making money while DE was bleeding with less than 3/4 full jets. Either company could have made money with good load factors--why was JBs so much higher? CUSTOMER SERVICE! You cannot continually p!ss in the coffee cup of even your "cheap seat" customers, and expect them not to notice. When given the alternative, they are GONE!

Don't believe it? In 2000 or 2001, the City of Pensacola gave Air Tran a million plus bonus or guarantee of some type to get them to move service from Ft Walton Beach (VPS) to Pensacola (PNS) in an effort to improve business travel to the area. When cities PAY you to start up there, you know the existing companies have generated some bad blood!

So...my 2002 prediction. My old favorite is going to continue to lose market share to Air Tran, JetBlue, and SWA (and Frontier if they compete in their neighborhood). And the issue is not just cost--it is attitude! While more and more flying goes to the regional connections, the poor customer service continues to alienate a larger and larger group. So when your city finally does get SWA, Air Tran, or JetBlue service, they will lose customers they can never get back. The brand loyalty they had in the 80s is dead--Generation X doesn't even know that (Southern Major) used to be the "customer service" airline...they look at them as the establishment. The upstarts that provide a smile, an honest answer, and actually seem to attempt to fly their timetables will develop the loyalty in the coming decade. Again--the 20-50 dollars difference in seat price may be enticing, but I know many customers in my area would pay $100 more to avoid headaches with the local regional.

So..the prediction? By 2008 (Southern Major)will no longer provide service to 30% of the cities it currently serves. It an attempt to cut costs, it will curtail flights in areas where it cannot maintain a yield justifying continued flights. Wages will be frozen, and in real terms go down at the current inflation rate. No significant mainline hiring will take place for 6 or more years. However, point to point expansion by Air Tran, Southwest, and JetBlue (in Florida) will fill the void and provide a higher level of customer options than are currently available.

Anyone who knows my background knows I hope I am wrong--but I don't see a lot of "light" for my old favorite at the moment.

Thoughts or rebuttals?
 
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KlingonLRDRVR

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Sorry to say but I think you are right on target. You will not catch me betting any money against your predictions. Well thought out post.

KlingonLRDRVR
 

46Driver

Hoist the Black Flag....
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I believe AirTran got so much business in PCola that they upped the number of flights from 3 per day to 4 per day.
 

typhoonpilot

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Albie:

Good post, very well said. I would say that you are slightly off in one area, that is pilot pay. USAirways just set the standard for that and it is for a large pay reduction. United will follow very shortly ( if they don't give at least 20 % they will go bankrupt ) then Delta and American will tumble. American not so much, as they never got the big pay raises that United, Delta and USAirways recently had. All of this happening and I still fly with captains that don't have the first clue about good customer service. We as pilots can have a positive impact on the customer service side just by doing little things like making good announcements; helping passengers where ever and when ever possible; and of course making a safe-smooth ( and I underline smooth ) flight.

Cheers,

Typhoonpilot
 

FL717

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That is an excellent commentary and think you are on point with most of your observations.
AirTran has a guarantee (travel bank) in several smaller markets that allows us to move into that market with little or no risk financially. Basically the way it works is this - if we do not generate the required preset revenue expected or needed during a set period (1 or 2 years), we may submit a bill to the local chamber of commerce or city that is sponsoring the travel bank, for the balance of the revenue deficit. You are absolutely correct in your opinion that these particular cities have a serious axe to grind with the ticket prices of some of the majors (southern, northern or elsewhere). It is my opinion that the business models at most of the majors DOES NOT WORK, nor has it worked for the last 30 years.. as evident by predictable business cycles (hire like crazy... furlough like crazy). Their business models only work during good economic times, and rely on gouging business travelers for a bulk of the model dynamics. That is why I believe they are not necessarily THE place to hang my hat. Southwest Airlines... there is a model that works. Will their model always work... depends on if they are able to keep the same corporate culture that separates them from the pack.
 

dragon

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Outstanding Post!

The flying public doesn't seem to want much except to get where they are going safely, cheaply, and in a timely manner.

Major Airlines answer to SWA and JB is to cut "frills" but they aren't copying what is making them really work. SWA keeps its airplanes in the air where they make money not on the ground where they don't. More importantly, their employees really seem to like what they are doing. Last several flights I've had on the Majors have all seemed that the pasengers were just in the way.

Thanks again.
 

Huck

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I must add that the beefed up "security" must also be taking its toll. If a business executive had the option of a King Aire or Citation ride, with his rental car pulled up to the airstair and everyone polite and professional, versus taking off his belt and shoes for a mouth-breather with a minimum wage government job - he wouldn't care WHAT the cost was.

I just did a deadhead DSM- MEM - MOB, and had to take off my shoes and belt twice, and have my bags hand searched three times. All while in uniform. By the end of the day, I was doing something I rarely ever do - re-evaluating my career choices....
 

Gumbydammit

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Huck,
I dont get it...you're at FDX, right...might this be the BEST place to be right now? Isn't the cargo flying the exception to the security hassles we see everywhere else? Say it aint so that even the cargo guys are getting fed up with all the monkey business!

Albie,
Great post...although I dont think things are quite so dire for the big boys right now. The "no frills" carriers are taking a chunk, but the main problem facing the big boys is the lack of DEMAND...killed by 9/11, the feds' mass buffoonery in airport security, and probably most of all, the economy. The excessive demand we experienced in the late 90's was wretched excess and it will take awhile to get back to those levels. Right now American businesses are cutting back everywhere to save money...IT budgets, travel, and other variable costs are the first to go because you can get by without them. Eventually the business traveler will return and he will want the traditional flexibility and benefits of the major airline...those that can take him anywhere in the world via an extensive route structure and codeshare agreements. Of course I doubt they will pay what they have been paying, but they WILL be back. Right now the industry needs consolidation and the feds are not helping with the bailouts. We need for free enterprise to work here and the strong players need to survive and the weak go away. There will always be the niche for the SWA's and the JBLU's but there will also always be the Merck's, the Pfizer's, the GE's, and the Coca Cola's out there that want the nonstop shopping for corporate travel. It may very well be a few years before it all comes back to normal and for those of us waiting to get on board, the wait may be too long, but it will all come back around. Service will return at the big boys and the feds will finally figure out that breast milk, while dull and unplatable, is not going to kill anyone...once a major player is allowed to fail. All the stupid feds with their stupid rules and policies and all the b*tchy FA's at the surviving airlines will finally get their sh*t together and realize that their life and jobs aint so bad and if they want to keep their jobs, they better start doing their jobs and doing them well....that's how the system works...and it does work. For us now though, the wait until they do get their sh*t in one sock will be painful while the poor guys on furlough and the poorer guys with no job at all sit and watch the process unfold. For the military guys, it may be time to think about orders for a couple years and for the civilians, God help you poor guys put up with just a couple more years on regional pay. It's a rough time for us now, but eventually things will all come around......

.......then again I could WAY off and we're all screwed.
 

AlbieF15

F15 Ret/FDX/InterviewPrep
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Gumby,

My point is that the current poor customer service will be the death knell for some majors, even when those customers return. In the past, when faced with a choice between an upstart (Peoples Express) or a major (USAIR), the customer could expect that on the major they would have a higher level of customer service, a "classier" aircraft with a more comfortable seat, and good CSAs who helped if/when flights were delayed, bags were lost, etc.

Fast forward to 2002. Jetblue offers a lower fare than many majors (but not always the LOWEST fare). When you get a last minute notification of a business trip, you don't feel like you are "raped" when you pay the walk up fare. The planes are new, the seats are gucci, the TV has 24 channels,the FAs are friendly and helpful, and when (RARELY) something goes wrong, the CSAs are the best in the industry at trying to make it right. My favorite story...a guy loses a baby stroller somewhere between boarding and deplaning...it got sent to the wrong spot vice to the jetway at the arriving aiport. He got angry, then caught himself and said "Oh well...this is JETBLUE...I know you didn't do it on purpose.." In other words, the repuation and product is so good, customers will give them the benefit of the doubt when, in rare cases, things go wrong. Compare that with "oh...they cancelled my flight again..must not have been full..." cynicism that I heard in DFW two nights ago and often hear in ATL.

Compare that to the Delta/ASA act. Delta still appears to try hard, but cost cutting (grab your "sky deli" sandwich bag on the jetway) and the horrendous reputation of ASA for poor customer service (lost bags--cancelled flights--indifferent CSAs)mean the whole experience is WORSE than the "upstart". Instead of spending MORE time and effort on customer service in lean times, the majors have got it backwards. There is no incentive right now except for frequent flyer programs for pax to travel on AA, DAL, or UAL instead of Air Tran, JetBlue, and Frontier. SWA is a "cheap seat", and don't compete on service. However--the other 3 "low cost" carries provide a better product these days, IMHO. The gal bumped in DAL from her PNS trip specifically mentioned she had flown Frontier recently, and mentioned how nice it was. She didn't say "it was cheaper", or "I saved 50 bucks.."--she mentioned the SERVICE. A good ticket price will get someone to try your airline, but good customer service will keep them coming back. Jetblue and AirTran have grown tremendously based on those ideas. I get the idea ASA survives simply because "they are what we got at our airport...". The DAY that AirTran or JetBlue show up in an ASA city is the day Delta is starting to lose that market. That won't happen in some markets, because a 150 seat Airbus or an 717 may still be too big for some markets. However--time and growth will gradually reduce the number of those small, regional only enclaves. Unless there is a fundamental change in ops, when faced with a choice there are a bunch of angry customers that are GONE.

As for the wage/scope issues--I'm not an expert. All I know is that product verses product, most days, JetBlue and AirTran offer a superior traveling experience. As their routes expand, they will grow at the expense of other carriers. I think they could raise prices and payscales (which they won't--at least for a while) and still whip up on majors in some markets. The fix isn't in the hands of the pilots--its at the CEO, marketing, and human resource department. I've seen a lot of angst on these boards about "why does SWA/JetBlue do such a detailed background check?" The answer is simple--they don't want jerks in contact with their paying pax. The majors could take a lesson or two from that attitude.
 

Rick1128

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Gumby

From what I am seeing, I believe your comment about corporate aviation is off the mark. While several company flight departments have either downsized or shutdown completely, many more are upgrading or adding equipment. And other departments are starting. Some, like my previous corporate employer, are restarting their flight departments. After 9/11 there have been a lot of first time corporate operators starting up. In jets and I don't mean CE500's or LR20's. I mean Hawkers, CE650's, etc. It is an interesting trend. And I believe it will continue as long as airline service continues the way it is and the airports treat the people who really pay the airlines' way (business travelers) like dangerous criminals and terrorists. And they will travel whatever way is most comfortable and convenent for them.
 

Gumbydammit

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Albie,
I agree that the PRODUCT itself is far superior at JBLU and AirTran and even probably SWA because of the reasons you mentioned, but I think EVENTUALLY the majors will come around and be back in the mix. Like I said, we are a long ways away from a fix here....much has to happen that will not happen for awhile...we need a "come to Jesus" so to speak in a big way. However, how much business do you think Delta will lose to these folks before they start digging their heels in and playing hardball? I'm not sure they have the right answer right now (RJ's just aren't a better product), but I think they eventually will compete and offer the service people expect...they will eventually solve the problems of surly employees and wasteful business practices. In the end they can give the corporate customer what the startups can't give them and that is one-stop (not nonstop like my previous post) shopping for their travel needs and the coveted frequent flyer miles everyone wants. You were a military guy...how much did it suck going commercial on a different carrier everywhere you went? The corporate/government travel money will be back eventually and the fractionals are just not practical for one or two people going to a sales conference somewhere. On that note...Rick does have a good point...corporate flight departments will continue to grow and pick up business. All it takes is an experience like Huck was talking about to convince anyone of that...a first class and pleasant flying experience is a misnomer nowadays...these airport security guys are IDIOTS. Who the he11 makes a lady drink her breast milk?!?! Cr@p like that will eventually stop for the most part....sanity will (hopefully) return here and someone will finally realize that frisking the pilot flying the plane who can kill everyone on board anytime he wants is probably not helping. In the meantime, I agree the fractionals will grow as a result, but much of the time they just aren't PRACTICAL. How can a corporate flight department justify spending thousands to move two people to their sales meeting somewhere on their corporate jet when they could just send both on a commercial ticket for less than a grand? The market is there...it's just cyclical and the recession with all the other factors is kicking the crap out of the big 5. Once the shakeout happens, pay will freeze or retract, and those left will either pick it up or pack it up once they realize that the customer is what puts food on the table. For us now though, the big 5 just aren't an option and probably won't be for a few years, but we've all got to realize that it will all come back around sooner or later...probably not quite like it was, but not too far off either.
 

HA25

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Albie15, I agree with 99% of what you are saying. I did a post some two months ago about the state of "customer service" at the majors, and the nature of F/A's and gate agents today vs the "old days" when they were young peope who were excited about their job. The unions have destroyed them.

I belive in pilots unions, but sorry, I don't think that F/A's and other employee groups (less the mechanics) need unions. But we are stuck with them, like it or not.
 

Shag_McNasty

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How can a corporate flight department justify spending thousands to move two people to their sales meeting somewhere on their corporate jet when they could just send both on a commercial ticket for less than a grand?

We do it every day! We'll even do it for one passenger. We'll even fly empty to Europe, pick up one or two pax, and fly them back to the U.S. The justification is safety, security and convenience.
 

AlbieF15

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Divide a 6 or 7 figure income by number of days a work per year. Now do the math with corporate aviation allowing 1 mtg per 1 day, or airline allowing 1 mtg per 3 days (ie...tue travel, wed mtg, thurs travel) and you see the math. Even a Beech Baron for a small company amortized over 10 years can make sense if you price in ASA ticket prices ($600 walk up fares for PFN to Savannah, for instance)

You don't have to take my word for it--ask the corporate guys "how's business?". The fractionals allow corporations who could not justify owning a citation or lear outright the option to cost share with other companies (sort of like a GA partnership....haven't you seen the adds for 1/3 interest in Mooney 201, etc). Throw in a lifeguard or Make a Wish flight every once in while for good PR and altruistic purposes, and the whole thing isn't nearly as "offensive" to stockholders and the general public as it might have been a few years ago. Corporate aviation isn't just a luxury...its generally a pretty cost effective way to do business when you factor in the other benefits.

Yes...there have been abuses in the past. However...9/11 allows companies to tell stockholders with a straight face why it is to their advantage to avoid airline travel.
 

Shag_McNasty

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Albie,

Well said. Yes, business is good on the corporate side. Just ask Falcon Capt. I think I heard him say his company has cut 50,000 jobs over the last year, but yet he still has a job. A few years ago he would have been the first one out the door.

Mike,

The answer to your question is yes, only top level execs travel alone. Mid to low level execs typically travel in groups of 4 or more to make it more cost effective.
 

LJDRVR

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Albie is correct. Not only has on-demand 135 charter been on the rise since September 11th, I hear a new refrain from our charter customers that I didn't hear before. Many of my pax recount their "customer service horror stories" on the scheduled carriers, and tell me they try to stay away from the airlines as much as possible. I seem to hear these all the time now. I can think of several customers I fly on a regular basis now that are begining to use charter more frequently.

Of course these people can afford to "vote with their feet." The vast majority of the travelling public can't afford to ride in a private jet. These masses though, are having the same less than wonderful experiences that I hear about from my passengers. Some major airlines, in a post deregulation cost-cutting frenzy, have alienated legions of previously loyal customers. I like how Gordon Bethune put is in his book:

How running an airline is like making pizza

Say you're running a pizza place and your boss says, "the only way we're going to be a successful pizza place and get customers and make money and win is to make a cheaper pizza," What are you going to do? If you want to win, if you want to be rewarded by your boss, You're going to keep trying to make a cheaper pizza. You're going to make thinner and thinner crusts to save on flour. You're going to use less and less sauce to save on tomatoes. You'll buy canned vegatables rather than fresh. You'll buy frozen meat instead of fresh.

Sooner or later somebody's going to get the bright idea to take half the cheese off, or all the cheese off and make the pizza out of cardboard. Well, you can make a pizza so cheap nobody wants to eat it.....So, you're going to be making these incedibly cheap pizzas, and the people in the cost department and the people in the supply department are going to be hapyy and high-fiving each other. They'll be saying, "We're winning back here!" And meanwhile up front, where the orders have dried up and the customers are complaining and no pizzas are selling, you're not winning at all. In the end it's like a canoe-the back end can't be winning while the front end is sinking. If any part of the canoe is sinking, nobody cares how good the rest of the canoe is doing, because the whole thing is going to sink.
(Bethune 1998)

This may be an overly simplistic and trite metaphor for part of what's ailing our industry, (CAL is hurting too.) but I think it illustrates the approach some of our leaders have taken to our product.

I really do think Albie is correct in identifying customer service as the key. Until we all realize the importance of CS, there will be no meaningful recovery.
 

Caveman

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I agree that improving customer service is the single best answer to getting people flying again because it directly counteracts the two primary reasons people aren't flying: cost and security hassles.

Until we get some common sense back into the equation security will continue to be a joke and ineffective. In other words there isn't anything in the short run that we can do to combat the security hassle other than kill them with kindness in all other aspects of their flight. Bad security notwithstanding, that should be the goal regardless. Happy customers are repeat customers.

I disagree that JB and AirTran are winning the war mainly because of customer service. Anyway you slice it their labor costs are significantly less than the big 5 or 6. While JB or AirTran may have slightly higher fares in a few markets, across the board it cost less to buy a ticket on them. Ask Joe 6 pack what is the predominant factor on which they base an airline purchase. I'll bet the farm that the overwhelming majority will say ticket prices.
 
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Clownpilot

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Oh my God

All you mental midgets who think they have the entire airline industry figured out just SHUT THE HILL UP. The guys running the shows are waaaaaaaaaay smarter than any of you and they know that the key to survival is to find the current way to compete in a down economic cycle. As soon as the economy goes on the upswing again they will go back to many of the policies and programs they had before and will be raking in the cash again as they were before. Don't get pissed cuz the current climate has you stuck at a package carrier or crappy regional airline. Thats the way the ball bounces. You just came up on the short end of the stick and now you want the major guys who got your dream job to suffer as you do. Well, too bad. This is temporary the industry WILL recover. Jetblue MIGHT survive. And none of you have the faintest idea how to run or compete in the airline industry but you sure do like hearing yourselves talk and patting each other on the back about how right you all are in your assessments. If you were right, you'd be running the show not them. Go back to your sad little lives and stick to things like tic tac toe and beer drinking. You know, stuff you can comprehend.
 
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