Let's Start an Airline-Hypothetically

[Astra Guy]

enigma,

I am one of those very pilots I was talking about. The folks you mentioned were very poor examples of how real managers should act. Lorenzo was out to put the company down, period. I am not saying it is a one way street. Bad CEOs have ruined many of the best airlines in the business. I do agree with Publishers that us pilots do tend to be more vocal, as a group, than any other single group of workers that I know of. Maybe that is because we can figure out some of the shenanigans that are taking place. There are a couple of airline CEOs that seem to have backing from their workforce, from what I have read. As I said, people are just people, regardless of their position in life.

I am still a pilot first, foremost and always will be.

 

[Publishers]

comparisons

Enigma

The comparison between Don, Leo, and Frank is really not fair nor does it reflect what I was talking about.

The fact that Don and Leo were trying to line their golden egg was more bad taste due to the timing than something not appropriate for people in their position.

In either case, I do not find either one of them to have the kind of employee bashing traits I see here.

As to Frank Lorenzo, you are talking about a totally different subject adn should put him more in the category of Carl Ichan.

They are not managers of people but traders of companies and assets. I have known a number of these people in both aviation and other businesses. Their interest does not lie in running companies. They trade for the value just like they were stocks.

The point of whether these people were great managers or even crooks, has absolutely nothing to do with the point I made as to their attitude towards employees.

 

[enigma]

Re: comparisons

Enigma

The comparison between Don, Leo, and Frank is really not fair nor does it reflect what I was talking about.
...................................................
The point of whether these people were great managers or even crooks, has absolutely nothing to do with the point I made as to their attitude towards employees.

Pub, My words were written as a specific response to this: The boredom sometimes results in creating little things to talk about....this is just one of them. I quoted Astra, not you. You may be correct in your perception, but that's a different topic. Astra asserted that pilots create things to talk about. I countered with a few examples of real issues that pilots talk about.

Now let me hijack the thread a little. If I've read you correctly, you believe that pilots just don't have the total picture in regards to running a profitable airline. You are probably somewhat correct. Pilots may attach personal animosity to management actions that were in no way personal. In some instances that is unfair, but fair or not, correct or not, managers need to deal with those perceptions.

How do YOU deal with a pilot who distrusts you as a manager because of misperceptions developed by the Lorenzos of the world? How do you convince me that my base closure was the result of economics instead of your need to exert more control over a group of "maverick" pilots? How do you convince me that my loyalty to you will ever be repaid?

enigma

 

[enigma]

The folks you mentioned were very poor examples of how real managers should act.

I didn't mention those managers to accuse or defend them. I mentioned them to illustrate that your statement about pilots creating things to gripe about was incorrect.

And another thing! If you, Publishers and a few other management apologists would ever sit back and realize that maybe we're not just bichin, you might well be able to develop programs and processes that could make more money for us all. For example, In an organization I have worked for, the payroll department was continually screwed up. Ninety percent of the mistakes were in their favor. Pilots gripe to upper management and get dismissed because they assume that we are all trying to work the system for more pay. In the end, they end up paying the error. They not only pay it, they pay it with a paper check delivered by FedEx overnight. They continued to make the same mistakes over and over. It was bound to have cost them a ton just in FedEx charges, but they didn't wouldn't fix the system. So we gripe.

At another job with the initials MESA, Larry loved to publicly state that FO's should be paying him for the privege of flying his airplanes. (Little did we know that he would soon figure a way to make this come to pass) He had a public dislike for pilots.

Let me ask the same question that I have past asked; Why do you suppose that employees who enjoy their job so much that they are willing to do it for almost nothing, employees who come to the first day of class with a smile one mile wide, employees who start their career like a Saturn V, become so jaded so quickly? Why? All one need do is read the words posted here by the guys who finally got the call; you never hear any griping then do you? No you don't and it's because those people are truly pumped to have been asked to join the team. They are excited to be working for you, they want to succeed. Yet in a relatively short time, they are reduced to people who" create reasons to gripe".

Maybe it's just me, but I think that they start griping because of they way they are treated.

In initial gs once, the CP showed up to visit the class and spent an hour telling us how he expected us to be a bunch of slackers, etc. He took twenty guys who were ecstatic to be there and dumped cold water on us.

If ya'll are really trying to run your virtual airline in such a way as to keep unions out, you will need to identify the reasons that pilots show up so happy. Find that out, and work hard to maintain an atmosphere that encourages those feelings.

regards,
enigma

 

[bobbysamd]

Point-to-point service

I personally like the point to point system, as well. Once we get more data on building our route structure then we can start working on the trip scenarios. My gut feeling is that we should serve the densely populated areas first. Of course we have to bounce that concept off of the competition and try not to pile on an already saturated market.

The exceptions to point-to-point service would be for feeding our trunk line. (When was the last time you heard that term?). For that we would use our own regional (feeder) line, as discussed above. No code-sharing, contracting-out to Mesa, or any of that malarkey. Our feeder-line pilots would be part of our overall system, our employees, and would hold seniority numbers with our company, eligible for any line and equipment their seniority can hold.

 

[Publishers]

concept

With a larger operation, it probably would not work but in our 135 many years ago, I insisted that the pilots take an hour once or twice a month and I went over our financials.

They really did not like it much but it helped them understand where we were coming from. As we had a much bigger company as parent, there was a tendency to think that the company has plenty of money, why do we need to be concerned with our spending.

One problem with the pilot core is that they are not around the business offices very much if at all. They do not get the sense of belonging or reinforcement that other employees do.

As to pilot loyalty Enigma, I never saw much of it. There was a certain amount of pride in our organization because we did things the proper way and you were never embarrassed by the equipment, no matter what is was. Still, the fact is that anytime someone could leave for a bigger or better piece of equipment, they were long gone.

Now I do not want to be branded a managment loyalist like my friend Enigma would say, but the examples of Don Carty and Leo Mullin are people far removed from direct management of an empoyee group.

Look at some guys like Connie Kalitta or Del Smith, or Bob Fleming if you want to talk about people who were a bit tough on their employee groups.

 

[Astra Guy]

Hey Guys,

I will make one final post about people stuff until after we get other issues worked out like routes and airplanes.

This company will not be like what most of you have experienced. First of all everyone who interviews will have a thumb nail sketch of where we are and where we intend to go. Along with that for those who are at the top of the heap will get more information which will make it clear what the companies expectations are of the company and each individual. Many of the problems are created by unrealized expectations. The loss of halo effect is one example. Maybe what was promised never was actualized. I think if everyone has realistic expectations and the company does everything they can to live up to those expectations then there will be fewer problems.

The action by the CP who poured cold water is new employees has no place in our business....he would never be the CP.

On the financial example that Pub brought up I think it is important to share the financial information frequently with everyone. There would even be training on how to read financial statements. It would stimulate questions and hopefully answers as to why things are the way they are. I get monthly financials from our company. I share those with each of my folks and encourage their questions. It is important for everyone to be on the same page. Lots of misunderstandings can be avoided and if things aren't too keen then everyone should know why.

It is difficult to explain everything without talking eyeball to eyeball. Something that takes 20 posts to get to the bottom of could be handled in an hour long conversation with the group and there would be no misunderstandings. Everyone might not agree but as a minimum everyone would be understood.

Now I intend to move forward after we get some more statistical data on possible routes and airplanes. Then we can start dealing with feeding the horse that pulls the cart.

Thanks for all of the input from everyone.

 

[enigma]

There are a number of private investors that want to start an airline. They want to be the leader in customer service and consistent high levels of performance and reliability. They are in the exploraty stage of building this airline. Because they know that their ultimate success will be dependent upon hiring highly qualified and motivated employees, they are willing to permit six members of the 11 member board of directors to come from their workforce. Members of the board will serve no longer than two years.

...........................................

The investors are adament about keeping their workforce non-union and are willing to pay above median scale to accomplish this.

Due to your airline experience and apparent business knowledge from testing they want you to join their team. Your input will help establish pay rates, upgrade times, work rules, benefits etc., as a minimum but they are also looking for input in all areas of their operation.

OK Astra, which is it? Should your intentions be gleaned from your first post, quoted above? Or from the last, quoted here, "Now I intend to move forward after we get some more statistical data on possible routes and airplanes. Then we can start dealing with feeding the horse that pulls the cart"?

To me, your initial post indicates that this was an exercise in keeping unions out. Now you have shifted to operations, What gives?

enigma

 

[Publishers]

routes

While obviously the route structure proposed needs some study, my first blush is that you are concentrating on longer routes which in some cases produce the absolute worst yields per mile.

I heard that even Jetblue is looking at giving up the long route.

You might want to look at a longer route like miami chicago non stop then fly it one stop at discount then non stop.

 

[Astra Guy]

enigma,

There isn't a shift in focus. The first post is still right on. We have had a number of ideas and thoughts about the people side so far. How are we to determine how many non-union people we need until we get the operations side together?

With a basic core of ideas on how to treat people fairly we need to establish our market, route structure and airplanes. This seems pretty obvious to me. We have some folks working on this and once we kick around and come to decisions on these aspects then we can start to build.

 

[TonyC]

How are we to determine how many non-union people we need ...

No agenda.

No dog in the race.

 

[Publishers]

Awhile

It has been awhile but let's look at the philosophy first.,

Southwest for example found a location from which to start that was not in the face of the majors and concentrated on frequency at a price. They stayed away, as they grew, from getting bogged down on east coast city pairs where they could not make their turn times and hence their utilization.

At that same time you could go from NY to LA for a few hundred bucks. Does not take a math major to see that revenue per passenger mile sucked. In fact, most of them made the money flying the surrounding passenger to NY to catch the LA flight.

With all the discount carriers, it will be harder and harder to come up with medium city pairs at about 1.5 hours flight time. Look at maybe St, Loius, which lost a bunch of flights, to somewhere about that 1.5 to 2 hours out
.
Look and see what the regional feed might be. Southwest also proved that they were their own market. Whereeverr they went, the traffic went up 5 fold as they were attracting people to drive to catch them

 

[enigma]

enigma,

There isn't a shift in focus. The first post is still right on. We have had a number of ideas and thoughts about the people side so far. How are we to determine how many non-union people we need until we get the operations side together?

Whatever, it's your thread.

enigma

 

[enigma]

No agenda.

No dog in the race.

Now stop it, you're not supposed to be reading for content. This is only an exercise.

enigma

 

[Astra Guy]

Publishers brought up a good point about SWA. They built brand loyalty by concentrating on under-served locations and their customer service. They started small and eventually expanded their route structure by, more or less, word of mouth, since what they offered was more attractive to the consumers.

Jet Blue started in a different way, to a degree, offering more creature comforts to it's passengers. Customer service is high when compared to the legacy types.

There is no doubt that the yields would be better on shorter flights, to a degree. I think we should expect to operate at a loss on some flights initially but hopefully expect to reap a profit on others. We are building brand loyalty.

I think what we need to keep in mind is that first, we may not want to start off small serving just a few locations. While SWA did this and to my knowledge has always been in the black, we can not to expect to be so fortunate. Competing with all others in the market will reap losses on some flights with profits on others. The end game plan should be to offer an alternative that reaps more customer satisfaction than any other carrier. Offer good seating arrangements that do not make customers feel cramped on their flights. Offer real food on flights. Outfit the aircraft with the latest technology to keep the customers entertained much as Jet Blue offers. Advertise the differences between our service and our competitors'. If we can do these things then we will build brand loyalty.

Let's assume that it will be year four before we break even. In year five we set our goal to make a profit. If our business plan is to be in this for the long haul then we need to be competitive with all others.

I am not sure about a hub and spoke system unless it applies to using regional type flights to feed our main cities down the road. The regionals would be part of the mainline but operate a different aircraft. The RJs seem to be the plane most commonly used but I guarantee you that the passengers don't like them because of the seating situation. 717s make more sense from a passenger comfort standpoint. What we surely do not want to do is offer a lesser level of service and comfort on the feeders than we have on the larger aircraft when we get to the point of putting feeders into the system.

The story on the street about downers in SWA's operation are the lack of seating assignments. I haven't heard any downers about Jet Blue's operation. I haven't experienced any downers with AirTran.

If our level of service is high, customer satisfaction is high and we succeed in achieving brand loyalty then we could charge a few bucks more/flight than our competitors and still be competitive.

What do you guys think about staying out of the NY-PHL mix. How about drawing a line geographically from Dulles, Richmond, Charleston south and work southern and western cities from that line?

 

[Publishers]

Routes

As I said it has been awhile.

I don't remember if you remember when Key tried to do service out of Savannah or Air South at Myrtle Beach.

They were trying to do hub and spoke that was for liesure travelers alone. The problems were two for starters

1.. Balance of the flight loads to the southern destinations from northern origination.

2. No traffic generation at the hub itself.

We could look at something like this through Miami or Charolette.

Cities up north like Minneapolis, Buffalo etc to destinations like San Juan Cancun etc with a stop in CLT or MIA.

 

[Astra Guy]

Shadow,

Thanks for proposing some route structure ideas. Let's run with some of your city pairs, just to get started.

As for NYC we need to think about several things. EWR is closest to downtown, from my understanding. ISP surely is an attractive idea but we have to think about where do most of the folks live working in the city. Most travelers will want to go to the airport and spend the day travelling from their home rather than coming from the city. Let's look at ISP-BUR and EWR-BUR. I don't know how far PMD is from the city but that might be an option if not too far from the travelling public.

Quoted rates:

20 days out, Saturday night stay.
ISP-BUR $314 with 2 stops 12 hour travel time.
7 days out $499 2 stops 18.5 out, 13.9 back
Tomorrow $634 2 stops 107 out, 10.1 back AA
Nonstop NA
EWR-BUR $501, one stop, 7.5 hours travel time.
7 days out $554 one stop 8.3 out 13.7 back
Tomorrow $524 two stops 10.5 out 8.7 back
Nonstop to LAX tom. $1021 AA and CA
ISP-SFO $545, one stop 9 hours out 7.5 back
7 days out $670, two stops 11.1 out 10.1 back
Tomorrow $723, two stops 10.6 out, 10.5 back
Nonstop NA
EWR-SFO $181 nonstop both ways. United
7 days out $285 nonstop out, one stop back United
Tomorrow $256 nonstop United
ISP-SEA $312 one stop 8 hours out 7.5 back Delta
7 days out $411 two stops out 9.2 out, one stop back
Tomorrow $501 two stops, 10.3 out, 10.6 back AA
EWR-SEA $301 nonstop both ways. Continental
7 days out $308 one stop both ways 8.4 and 7.3 ATA
Tomorrow $308 ditto
Nonstop tomorrow $1367 CA
ISP-ORD $236 one stop 4+ out 3.5 back Continental
7 days out $281 one stop 4.4 and 4 USAir
Tomorow $336 one stop 4.2 and 3.6 CA
Nonstop NA
EWR-ORD $241 nonstop AA
7 days out $316 nonstop United
Tomorrow $274 nonstop AA
ISP-MDW $235 nonstop Continental
7 days out $569 one stop each way 4.2 and 5 Delta
Tomorrow $335 one stop 4.9 and 5 Delta + partners
Nonstop NA tomorrow
EWR-MDW $240 nonstop Continental
7 days out $240 nonstop Continental
Tomorrow $247 nonstop Continental
BWI-BUR $243 one stop 7.5 out, 6.7 back USAir
7 days out $395 one stop 8.4 out, 10.1 back AA, mixed
Tomorrow $428 two stops 10.9 and 8.3 multiple
Nonstop NA
Nonstop to LAX tom. #1551 United
BWI-SFO $353 one stop 8.2 out, 8.9 back AirTran
7 days out $473 one stop 8.2 out, 6.8 back AirTran, FA
Tomorrow $344 one stop 7.1 out, 6.7 back FA
Nonstop tomorrow $1765 United
BWI-SEA $274 one stop 7.9 out, 6.7 back AA
7 days out $314 one stop 7.9 out, 8.4 back AA
Tomorrow $344 one stop 10.8 out, 6.5 back FA
Nonstop NA
BWI-ORD $183 nonstop AA
7 days out $183 nonstop AA
Tomorrow $404 one stop 5.8 and 3.5
BWI-MDW $192 one stop 6.5 both ways AA
7 days out $192 one stop 3.5 out, 3.4 back CA
Tomorrow $403 one stop 3.5 both ways CA
Nonstop NA
BWI-DAL $277 one stop 5.2 and 6.7 CA
7 days out $429 one stop 5.2 and 4.8 CA
Tomorrow $629 one stop 5.2 and 4.7 CA
Nonstop NA
Nonstop tom. DFW $623 AA

As for the SFO area isn't Oakland actually closer to downtown and Marin(sp) County?

In the Chicago area there might be a way to build a terminal in DPA, west of the city. This is actually closer than MKE and would have no competition on the front end.

In the Dallas area Addison is probably not going to work simply because there is not enough room to squeeze a terminal in. If we could secure gates at DAL that would be the way to go.

Doesn't USAir have a hub in BWI? I like BWI as an option.

What are the pros and cons of FLL vs MIA?

What about MSP? STP sure would be a niche area if one could open up a terminal there. I don't know enough about the negatives politically in that area.

I think one hour turns are realistic. 12 hour days for the aircraft is probably realistic.

 

[Astra Guy]

All,

I discovered some ball park figures for the 757-200. DOCs should run $3.7K/hour. Let's use $4K/hour as our figure. This should allow for some fuel and maintenance fluctuations.

Using a typical ATL-DAL-ATL scenario of 3 hours $12K should cover the DOCs. 60 PAX at $200 would cover the DOCs. Assuming that $8K/hour would cover DOCs and other costs it would take 120 PAX to break even. That is pretty close to normal break even %s of 60% of capacity.

My ideas on interior refurbishments would include the same type of seating and creature comforts offered by JetBlue. In addition we should be able to offer broadband internet access on the same screens displaying the tv programs.

Comments?

 

[Publishers]

fares

Look at some of those fares and figure out how much you have the potential to make.

At FLL cost aroudn $5.50 per boarded passenger to the airline, at MIA it is 13.50.

You have to remember ticket tax, reservation cost, ramp and gate rental , etc.

I made sopme quick calculations on United EWR adn SFO and fail to see how we stay in business like that.

Someone compare those fares by milage with other shorter segments like Charolette Birmingham, New Orleans Little Rock, Oklahoma City Louisville as example.

 

[Astra Guy]

Publishers,

I agree that we have to make some calculations on the fare pricing to see what makes sense. EWR long haul trips are not where we want to be, that is for sure. Actually EWR is not a good place to base out of, just from my flight experience into and out of there. Assuming that the ISP market is underserved, and that is yet to be determined, then we surely could make some inroads there even on long haul trips by charging above the going EWR rates.

This whole process takes more study before we settle on a realistic route structure.

I can come up with flight times to most any destination which should help.

I do think that by configuring the aircraft up front with the bells and whistles could reap a solid payback within our four year time frame.

Thanks for your input on getting this exercise underway.