Not DisappoinTED

[G4G5]

"The reduction in cost per seat mile comes for the increased number of seats in the TED A320s, 156 seats in a TED A320 vs. 138 seats in a mainline Bus. A 13% increase in ASMs at the same cost."


It's not the same unit cost. That's the point.

Processing 156 folks costs more money then processing 138 folks.

Speaking of which are the 156 folks paying the same average fare premium as the 138 folks? 156 folks @ $200 each is nowhere near as profitable as a 138 seat aircraft where the business and averages Joe's are paying $400 each. Does anyone over their realize the break even point?

Over simplification but to show my point
Sell 156 seats x $200 average fare= $31,200 / 138 seats = $226
So if UAL had sold the same seat on a 138 seat aircraft for an extra $26 dollars they could have made the same money. Instead they created TED.

That's why the LCC airline within an airline has NEVER worked.

Which get's me to the associated costs of having a same type A320 operate in a different class configurations. AA tried this with their 777. They had a Pacific and an Atlantic configured aircraft. When one would go in for maintenance or go down at the gate with a mechanical. It was extremely difficult to switch in the wrong type of aircraft. So difficult that they determined that this was no longer worth the cost. They reconfigured all the A300's/767's/777's to same type cabins, claming that it saved millions.

What about an aircraft with 156 seats. Isn't that an additional flight attendant?

Marketing expenses associated with operating an airline with in an airline?

For the additional 13% increase in ASM's, is it worth it?


PS I agree about Boyd but you have to admit the reverse Kirk thing was humerous.

 

[skykid]

Trojan, couldn't agree with you more about the nonsense Boyd spews out on a third grade level.

One of the carriers that has a bunch of different aircraft types and actually flies overseas makes a move to protect its domestic market. I think it was a bold move, and bold moves are easy to be critical of, esp if your mind is already made up. G4G5, not sure you are keeping up with current events - the banks are already convinced, and if you think Ted is even one of the top FIVE things the ATSB is going to consider, you are way off. United is flying about 200,000 pax per day this month. Do you really think they are spending alot more money to process 156 pax vs 138 at a gate?! Let's say for arguments sake it costs $10 apiece to process those extra 18 people (which is off by about $9.75). I wonder if even filling 2 extra seats above the 138 would pay for an extra flight attendant? You are right though, what Ted needs is lower costs - employees making less - than the huge cuts already felt by UAL employees. Oh yeah! - that's just what pilots need - even lower pay! Seriously, United is changing up the product. That is a good thing. You naysayers need to shut your pieholes and hope some form of what "used to be" makes it through this. Whoever you fly for is potentially not the final evolution here. Yeah! - let's hope some of the legacy carriers go under! See what fills the void, and what your paycheck looks like when the guy willing to do your job for 30K less gets his chance.

 

[rudderdog]

If you look at the LCCs not one currently flying has an aircraft with more than ~160 seats

20/20,

There's this new carrier in town you may not have heard of. They are a LCC and operate both 737's , 757's and a few token L1011's to generate revenue on the other side of the world during the slow season here in the states. They only have 1200 or so pilots and pay about the same or better than United. Their cost structure is mature and they have a very good retirement plan. With all this, their CASM is around 7 cents.

Do you know how many seats are in a 757-300?

I'll give you a hint. It's between 246 and 248. And most every seat has been full all month.

20/20, you may want to change your name to 20/60.

 

[Mr Hat]

Ya gotta hand it to Boyd, he has a way with words. Reverse Kirk syndrome, thats funny!

 

[G4G5]

"if you think Ted is even one of the top FIVE things the ATSB is going to consider, you are way off."

And you are way off, if you think it's something that they are just just going to ignore. Someone will no doubt ask the question, "what are you doing differently?" Why did Shuttle by United fail? Could it have been a poor busniess plan?

You give the ATSB folks too little credit, theses are not a stupid people. They have said No more then they have said Yes (se UAL's last attempt). They are fully aware of exactly how many times the airline with in an airlines has failed. UAL WILL be asked, why they think it will work this time when no one else does.

Someone else will ask why doesn't Amr have an LCC? Why is the DAL CEO on record as being opposed to it?

You can only get your business plan rejected so many times before people lose confidence in you. How many times has Tilton screwed up the business plan? (Attaching $100's of millions of dollars to a code share with USAir?)

While it may not be on the top of the list it certianly will be on the list.

 

[canyonblue]

Someone else will ask why doesn't Amr have an LCC? Why is the DAL CEO on record as being opposed to it?

Richard Anderson at Northwest is also vehemently opposed to it.

 

[G4G5]

Richard Anderson at Northwest is also vehemently opposed to it.

Arpey is against it too, he claims that brand dilutions is far worse then anything you can gain from creating an internal LCC.

That was my point: When an Oil man takes a business plan to Capital Hill asking for money and part of that plan is a concept that has always failed and every Airline CEO is opposed to, the ATSB will ask questions.

The banks could care less, if UAL has the assets to secure the loan they will gladly lend them the money at some crazy interest rate. All UAL is doing is trying to get Uncle Sam to co sign the loan, so they can cut a better deal.

I do not believe that not getting the loan will kill (nor do I want it to)

 

[T-Bags]

Is AMR or NWA profitable? Why should UAL follow their business plans? For the record, NWA ALREADY uses "high density seating", so there is nothing to "dillute" A NWA A320 has 148 seats (SAME NUMBER OF ROWS AS TED!!) vs 138 for UAL and 156 for TED while a NWA 747-400 seats 403 vs 347 for UAL. UAL was FORCED to implement the TED product because the routes simply DO NOT support mainline service. They were losing market share in those markets. The alternative was either MUCH less service, or UAX (as in the case of LAX-PHX/TUS downgrades from "shuttle"). Would a fun little ride on an RJ be BETTER than a 156 seat Ted jet, with a LARGER econ plus seating section?

 

[Andy]

G4G5, another factor that you fail to consider on UAL's implementation of TED is the destinations that TED flies to. Vacation spots (Vegas, New Orleans, Orlando).
These destinations were already thin on business travelers, so the removal of first class seating was a proper decision.
UAL has realized the folly of relying totally on the business traveler, and is now seeking to capture some leisure traveler revenue.
It may not work, but the ticket prices on TED are comparable to the LCCs. I don't think that UAL's CASM for its Airbii are that much higher (if at all higher) than the LCCs.
As for an extra FA, UAL used to staff 138 seat Airbii with 4 FAs. Post-911, I believe they reduced it to 3. However, if you're paying an FA $25/hr, it takes less than one additional passenger to pay for the FA on a 3 hr flight.
The additional marginal costs of adding 18 seats is more than offset by the additional revenue captured on flights to those targeted destinations.

 

[G4G5]

Hi Andy,

Let me preface this with, I am Pro UAL. I just hate to see them travel down this road when conserving cash and coming up with a realistic business plan is so important.

Andy
G4G5, another factor that you fail to consider on UAL's implementation of TED is the destinations that TED flies to. Vacation spots (Vegas, New Orleans, Orlando).
These destinations were already thin on business travelers, so the removal of first class seating was a proper decision.
UAL has realized the folly of relying totally on the business traveler, and is now seeking to capture some leisure traveler revenue.

G4G5
I fully understand what you are saying . The problem is what do you do when the economy turns and things return to profitability? You now have a dedicated aircraft that is painted and configured to cater to the cheapest fares out there. You will not be able to move those assets into a profitable market quick enough (the other Legacy carriers can adjust and absorb the new business traffic much quicker). UAL could have kept the same paint job and just lowered the fare to compete on the vacation routes. Instead people have to become familiar with a completely new airline.
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It may not work, but the ticket prices on TED are comparable to the LCCs. I don't think that UAL's CASM for its Airbii are that much higher (if at all higher) than the LCCs.

G4G5
I tend to disagree, UAL has the cost of supporting it's vast infa structure. You are still paying the maint, baggage, reservation yada yada the same as mainline.

Jetblue has a much lower cost basis, they generate a much higher ratio of tickets on the internet, they have no centeral reservations, yada yada.
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As for an extra FA, UAL used to staff 138 seat Airbii with 4 FAs. Post-911, I believe they reduced it to 3. However, if you're paying an FA $25/hr, it takes less than one additional passenger to pay for the FA on a 3 hr flight.
The additional marginal costs of adding 18 seats is more than offset by the additional revenue captured on flights to those targeted destinations.

G4G5
The additional revenue that you are trying to capture is that of the folks willing to pay the least amount for a ticket. As my example above shows. It's much harder to consider this a break even when LUV and B6 cap their fares at approx $300. That tells me the most you can charge for the TED seat is $300. I have to believe that you can do much better charging a lower fare on the UAL flight and then letting the occasional walk up pay the greater fare. You just can't prove that those additional 18 seats at the rock bottom fares generate enough to pay the cost of operating an airline with in an airline (marketing TED, cost of coversion, yada yada)

Can UAL FF's use TED for thier points?