Southwest DIA, Frontier>DONE

[canyonblue]

I'm done with you, you can have the final word there F.L.A.P.

Let me guess short dude, 5'2" long time almost regional lifer, 17 years:crying: multiple turn-downs at any major airline during the roaring hiring day's turned down by 22 airlines including Aeroflot:smash: who has a serious inferiority complex You talking to me? who get's lucky getting hired on by SWA's and now feels the need to thump his chest to show what a real pilot he has become.
Proud to be a FLAP. :beer: :beer:

 

[climbhappy]

Quote by PCL_128: midway's business plan killed them....Indy air.....


yes, I agree, clearly indy air with the 30/barrel assumption. MBA students do better than that with their class projects.

The economic downturn showed Midway's vulnerability.

I hear Frontier is cash poor and can't bear a price war..... Does that show any problems with their plan.? Or is it just oil and too few aircraft to spread out those costs?

 

[jetalc]

Let me guess short dude, 5'2" long time almost regional lifer, 17 years:crying: multiple turn-downs at any major airline during the roaring hiring day's turned down by 22 airlines including Aeroflot:smash: who has a serious inferiority complex You talking to me? who get's lucky getting hired on by SWA's and now feels the need to thump his chest to show what a real pilot he has become.
Proud to be a FLAP. :beer: :beer:

Too many icons...too many colors...too much motion...not much substance...must...get...some...aspirin...

 

[USMC319]

I hear Frontier is cash poor and can't bear a price war.....

You heard wrong. Frontier has one of the strongest balance sheets in the industry, relatively speaking. For a little 49 airplane airline they are doing just fine, however, any airline could use more cash and would prefer not to engage in a price war.

 

[TOGA]

FlyBoeingJets -

I've just accepted a job at F9, and one of the things I liked about them was their CASM as it compares to SWA. In fact, that's one specific reason I feel OK about resigning my seniority with 2000 pilots under me. So, your comment about their CASM piqued my curiosity. Please don't think I'm being a smartass by asking this (quite the opposite, I assure you), but how would you 'adjust CASM for stage length'? Doesn't "Cost per Available Seat Mile" already specifically accomplish that 'adjustment'? F9's CASM is lower, until (of course) you add in SWA's fuel hedging program.

 

[vc10]

What a bunch of ****. You think that *any* corporation does things out of the kindness of their hearts? What heart? It's a corporation, it doesn't have a heart. It's incorporated for the sole reason of making money for its shareholders. The only reason any airline serves a particular city is because they think they'll be more profitable (eventually) if they do.

The legacy carriers have a 3-decade history of reaming consumers every chance they get. Back in 1999 or 2000, you want to fly from New York to LA at the last minute? You're going to pay us over $1000 and you're going to like it.

Now, does Southwest serve cities out of the goodness of their hearts? No, it serves what's profitable (though it takes a lot longer for Southwest to give up on a market than most airlines because it's figured out that customers really value an airline they can count on).

Southwest, however, has figured out that it's actually *more* profitable to give people a good deal. Makes people feel all warm and fuzzy, makes them want to fly a lot, and makes them want to fly Southwest. Southwest supports the low fares by being way better on cost control than any major airline.

It also figured a long time ago that it was very important how they hire and employ people. So Southwest is much more selective in who it hires, and then once it's hired someone, it generally treats them much better than employees at the average airline. It does this NOT out of the goodness of its heart, but because it's GOOD BUSINESS.

Southwest is after the same thing as any other airline: profits. It's just has a much better business model.

The idea of United, or Delta, or Northwest "subsidizing" service to East Bum**** by hosing people on a mainline route is absurd. They're all just corporations. They're all just trying to make a buck. None of them has a heart---and most of the airlines have, historically, treated both passengers and employees far, far worse than Southwest. This downturn, the legacy airlines got their heads handed to them, and did passengers care? No, they did not. Why not? Because most passengers don't give a damn if the legacy majors get reamed because as far as most American consumers are concerned, the legacy majors had been reaming them for decades.

WORD.

Kinda the price you pay when you decimate them on trunck routes that were once profitable enough to support their network so they can provide service to the little guy in Minot. Because in the end, regardless your opinion of network carriers, they actually do care enough to serve everyone.

 

[vc10]

No, CASM is just the operating cost of the airline divided by the number of ASMs. The figures as reported by the airlines do not adjust for stage length.

What does it mean to adjust for stage length?

Every airline has an average stage length. It's the average length of a sector for that quarter (or year or whatever period you're measuring ASMs or operating costs).

The average stage length for F9 is quite long---don't remember off the top of my head, but I'd guess it's well over 1000 miles. It's probably in F9's latest financials.

The average stage length for Southwest is pretty short, I think somewhere around 600 miles.

All things remaining equal, CASM for a given flight goes UP as flight length goes down, because the cost of operating at cruise altitude is small---most of the cost of a flight comes in everything that happens at an airport: checking people in, boarding, takeoff, landing, getting people off, getting them their bag, etc.

So, if Southwest and Frontier were identical in all other respects except their average stage length, you'd expect Frontier to have a lower average CASM than Southwest.

Wall St analysts spend a lot of time worrying about these things. All of them agree: Frontier's costs are significantly higher than those of Southwest, once you stage-length adjust appropriately. I heard an estimate of 15% higher than Southwest by a guy who is one of the best of the analysts.

Here's another secret of Southwest vs. Frontier. Southwest won't be relying a lot on Denver originating passengers to start with. Take a look at where it's flying to Denver from, initially: Las Vegas, Phoenix & Chicago Midway. All of these are huge Southwest strongholds. So suppose you're a guy who flies Southwest a lot out of Phoenix. At the moment you're not flying Southwest whenever you go to Denver because Southwest until now hasn't flown to Denver (well, it did back in the 80s, but that's ancient history). Now that guy is going to say "hey, my airline now flies to Denver, great, another chance to get Southwest frequent flyer credits". That guy might have flown America West, or United or Frontier before. Now he's flying Southwest. That's money out of Frontier's pocket (or United or America West) that Southwest won't even have to fight to get.

Southwest is going to do just fine at Denver just from folks like that. It's going to chip away at Frontier's passenger base and Frontier better raise the level of its game because otherwise it will be crushed between United and Southwest.

FlyBoeingJets -

I've just accepted a job at F9, and one of the things I liked about them was their CASM as it compares to SWA. In fact, that's one specific reason I feel OK about resigning my seniority with 2000 pilots under me. So, your comment about their CASM piqued my curiosity. Please don't think I'm being a smartass by asking this (quite the opposite, I assure you), but how would you 'adjust CASM for stage length'? Doesn't "Cost per Available Seat Mile" already specifically accomplish that 'adjustment'? F9's CASM is lower, until (of course) you add in SWA's fuel hedging program.

 

[USMC319]

The last report showed F9's CASM ex-fuel at $ 0.0586 and SWA at $ 0.0631. With SWA's current fuel hedge, their gain on fuel futures gives them about a 15% CASM advantage including fuel this quarter, with that advantage decreasing over the next several years. The interesting thing is that the fuel hedges being made now could possibly work just the opposite of the last cycle and become a liability to the airlines like Frontier and Southwest whom participate in these programs.

 

[PCL_128]

Now that guy is going to say "hey, my airline now flies to Denver, great, another chance to get Southwest frequent flyer credits".

"My airline?" Are you kidding? No one has a "my airline" anymore. They only have a "look at this great fare I found on Expedia" airline. No customer is loyal to Southwest any more than they are to Delta, United, or any other airline. They're just looking for the best price.

 

[1BigRodeo]

Have you seen the California corridor lately?

Enlighten me with a quote from anyone other than here that represents the management or pilots of SWA in planning the intentional demise of another airline. We go where the numbers are. If youre there and your business plan isnt solid, you are on the chopping block by no other fault than your own. We do not stay up at night dreaming up how to kill another airline. We do defend ourselves alot from outside attacks though, seems like lots of folks like to do that. We are interested in survival, and survival comes from strong business. Period.

I am ineterested in what you mean by the "California corridor" and what that means in relation to what you quoted me on.

 

[1BigRodeo]

Comparing SWA to Frontier is comparing apples to oranges. The networks, the products, the costs...everything. If you guys would stop chucking spears at one another and just start an "I hate ____ airlines" thread, the meat and potatoes of the issues could be discussed in here.

Frontier has a different cost structure, a different product, and a different route system than SWA. The newspapers reported the other day that Frontier had made some motion to gain more financing to compete with SWAs arrival at Denver. If that is not true, someone please post a primary source rebuttal, because this thread is already teeming with "expert opinion". This shows where the two companies are the MOST different. Financially. Taking on financing in this environment will add many new costs to the bottom line, ie. CASM.

If you havent been keeping up, SWA pays cash for a vast majority of our operations. The hedge, planes, gates, equipment....many many of our assets are just that. Assets. We own them. We lease a great many things, finance some, but our balance sheet states that we are not credit junkies. This is what I would fear most in competing with SWA. Insulation. Not bulletproof, but insulated from environmental anomalies, hiccups, and downturns. A solid business plan with proven results being led by people who spend every day in the War room dreaming up the "what ifs" of the industry. Crack open your edition of the "Art of War" and relate many of the nuances of your business plan to the thirteen chapters of this book. If nothing else, the most true and demonstrated example of the way this world works, business or not, is "Prepare like the enemy will come, not in the hope that he will not". Also, "he who knows himself, as well as his enemy should not fear the result of a hundred battles". I think Gary Kelly may have read this once or twice.

We will see, as I am just an enlisted man in this mess of an industry.

 

[vc10]

Not true. There are plenty of people who pick the lowest fare on Expedia, but there are still plenty of frequent flyer mile junkies out there. When your business pays for your travel you pick one airline and stick with it so you can take your family to Hawaii on FF miles.

"My airline?" Are you kidding? No one has a "my airline" anymore. They only have a "look at this great fare I found on Expedia" airline. No customer is loyal to Southwest any more than they are to Delta, United, or any other airline. They're just looking for the best price.

 

[SWA/FO]

Everybody talks about Frontier possible problems... What about UAL...they have to fight Frontier and SWA. They are still in CH 11.

 

[sf260pilot]

"My airline?" Are you kidding? No one has a "my airline" anymore. They only have a "look at this great fare I found on Expedia" airline. No customer is loyal to Southwest any more than they are to Delta, United, or any other airline. They're just looking for the best price.

You cannot get internet fares on SWA anywhere else but Southwest.com.

 

[SWA/FO]

www.southwest.com