On Your Six
Well-known member
- Joined
- Mar 8, 2004
- Posts
- 4,507
On your six eats his own poo!
Don't tell anybody.
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On your six eats his own poo!
Yeah, I'll post my W2 here for you. If you want to prove that you are indeed logical, then answer two simple questions for the rest of us:
1. Is SWA's position and growth prospects threatened by the growth of other LCCs like Jet Blue, Air Tran, Spirit, Skybus, VA and the regional operations of the legacies (E170/CR9 operators)?
2. How is the cattle car boarding process preferrable to the normal, reserved seating process in your mind (not what SAN people think)?
Just answer those two questions in a logical, non-emotional manner and I will be happy - and we can end this debate for good. One word or one sentence answers don't work - some thought and examples would be appreciated.
On Your Six
In 5 years of lurking, I've never felt compelled to add anything to an argument.... here goes:
- In your first post, you referred to "low cost 70-90 seat RJs". Are you familiar with the relative CASM numbers for a 70 seat jet and a 137 seat jet?
- IFE is not free. It costs the airline money to provide this service, a cost that SWA does not have. So many people have ipods and portable DVDs nowadays that I expect IFE to become less of an issue. SWA is wisely looking into onboard internet access, a service that cannot be brought along by a passenger.
- The bottom line for most passengers (not all) is value and reliability. Decades of evidence seems to suggest that people will give up an assigned seat and IFE to save even 2 bucks. Frequent flights, consistent ontime performance, and reasonable grace under pressure in trying circumstances brings people back to SWA. I landed in FLL last week and had to swap aircraft due to a broken one at the adjacent gate. We were about 25 minutes late leaving after taking the next inbound aircraft and we arrived only 5 minutes late. I expect that this "swap cycle" continued most of the morning until SWA maintenance arrived and returned the jet to service. Most passengers on numerous flights throughout the day were not affected by more than 10-20 minutes. At many of our competitors, a broken jet like that would mean hours, if not days, of delay. Frequency between city pairs and a non hub-and-spoke network (to this day not matched by a single competitor) allow this type of flexibility.
- I do fear the Skybus model (though not necessarily out of CMH) because the same evidence that shows that people will forego seats and IFE for a few bucks might also suggest that they will forego drinks, bags, and a 1-800 number for a few more bucks. That could be a problem... we'll see.
Despite the "low cost RJ" mistake, thank you for your constructive analysis of our airline and this business.
Plus six months ago you were considering going back to UAL..... Sorry dude, got to call bullsh!t on this one. Why the white lies?
That book was written before JetBlue, Skybus and VA existed. Plus, Air Tran, Spirit, Frontier and even Alaska were much smaller operations at that time. The competitive landscape is very different now.
Going forward, you will have many LCCs searching for growth (with no growth, stock prices will dive) with considerable pressure on yields from the upstarts. Have you seen how many airplanes SWA, Air Tran, VA, Jet Blue and Spirit have on order over the next year or two? That's a huge amount of capacity searching for growth. Meanwhile, you have the incumbants like Delta, UAL, AA, CAL and now NWA (leaving Chap 11 much stronger) who won't just lie down and die - they will fight to maintain market share. These legacies will continue to expand the use of lower-cost 70-90 seat RJs (these did not exist when NUTS was written). You see this with Delta using E170s and putting them on competing Air Tran routes - the E170s are just as comfortable for pax and yet the pax have access to Delta's worldwide route structure. Watch as Delta eventually adds lower-cost E190s (in addition to the growing stable of E170s and CR9s) and deploys them on competing Air Tran, SWA and Jet Blue routes all over the country (I presume the Delta pilots on the E190s will be paid wages similar to those paid the Delta Express 737-200 pilots pre-9/11).
The point is that the LCCs will increasingly compete with each other on overlapping routes while they search for growth and places to put their new capacity. Yields can not be maintained forever on increasingly competitive routes and profits will likely suffer - that's just logical. Watch what will happen in SFO as VA ramps up while SWA and Jet Blue enter that market to cut it off. That should be fun to watch - I doubt UAL will sit there and watch the battle without ensuring it maintains its diminishing piece of the domestic pie.
Boyd can knock Skybus and VA all he wants, but remember that Jet Blue was also very well funded years ago and its viability was called into question then too - you never know in this business... Fuel prices (and the ability to hedge fuel effectively) and currency exchange rates will continue to play a role for all airlines - nobody is immune including SWA. SWA's lack of IFE and its cattle-car boarding with unassigned seats won't help its cause either.
Bottom line, I don't think SWA will ever be hurt significantly, but it will no longer have the freedom to develop markets over time and its profit margins will likely not be as fat in the future - there are too many LCCs scrapping for its core market and the Legacies are deploying lower-cost 70-90 seat RJs to maintain market share and preserve international feed. Stock analysts will continue to look for growth and profitable LCC routes/markets will continue to attract competition with growing fleets and few good places to put those expensive airplanes... Should be interesting to watch.
That's my $0.02.