Trouble ahead for Low Cost Carriers???

[jetblue320]

I think what happened in ATL is a wake up call which will go unheeded with you guys.

Yes, it was absolutely a wake up call. But unheeded is absolutely not correct. We most definately learned a lot from the ATL deal. Please don't misunderstand our lesson as us running away crying, we just ran away smarter. Trust me, we'll be back when we are better prepared.

As far as the PEX comparison, Speedbird made an interesting comment in a prior post that was relevant. We (JB) have something that PEX didn't have, and it's not better plans or more money. We have PEX to learn from. Our VP of Opns. was ex-PEX and believe you me, we won't have a repeat performance!

It is sad to see the legacy carriers spending time, effort and money targeting jetBlue. If they took all of those resources and aimed them at better performance, targeting customers, and taking better care of their people internally maybe they would turn things around. Song is at leat attempting to improve the overall product, but even though it is early to tell, they haven't effected jetBlue's ability to thrive (measured by our ever increasing loads) very much at all.

As far as the economy recovery bailing out the legacy carriers, that is probably true. I for one, however would not like to bank my future on what everyone else does but rather what I/we can accomplish. It's like my boss (DN) says all the time: "let's just stay focused on us". I think that is the key. But like the General always says "we'll see, it'll be interesting"

Merry Christmas All

 

[Boeingman]

Speedbird:

I don't have the time or inclination to argue with you. My point is there is a lot of hype with JB and it seems from your reactions you buy into said hype hook line and sinker. Nothing more nothing less. Personally, I think JB is asking for trouble with the rate of expansion taking place.

My point is one of caution and that I feel what happened to JB in ATL may be a precursor of things to come when the trunks start getting off their collective rear ends by defending their turf more aggressively.

As far as the yield management, you're responding with apple and oranges. Interjecting pricing and purchasing functions although a valid example has no merit in what I am saying on a cost basis and maximizing revenue. AMR could price just how many seats it needed to sell at rock bottom prices to drive a given amount traffic away from PEX to the point where their cost structure lost its advantage and they ended up losing money.

I'll let the General take over from here, I think he knows what I am trying to say.

I'm off flying. I'm careful not to casually say where I'm going because I don't want another lecture from that whiner Mugs.

 

[Boeingman]

Yes, it was absolutely a wake up call. But unheeded is absolutely not correct. We most definately learned a lot from the ATL deal. Please don't misunderstand our lesson as us running away crying, we just ran away smarter. Trust me, we'll be back when we are better prepared.

As far as the PEX comparison, Speedbird made an interesting comment in a prior post that was relevant. We (JB) have something that PEX didn't have, and it's not better plans or more money. We have PEX to learn from. Our VP of Opns. was ex-PEX and believe you me, we won't have a repeat performance!

It is sad to see the legacy carriers spending time, effort and money targeting jetBlue. If they took all of those resources and aimed them at better performance, targeting customers, and taking better care of their people internally maybe they would turn things around. Song is at leat attempting to improve the overall product, but even though it is early to tell, they haven't effected jetBlue's ability to thrive (measured by our ever increasing loads) very much at all.

As far as the economy recovery bailing out the legacy carriers, that is probably true. I for one, however would not like to bank my future on what everyone else does but rather what I/we can accomplish. It's like my boss (DN) says all the time: "let's just stay focused on us". I think that is the key. But like the General always says "we'll see, it'll be interesting"

Merry Christmas All

I think the leagcy carriers are going to target JB because they all learned a lesson from letting SW grow to the point where they are eating at their markets on an ever increasing basis. They ar now a force to be reckoned with and it will not be a mistake they want to repeat.

I don't think for an instant you guys left ATL in tears, my only point is that it validates my above thinking that there will be a line drawn in the sand in certain markets and proof positicve was DAL's reaction.

Perhaps unheeded was an unfair characterization. But the impression that is left by many JB pilots I have run across is that you guys are immune to any type of downturn.

 

[SpeedBird]

General Lee:

If I'm giving you the perception of "double speak" then that is certainly not my intention. I think I made my comments regarding ATL with the purpose of agreeing with boeingman, but providing my views that his accusation that it was "unheeded mistake" was an empty one without any substantive support. I hope he rebuts my position with something more objective to make this debate more compelling.

I could spend a considerable amount of time regurgitating all the facts about what has happened in ATL with jetBlue, Delta, and AirTran but it doesn't serve any useful purpose for the point I was trying to emphasize here. My point was that it was a mistake for jetBlue to go into ATL and there is no double speak about that.

Don't happily assume that jetBlue was losing money on its ATL routes from LGB and OAK. They were in fact profitable, but not as expected when jetBlue management decided to innaugurate this service. Boston is seen as a much bigger prize than ATL, and I would venture to guess that as the on-going negotiations with Logan officials since last summer generated a better than expected result, it made jetBlue's decision to pull out of ATL that much easier. Unlike some other airlines which have had to shed excess capacity in the last three years, jetBlue has been capacity constrained even as it has grown at an average rate of 50% YOY. If they could have acquired their gate agreements in Boston just six months earlier we wouldn't be having this discussion about Atlanta; because jetBlue would most likely have never started service there in favor of opening Boston service sooner.

Funny thing about Boston, and something you've been quiet about since the news broke is that jetBlue is expanding its previously announced service out of Boston due to "strong" demand for tickets to FLL & MCO, etc. Just imagine what would of happened if Song had not positioned itself in Boston before jetBlue, in an effort to stifle jetBlue's new service.

I will agree with you that an improving economy will result in improving yields for all airlines, but if and only if capacity growth is measured and lagging with regard to growth in demand. But even in the best scenario don't expect to see the types of go-go yields and stratospheric walk-up fares that were ubiquitous during the last half of the nineties and early 2000.

 

[Cyclone]

expensive post

Speedy...whoa...lots of fifty cent words there big fella. Are you jetblue management? You must not be a pilot.

Are jetBlue and SWA in direct competition in many markets?

Who should be more afraid of the other?

(JBLU or SWA)

 

[General Lee]

Speedbird,

I do agree with you about that. I will be tough to see those types of "go go" yields, although we heard the same things from our ex-CEO Ron Allen in the warly 90's---"This industry has changed forever....."--and he was talking about the onslaught on Southwest. In fact, we did even better in the boom times of the late 90's----and that of course fell apart after 9-11 and the bad economic cycle. We don't really know what will happen with the economy in the future, but even the "know it all yahoos" in the USAToday Money section today stated that we "could" hit Dow 15,000 at the end of this decade. If things run away again like they did in the late 90's---things could get good again for everyone. But, this time we have some debt burdons, and the internet is a factor.


I am sure that Jetblue will have a profitable run at BOS, but some of the routes I question. (LGB and DEN) Remember that Delta Express was NOT the only game in town in the past, and Metrojet was the other half of the equation. Back then we were both using older 737s, with no IFE. Now, Jetblue and Song will fight it out with nicer aircraft, and IFE---and there is quite a bit of traffic between the upper NE and FLA. Song has the advantage because we can get feed from ACA and their Dornier 328 jets---and Comair's Rj's etc....Delta is currently building a large terminal in BOS (adding to our debt load no less), and plans to have a sizeable network there eventually---with mainline service to ATL, CVG, DFW, BDA, and SLC, Delta Shuttle service to LGA and RJ service to DCA, Song service to FLA and LAS, and many RJ flights to all around the NE, and eventually nonstop service to Europe (before 9-11 happened, we were planning nonstop 738 service to Shannon and Manchester---no joke).

As far as Jetblue service to DEN, I know frontier dropped the only LCC service, but it will be late night nonstop service westbound, and an allnighter eastbound. A lot of people do not prefer those times. And to LGB---I know some people like the convienence if they live or work near there----maybe the shipping industry in San Pedro, or people who live in Palos Verdes. But other than that, I think a cab ride from LGB to Burbank or north of LAX, or one south to Orange County or Newport Beach--would be expensive and a hassle on the 405 freeway. But, maybe there is a need for people in the LGB area to go to BOS.....Time will tell. Also, there isn't a lot of room to add more flights at LGB---since they only have a limited amount of slots thanks to the LGB city council. If more are given out, expect Delta and others to ask for most of them---for fair competition......yeah right.

We shall see if this all works out for Jetblue. I think they will do well on some, and may flounder on others (like LAS--LGB--used to be hourly almost) I don't think Delta disregards them anymore.

Bye Bye--General Lee

 

[jetblue320]

But the impression that is left by many JB pilots I have run across is that you guys are immune to any type of downturn.

Yes, that may be true for some of them but certainly only the gullible and naive ones. Fortunately, they don't make the decisions at their level!

See ya

 

[B6Busdriver]

General,
Do you really think JetBlue's intention of acquiring slots in LGB was so they could have hourly service to the lowest yielding market in the country? Come on. Plain and simple, service was started between LGB-LAS and LGB-OAK to avoid a lawsuit; nothing more nothing less.

 

[B6Busdriver]

Perhaps unheeded was an unfair characterization. But the impression that is left by many JB pilots I have run across is that you guys are immune to any type of downturn.

There may well be some at jetBlue with that mentality but I can promise you that is NOT the overall sentiment. Many at JB are re-treads(myself furloughed) and didn't just fall off the apple cart yesterday. Many are painfully aware of bankruptcies,mergers,strikes,etc,etc.
The one thing that gives me hope is our management. I have heard them say over and over and over again that we are only as good as our last flight. Our own management is quick to point out how tough this business is and how all competition must be taken seriously.
Please don't confuse a few people's over exuberance as the overwhelming sentiment at jetBlue.

 

[B6Busdriver]

Joe, we've all got our opinions. However, JBLU is starting to be caught in the crosshairs of multiple carriers. I didn't mention AMR's aggressive response to JBLU expanding service in BOS.
The number of carriers that are aggressively battling JBLU increases daily. It's just like the game of Risk ... it doesn't matter if you're the strongest one on the board if you've got 5 opponents simultaneously gunning for you. Eventually they'll weaken you enough that you'll lose.
While $600 mil may sound like a lot, UAIR currently has $1.9 bil in cash and financial analysts are already preparing the fat lady for her encore in CCY.

You are right about one thing, we are in everyone's crosshairs. Personally, I cringe everyttime I read a flowery piece of journalism about jetBlue.
I've heard your prediction that jetBlue will "fold it's tent". We shall see. I'm sure you would never wish that on us. Your outlook on our certain demise comes from your vast experience in this industry. I'm sure you have no ill will or axe to grind. Right?

Oh and by the way.Comparing our cash postion to UAIR is apples and oranges and you know it.

 

[General Lee]

B6busdriver,

I guess that was a good way to use the slots or "give them up" at LGB. You were trying to find anything while looking for better use. I guess that was smart. As for everyone gunning for you----you don't blame us, do you? Your CEO has slammed us many times in the media, and the "Song sung Blue" name of one of your busses wasn't very nice. (I thought it was clever, though) Ofcourse you are the media darling, and AA is going to fight you, Song, everyone. Then you will have Southwest breathing down your neck (in PHL, and other places eventually), and it might get tougher down the road. But, I don't see you disappearing---primarily because you have a good product. But, other airlines will try to squeeze you---no doubt.

Bye Bye--General Lee

 

[B6Busdriver]

B6busdriver,

I guess that was a good way to use the slots or "give them up" at LGB. You were trying to find anything while looking for better use. I guess that was smart. As for everyone gunning for you----you don't blame us, do you? Your CEO has slammed us many times in the media, and the "Song sung Blue" name of one of your busses wasn't very nice. (I thought it was clever, though) Ofcourse you are the media darling, and AA is going to fight you, Song, everyone. Then you will have Southwest breathing down your neck (in PHL, and other places eventually), and it might get tougher down the road. But, I don't see you disappearing---primarily because you have a good product. But, other airlines will try to squeeze you---no doubt.

Bye Bye--General Lee

You are right, we are on the radar screen and now everyone is after us. The name Song Sung Blue(a Neill Diamond song) came form the employee name the plane contest. The name was selected before Song was created. That said the name was put into use after Song was announced.

 

[General Lee]

B6busdriver,

Hey, I thought it was funny. And, I am ashamed to say I like the song, too. (Not that I would listen to Neil Diamond...)

Yeah, you are now in the scopes of every Major and some LCCs out there, and it will get more interesting when we bring back more capacity, and you guys get more airplanes. The only advantage we have at Delta is that we have new airplanes for Song available right NOW. If management wanted to, they could put 10 more 757s onto Song from mainline easily. (we have 120 757s in the mainline fleet----I guess minus 36 now) So, we could put more pressure on quickly if needed. I think they are just watching how Song is doing, and I believe they will put 10-15 more into service next year. Then Airtran will get some 737-700s, and Southwest will get 47 (?) new 737-700s, while getting rid of 15(?) 737-200s. The sky will definitely be a little more crowded over the next couple years.....(we're adding back atleast 9 older 737-200s and 2 767-200s.....)

Bye Bye--General Lee

 

[Andy]

I've heard your prediction that jetBlue will "fold it's tent". We shall see. I'm sure you would never wish that on us. Your outlook on our certain demise comes from your vast experience in this industry. I'm sure you have no ill will or axe to grind. Right?

Oh and by the way.Comparing our cash postion to UAIR is apples and oranges and you know it.

B6Busdriver, it's nothing personal. When many talked about UAL going chap 7 and carriers started to feed on UAL's carcass, I wasn't crying. Heck, I was already furloughed by UAL by that time. I hitched my sail to UAL, through fair winds and foul weather until the day that I retire or UAL goes chap 7.
I'm able to ride out the furlough fairly comfortably; I have enough work with the AF reserve to keep me employed full time.
Before getting hired at UAL, I flew with a nonsched 121 carrier. No complaints. I flew with a lot of pilots who hopped on every upstart hoping to hit a SWA-type pot of gold. These guys flew for WestPac, WinAir, AccessAir, and a ton of other names that I had barely heard of.
FWIW, back in early 2000, I flew into LGA, hopped on the subway and got off at Kew Gardens with resume in hand. I personally talked to JBLU's HR person (she was very nice). I had an interview scheduled what turned out to be the day after I started class at UAL. Had I gone to the interview, I would be a fairly senior capt at JBLU by now. I don't regret my decision.

My opinions of JBLU's future are based on following this industry for more than 35 years; I don't have an axe to grind. I followed the airlines and read the business section of the Washington Post before I was in the third grade. I grew up in a house where my dad was an airline exec. I remember going on vacation to airline conferences in the Canary Islands and Barbados in my teens. Ever wonder what those airline execs discussed? Yes, there was competition among them, but there was also cooperation on mutual goals.
The way that I see it, the legacy carriers view JBLU and other LCCs (other than SWA; they're now too big to take on) as a serious threat to their long term existance, and they will aggressively try to contain them or run them out of business. Someone mentioned AMR's defense against Legacy earlier in the thread. Legacy made the mistake of going after AMR's high revenue biz traveler in AMR's most important hub. I was not at all surprised by AMR's aggressive response.

I realize that JBLU & UAIR finances are apples and oranges. Right now. However, with expansion comes additional infrastructure expenses. JBLU is currently able to get good deals from airports, but that won't last forever. Thus far, JBLU has gotten a nearly free ride vis-a-vis infrastructure costs; going forward, JBLU's fixed costs will grow exponentially as they expand.

 

[lowecur]

UAIR CASH

The last 10Q showed unrestricted cash at a little less than $1.1B. Where are you getting the 1.9B figure from?