UAL news.........

[KingAirKiddo]

Not to mention that the point to point service offered by SWA and other low cost carriers is not the catch all, be all for the industry.

The hub and spoke system employed by the network mainline carriers is not fundamentally flawed. This type of system allows a number of communities to have airline service when they would otherwise not be able to due to cost and load concerns. For example, it is not practical to run a 737 between Peoria, IL and Tri-Cities, TN. It is practical, however, to run a CRJ or Brasilia from Peoria to Chicago where passengers can connect to a mainline flight and get to any destination.

Don't get me wrong--SWA, jetBlue, and others are great companies that I would fly for in a heartbeat. They offer a great product and serve their niche markets well. All I'm saying is there is still a need for a hub and spoke mainline operation, although cost structures and inefficiencies will need to continue being reduced in order for all the carriers to remain viable.

 

[MLBWINGBORN]

A few thoughts to ponder..

First..never, ever discount any city pair right off the bat..It all comes down to operating cost and amount of traffic between those two cities..
SWA does ORF to BWI and we are making a killing off of a 20 minute flight using 737s..

Second..The hub and spoke system may not be dead in alot of peoples minds..But..Its in for a very big series of changes if not out right death due to starvation..IMHO the hub and spoke system is deader than a cheese sandwich on the menue at Mortons..It aint gonna sell!!

How many RJs at say 65% does it take to fill up a 767 going from ORD to DEN?How many will it take when supplying a 767 that needs load factors in the high 90s to make money?

Or..Would it make more sense to operate the longer range RJs direct to DEN and make a profit in their own right..

Anytime your are put in a position of relieing on another airline to supply you with business sooner or later you are going to be left holding the bag..History proves this one about every 5 to 7 years during economic downturns..

Third..Old ways die very hard and this is true for all old business models..Evolve or die is going to be the hue and cry for many months to come if not years and the hub and spoke system will be one of the bigest to fall prey to the needed changes..

And my favorite..
When are people going to stop looking at SWA like its a small,regonial, or low cost carrier..?
2950 flights a day...348 aircraft..and a market place that extends to the entire width and breadth of the lower 48 states..We launch more flights a day than any two "majors" combined when you look at domestic service and dont count RJs or feeders..

And lastly..The hardest thing to change in this world is a persons mind..
Allowing any labor force to wring every last drop of financial blood out of a carrier just because it can is a sure plan for a failure..While at the same time having a managment group in place that thinks its employess are the reason they are losing money isnt gonna be the way to run a airline either..

So..Until there is basic change as to how an airline manages both its people and its business they are all doomed..

Doomed to repeat their long history of horrible labor disputes and poor managment practices that in the end only serve to put into place the causes for the next round of furloughs and bankruptsies..

All the while pissing away BILLIONS and then in the end coming back to the Congress for more money..So much so that the total amount "handed" out so far could have.. at current prices.. bought up ALL stock of the 4 majors combined..

Mike

 

[shagadelic]

Nice post MLB, but I disagree that hub & spoke is completely dead. Next time you fly the ORF-BWI, ask how many people are actually going to BWI... You will probably find a majority going to our "Hub" at BWI to connect somewhere else.

 

[spinup]

ORF is a MAJOR ship building community, requiring a lot of traffic. I agree the example of ORF to BWI is a poor one.

The point that Kingairkiddo made is a valid one. SWA can only get their costs so low, beyond that they cannot service smaller communities profitably. Not many 737's running EAS.

At some point the growth in point-to-point service will be capped, at what point remains to be seen. SWA is sticking to what they do well, putting planes in profitable markets only. This doesn't include a vast amount of markets better served by regional carriers, feeding hubs.


.

 

[KingAirKiddo]

MLB,

Nice post.

The "low cost carrier" label seems to be the phrase of the week; in no way do I mean it in a derogatory sense. I realize that Southwest is a major airline, albeit a non-traditional major airline.

Southwest serves its niche well. It runs point to point non-frills service using a single airplane type. It is a company that chooses its route structure carefully, after close scrutiny. Its executives recognize the employee as an asset and communicates this point effectively. Compensation is based on a combination of hourly wages, profit sharing, and stock options, if I understand correctly.

What Southwest cannot do is put somebody on a 737 in Myrtle Beach and fly them to London, England. Southwest cannot pick somebody up in Lansing, MI and take them to Tokyo or Honolulu, etc. There is still a need for mainline flagship carriers and the hub and spoke model is the only way to accomplish these types of missions effectively. Do the mainline carriers have some lessons to learn from Southwest? Yes, of course. Management needs to recognize the value of a loyal employee group, and employees need to recognize that it is not feasible to demand $250,000 annually to work 6 days a month. It is my opinion that the events of the past couple years have led to a realignment in many of these types of areas. There are lessons to be learned and practices to be copied, but there is nothing wrong with the fundamental hub and spoke concept.

Again, I believe that Southwest is an excellent company that I would love to be a part of someday. All I'm saying is that its type of operations is not necessarily THE ONLY wave of the future. Conventional majors are here to stay.

 

[Boz]

When will you guys realise that UAL and SWA are not the same. SWA does not fly Int'l fligths. You guys try to compare the two and it is definately apples to oranges. The main fact is that SWA is a point to point domestic carrier that any airline would wish to copy, but the fact is that SWA has perfected the LCO better than anyone can do..

There has been attempts from CAL, DAL, and UAL to emulate this and it has failed. Obviously SWA is a major competitor that no major is able to emulate thus far. So by trying to copy it has not worked in the past pretty much is a predictor that most majors will fail in this arena for time to come.

Another fact is that UAL, AA, DAL, NWA, etc....would love to have the secret that SWA has but again they canot do it overnight, nor ever IHO.

SWA is force that has been challenged and no major will come close to copying there business model. So is UAlLgoing to try to copy this! Again NO way do they stand a chance.

UAL is set up for the business traveler and the fact is that UAL is suffering from the interantional business travel being sown from the recent war in Iraq and SARS. It is not going to rebound overnight. But when times get better I feel the carrier will be a strong force to compete with as it is trying desperatly to get its costs inline with the discount carriers. It is very economic based and again when there is a another boom in the economy hopefully UAL and other majors will get a good share of the profits from air travelers.

Just my humbble opinion but I am not seeing a Ch. 7 anytime soon and the future will dictate where UAL stands in the major airline market. They wiil survuve amongst major comeption from the LCO airlines and they will be a force to be reckoned with in the economic enviornment that has taken shape as of late.

I personally would not count them out at this stage even though they have been compared to Eastern, TWA, Pan Am, etc..as of late.

 

[KingAirKiddo]

Boz,

I agree with you that SWA and UAL are not the same. That was the point of both of my posts on the subject.

KAK