VA-keeping competitors honest

[Andy]

With what you are saying, it makes me think John McLeod had an instant effect on our bottom line. That lines up with the numbers we have started having since I was hired, and since he got here.

Here are the year over year route/price comparisons that I found in the latest DOT report.

Route/2011 avg fare/2012 avg fare
SFO-SAN/$108/$120
LAS-SFO/$114/$130
DFW-SFO/$169/$226
WAS-SFO/$262/$325

The 4.5% increase I used was based on other carriers' fare increases; I used a high estimate. Delta was +7.0% (but minimal overlap with VX), JetBlue was +3.6%, Southwest was +3.5%, AMR was +0.5% and United was -0.3%. The above price increases were much higher than even Delta's fare increases. And keep in mind that VX's avg fares were the lowest on the above routes, priced ~10% below the leading carrier on those routes so there's room for the prices to be raised further.

 

[bri5150]

http://www.fool.com/investing/general/2013/04/26/is-united-airlines-shooting-itself-in-the-foot.aspx

 

[Kalifornia]

Price below who's cost? I looked at a roundtrip for EWR on United earlier this year with more than a 2 week notice and it was over 1,100 dollars roundtrip from SFO. Sorry but that is a ripoff. I could do a roundtrip to London for that.

Delayed reply to this thread, but W T F ???????????????????????????????

2500 miles separates EWR and SFO. RT that's 5000 miles divided by 25 mpg would yield 200 gallons of gas to drive times $4 a gallon would be 800 dollars in petrol alone. A cute Volkswagon Bug with a flower pot might cut out some of those gas dollars. A $30,000 vehicle with an average life span of 200,000 miles would be use up 2.5% of its life to do the RT drive between SFO and EWR. or $750 linear depreciation. In addition instead of 5.5 hours it would take 3 days absolute minimum each way nestled between big rigs. Sometimes pilots are some of the most self depreciating circuit breakers to a fully functional career.

 

[Flyer1015]

Delayed reply to this thread, but W T F ???????????????????????????????

2500 miles separates EWR and SFO. RT that's 5000 miles divided by 25 mpg would yield 200 gallons of gas to drive times $4 a gallon would be 800 dollars in petrol alone. A cute Volkswagon Bug with a flower pot might cut out some of those gas dollars. A $30,000 vehicle with an average life span of 200,000 miles would be use up 2.5% of its life to do the RT drive between SFO and EWR. or $750 linear depreciation. In addition instead of 5.5 hours it would take 3 days absolute minimum each way nestled between big rigs. Sometimes pilots are some of the most self depreciating circuit breakers to a fully functional career.

I like when pilots start comparing flying to cars for gas price as if that's somehow relevant. Kinda like those pilots comparing themselves to doctors.

2500 miles separates EWR and SFO. RT that's 5000 miles divided by 25 mpg would yield 200 gallons of gas to drive times $4 a gallon would be 800 dollars in petrol alone.

Which is why I'm not driving. It's an A320. Assuming an average tailwind, assume ~ 32,000lb burnoff for SFO-EWR. 32000/6.76 = 4,733 gallons. Assuming 140 pax on that flight (not full flight), 4733/140 = 33.8 gallons. That is MY share of gas on that route on a passenger average basis. At 3 bucks/gallon, 33.8x3 = 100 bucks. That is my approx. share of the gas bill for that flight. So yeah, I stand by my comment. More than 2 weeks out, $1100 roundtrip is a ripoff. Less than 2 weeks, that's fair game for the premium one pays for travel on short notice.

 

[Kalifornia]

I like when pilots start comparing flying to cars for gas price as if that's somehow relevant. Kinda like those pilots comparing themselves to doctors.


Which is why I'm not driving. It's an A320. Assuming an average tailwind, assume ~ 32,000lb burnoff for SFO-EWR. 32000/6.76 = 4,733 gallons. Assuming 140 pax on that flight (not full flight), 4733/140 = 33.8 gallons. That is MY share of gas on that route on a passenger average basis. At 3 bucks/gallon, 33.8x3 = 100 bucks. That is my approx. share of the gas bill for that flight. So yeah, I stand by my comment. More than 2 weeks out, $1100 roundtrip is a ripoff. Less than 2 weeks, that's fair game for the premium one pays for travel on short notice.

So you're talking about the cost of the gas on one half of the trip. How about all the employees it takes to get you from point A to point B plus insurance which is in hundreds of millions for liability, the overhead in facilities to accommodate passengers, plus landing fees, plus maintenance. And then there is the lease or ownership of the airframe and engines. Do you know much a battery on a small GA airplane compares to the cost of a battery in a car? Take any car part multiple it's cost by 10 to achieve proper FAA certification. And that's comparing an auto to GA airplanes. Any new part other than replacing screws or likewise in a modern airliner is minimum $10,000. It's not landing on the moon, but it's making popcorn either.

There's a reason the list of airlines over time that have ceased business and or declared bankruptcy is far greater than any other industry besides independently owned restaurants. $1100 RT coast to coast is a ripoff if you're of the Yugo mentality.

 

[Flyer1015]

So you're talking about the cost of the gas on one half of the trip. How about all the employees it takes to get you from point A to point B plus insurance which is in hundreds of millions for liability, the overhead in facilities to accommodate passengers, plus landing fees, plus maintenance. And then there is the lease or ownership of the airframe and engines. Do you know much a battery on a small GA airplane compares to the cost of a battery in a car? Take any car part multiple it's cost by 10 to achieve proper FAA certification. And that's comparing an auto to GA airplanes. Any new part other than replacing screws or likewise in a modern airliner is minimum $10,000. It's not landing on the moon, but it's making popcorn either.

There's a reason the list of airlines over time that have ceased business and or declared bankruptcy is far greater than any other industry besides independently owned restaurants. $1100 RT coast to coast is a ripoff if you're of the Yugo mentality.

That's the nature of the business. My assumption was coach class. First class roundtrip is in the thousands. The airlines can make money on transcontinental flights, and many do it well. You are detracting from the main point, which is that UniCal had a monopoly on the nonstop SFO EWR market and therefore charged very high fares. Now that VX came in United not only matched the fares, they doubled daily frequency. United isn't going to make money on that route as they used to before, and doubling capacity is going to hurt them.

As for the other points you made, wages, insurance, liability, fuel, all that is accounted for in the airline's finance and revenue managment department. $1100 roundtrip is still too much. I've found cheaper fares on other airlines for that market, but with a stop. Again, UA charged a premium for that route because they had a monopoly.

 

[skypine69]

Why shouldn't ual charge as much as they can? If they put that price on the website then they feel they can get that price.

 

[jayme]

Exactly. Supply & demand set prices, not some arbitrary idea of what is fair.

 

[Bolo]

I am glad that VA is keeping competitors honest, but at the end of the day you have to make money! Is VA making money? If the answer is no, then good luck.

 

[Flyer1015]

Why shouldn't ual charge as much as they can? If they put that price on the website then they feel they can get that price.

I explained why. United had a monopoly on that route and could charge what they wanted. Now that VX came in, the United price came crashing down, along with double the frequency.

 

[olympus593]

So one airline was making money on that route, now two airlines are losing money on that same route. You are right, this is great news! Do you realize that over competition is a very bad thing for pilot's pay and job security?

 

[Flyer1015]

So one airline was making money on that route, now two airlines are losing money on that same route. You are right, this is great news! Do you realize that over competition is a very bad thing for pilot's pay and job security?

So anything other than a monopoly is over competition? It's just two airlines nonstop on that one route. VX won't lose money on that long term, the prices are slowly creeping up. United is losing worse because they overpumped capacity.

 

[Varmint]

So anything other than a monopoly is over competition? It's just two airlines nonstop on that one route. VX won't lose money on that long term, the prices are slowly creeping up. United is losing worse because they overpumped capacity.

Sometimes overpumping is good.

 

[Flyer1015]

That's what she said?

 

[Kalifornia]

That's the nature of the business. My assumption was coach class. First class roundtrip is in the thousands. The airlines can make money on transcontinental flights, and many do it well. You are detracting from the main point, which is that UniCal had a monopoly on the nonstop SFO EWR market and therefore charged very high fares. Now that VX came in United not only matched the fares, they doubled daily frequency. United isn't going to make money on that route as they used to before, and doubling capacity is going to hurt them.

As for the other points you made, wages, insurance, liability, fuel, all that is accounted for in the airline's finance and revenue managment department. $1100 roundtrip is still too much. I've found cheaper fares on other airlines for that market, but with a stop. Again, UA charged a premium for that route because they had a monopoly.

No, a grand is not a ripoff to go coast to coast across the continent in 6 hours each way. That's what you are stating. This industry since deregulation has seen pilot wages, quality of life, and stability significantly decline because of massive merry-go-round of new carriers, bankruptcies, and closed doors. Mostly because of competition and loans and unlimited investment dollars wasted away in fare wars. The lowest advanced ticket Greyhound Bus Fare EWR to SFO RT is $350. And the minimum time travel each way is 2 days and 20 hours and 4 bus transfers. And guess what, the procedure is fairly simple for what to do when the bus has an issue on the road. Pull over. Doesn't work that way in the air. Amtrak is $550 RT Advance and will also take you 3 days each way.

 

[Flyer1015]

No, a grand is not a ripoff to go coast to coast across the continent in 6 hours each way. That's what you are stating. This industry since deregulation has seen pilot wages, quality of life, and stability significantly decline because of massive merry-go-round of new carriers, bankruptcies, and closed doors. Mostly because of competition and loans and unlimited investment dollars wasted away in fare wars. The lowest advanced ticket Greyhound Bus Fare EWR to SFO RT is $350. And the minimum time travel each way is 2 days and 20 hours and 4 bus transfers. And guess what, the procedure is fairly simple for what to do when the bus has an issue on the road. Pull over. Doesn't work that way in the air. Amtrak is $550 RT Advance and will also take you 3 days each way.

Again you need to compare apples to apples and oranges to oranges. $1100 was a ripoff. I'd rather take a connection (one stop) and that roundtrip was $500-650 on other airlines. The good years were before deregulation. After that, it's cutthroat like any other competitive business. And as for pilot wages, the majority have been self-voted in so if you want to point fingers, point it at those who vote yes.

 

[Kalifornia]

Again you need to compare apples to apples and oranges to oranges. $1100 was a ripoff. I'd rather take a connection (one stop) and that roundtrip was $500-650 on other airlines. The good years were before deregulation. After that, it's cutthroat like any other competitive business. And as for pilot wages, the majority have been self-voted in so if you want to point fingers, point it at those who vote yes.

WTF, Point A to Point B. When someone buys something on Amazon, they choose shipping. Free shipping, that product gets put on trucks, and 5 days later it arrives. Next day delivery, that is usually $25 minimum for any package and rushed onto an aircraft overnight. Call it a fruit salad, but the pineapple (non-stop 6 hours) is more valuable and justifiable in commanding a premium over the apple (3 days and a lot of stops). Pilots have had to choose to sticking up to scum bags like Lorenzo or Lorenzo like and risking folding or undervaluing their services and still hanging by the thread. The biggest threat is recycled reckless competition, not pilots having to deal with RLA and constant instability.

 

[Flyer1015]

WTF, Point A to Point B. When someone buys something on Amazon, they choose shipping. Free shipping, that product gets put on trucks, and 5 days later it arrives. Next day delivery, that is usually $25 minimum for any package and rushed onto an aircraft overnight. Call it a fruit salad, but the pineapple (non-stop 6 hours) is more valuable and justifiable in commanding a premium over the apple (3 days and a lot of stops). Pilots have had to choose to sticking up to scum bags like Lorenzo or Lorenzo like and risking folding or undervaluing their services and still hanging by the thread. The biggest threat is recycled reckless competition, not pilots having to deal with RLA and constant instability.

Except the argument is lost in a nonstop to EWR for 1100 roundtrip or a one stop in DTW with 1:30 on the ground for half that roundtrip. You're getting there the same day, in one case, just 1:45 later for half the price. As for folding or undervaluing careers, the reason is the seniority list that has been the measurement of our profession. Lose a company, and the pilot's longevity/seniority will never carry over to the next company. That is why pilots are always hanging on and voting yes to paycuts.

Besides, there is no point in arguing financials with pilots. Pilots fly airplanes, and even though some are accountants on the side, they still have no say in how an airline runs, and their long term guess is as good as anyone else's. After all, if we could accurately predict the future, we'd all pick airlines that would be around until we were 65. There were a few pilots who decided to start airlines, that never went well (Kiwi, California Pacific, etc).

 

[jonjuan]

Besides, there is no point in arguing financials with pilots. Pilots fly airplanes, and even though some are accountants on the side, they still have no say in how an airline runs, and their long term guess is as good as anyone else's.

To include English billionaires who try to understand how airlines work.

 

[Kalifornia]

Except the argument is lost in a nonstop to EWR for 1100 roundtrip or a one stop in DTW with 1:30 on the ground for half that roundtrip. You're getting there the same day, in one case, just 1:45 later for half the price. As for folding or undervaluing careers, the reason is the seniority list that has been the measurement of our profession. Lose a company, and the pilot's longevity/seniority will never carry over to the next company. That is why pilots are always hanging on and voting yes to paycuts.

Besides, there is no point in arguing financials with pilots. Pilots fly airplanes, and even though some are accountants on the side, they still have no say in how an airline runs, and their long term guess is as good as anyone else's. After all, if we could accurately predict the future, we'd all pick airlines that would be around until we were 65. There were a few pilots who decided to start airlines, that never went well (Kiwi, California Pacific, etc).

Well, I detect you're attempting to be diplomatic in your latest reply here Let's though backtrack to the original thread title, that "VA-keeping competitors honest". If you thought there was no point to pilots arguing financials, then why did you respond to a thread that argues competition financials?? It's not PHD level economics. If I started an airline and charged $250 RT with EWR to SFO with a stopover in Indianapolis would now $500 RT be a ripoff? I mean with my grand scheme new airline, I could use A340s and start a special cadet program at Embry Riddle. Keep a 4.0 GPA/A grades and then graduation to A340. $34 an hour no union. 4 engines, Airbus, shiny, 500 passengers, soooo cooool!

Pilots do have a say if they have a union, even if functions poor, and should be concerned about financials and their quality of life. Calling $500 each way across the continent a ripoff is not helping the profession if in the process these low ball CEOs are low balling pilot quality of life to fund ultra low fares that make $500 each way appear to be a ripoff. Kudos to the Spirit pilots for semi successfully striking in not being completely hammered - they are still underpaid along with the most of the rest of the US airlines.