What makes an airline successful?

[USC***]

"What makes an airline successful?"

Lots of passengers paying full price

 

[Jetsnake]

Hi!

I think ALPA wants to do what's best for the pilots, as a whole, but I think their biggest problem is that they're still operating as a union would in a regulated environment. I don't believe they've adapted to de-regulation yet.

I think that was also the problem of the majors-they were set up and organized to operate in a regulated environment, and they're just now getting around to changing to operate efficiently in a de-regulated environment.

CLiff
GRB

As a ALPA member in good standing for 3 years, I'll tell
you what ALPA has done for myself and several other
thousand regional pilot's. The magazine has been great at
starting fires for myself in the North woods of Wisconsin.
ALPA doesn't give a **CENSORED****CENSORED****CENSORED****CENSORED** about the regional pilot. PERIOD.
That is a fact.
The Gov't de-regulated the airline industry in 1978.
The airline has adapted to de-regulation.
It just has not adapted to the price increase since
1942. That may sound funky and ridiculous to you and
others, but think about it.
Do a bit of research and you'll find that the average
paying passenger is paying the same amount today as
they were in 1942.
The difference. Those paying passengers were RICH.
That is who flew then.
Not Jerry Springers people.
You speak of the Airline Industry that was set up to be run
in a regulated environment. "You sound like Ted Kennedy"
The airline industry is not just getting around to running
efficiently. They suffer not only due to 9/11 and the war.
They suffer because of unions.
At Air Willy, when we pull into a gate, we have waited
up to 15 minutes while other rampers are sitting around
on tugs and lav carts(I don't know why), but they do.
Only to call OP's and find out that those sitting around
aren't working our flight. Rather than help out and do
the right thing. Working a flight. They'll sit on there ass
and not do $hit. WHY ?
Because the union say's they can only work so many flights.
I ran into a Ramper in STL at a UAL station and she
was worried about losing her part-time position which
made her roughly $40K per year at 28 hours per week.
While I had a smoke with her, she just complained about
how she had to deal with 4 carriers, Skywest,ACA,UAL,and
Air Willy.

If UAL excepts bids from all those that are bidding,
she'll have to deal with 7 carriers.
I'm sure the union group in ORD will accept this and provide
the utmost care to passengers.

Get real.

What union group looks out for the Regional Pilot.
Not ALPA.

Jetsnake

 

[172driver]

Now, if you want to have a coherent and rational national air transportation system, using JB and SW models won't work exclusively. If you want that then you will probably see many smaller cities without air service and city airports that aren't going to be able to extract exorbinate rents from their facitilites

True, JB and SWA models won't work exclusively, but that's why the RJ is so successful. The smaller cities won't go without air service. They'll simply have whatever service customer demand dictates, be it a turboprop, RJ, 737, or a heavy jet.

Most medium size cities can support big jets at peak times with RJ's picking up the rest of the schedule which would not be profitable to the heavies. These cities were previously served by 727's, MD80's, etc.

Most small cities create enough travel to keep RJ routes profitable, even though the demand may not always fill it up.

This is how I see the future. The large cities and the international market will continue to be served by the big guys. Medium cities will be served by low cost carriers/shuttles. All three markets will be served by the RJ. It is simply more customer/market friendly.

Basically, the market demands different types of service at different times of the day. Previously, customers were given no choice. e.g. the plane leaves once a day at 2:00 and the ticket costs $x. Be there if you want to fly. There was very little competition and it was hard to compare prices. Great deal for the majors.

With the advent of the LCC, the RJ, and the Internet, the customer has informed choices to make. They don't have to fly through ATL or ORD to get where they want to go. They can leave when they want to. They can do this for a lower price. Is it any surprise that the majors are in trouble?

I hate to see any airline or its employees hurting. I really do feel that pilots need to stick together as we are a small group of people with a common interest, passion, career. However, the airlines need to restructure and until it's done, some of us are going to be bleeding. We ought not blame this on each other, management, gov't, unions, terrorists, etc. The situation we're in is a product of the changing industry. Airlines, like everybody else, must adjust to what their customer base wants.

What makes a successful airline? The one that reads the market the best and most readily adapts their assets to serve it. If all carriers efficiently utilize their assets, the pilots will be employed and happy. Unfortunately, the most efficient use of the majors' assets right now is to park some planes. The market doesn't support all those big jets because they're less adaptable. It is hard to move a 767 to a market that supports it better. It's hard to find a route with 300 unserved pax. An RJ can very easily be transferred between cities as demand dictates. It can also fly point-to-point much more efficiently without having to rely on the hubs. Same with the LCC's on a larger scale.

 

[Draginass]

The CASM for an RJ is considerably higher than a SW 737 or JB A320. Many of the RJ operators operate on a major airline contract "fee-for-departure" basis (regardless of the pax count) vice having to fill the plane. Now, for instance, Air Willy is getting squeezed by UAL on that very subject. Given the depressed air fares, I doubt if RJs can "support" themselves in the quanties and departure frequency that exists now. Even with the poor compensation of regionals, if passengers on RJs will have to be paying quit a bit more and the plane will have to be darn full.

The point-to-point flying will probably pick up and in a lot of cases that could be a good market for RJs, if people are willing to pay a premium for it, be willing to fly in an small cabin, and not have to go through a hub. As a coherent "system" however, I don't think large-scale use of point-to-point is viable.

One thing for sure, the traditional airline managements have feet of clay and none of the major airline managements have a clue on how to bring themselves out of this morass. U can't decide if it's a major or regional airline. UAL is a deer in the headlights of an 18-wheeler, AA can't even manage it's PR, much less it's labor force. CAL and NW are next in line for Chapter 11, and DAL is hoping against hope that a miracle happens before next year. Being last in line to the BK docket is not good.

And the government? They could either care less or have no clue on what to do. With taxes on airline tickets about 30% of the price and city governments gouging for airport space, it's a mess. It would appear that they are going to let the free market forces shake out the system. I hope everyone likes what they get two years from now. I don't think it will be very pretty.

 

[Publishers]

Hub

Another aspect of this is that the hub and spoke system also leads to the same lack of flexibility. It is much easier for the point to point people to adjust to changes in the market. In a hub operation, you pull a few aircraft from a bank and it can ripple across a number of other flights that rely on the feed.

While Draginass points out that some leases reduce flexibility, there are two types of aircraft leases, finance leases, and, operating leases. Operating leases can be used to improve your ability to adjust as they usually are much shorter duration.

Smaller more mobile carriers can do well in this environment while the whales struggle.

Now that all have failed except Northwest and Delta, the pressure will be on those two to adjust to the new structure of the others. If their labor and lessors are responsive, they will come through this well. If not, they will join the failed, pulled down to the lowest common denominator.

 

[Draginass]

Yes, that's true, but what's the cost difference in the two. I would assume that an operating lease with it's higher flexibility would cost considerably more.

 

[Publishers]

Short

Yes the shorter term leases do cost more but if you schedule them right, a certain portion of aircraft will come due every year and you can get out of the aircraft.

Finance leases are basically structured leases that cost as it would if you owned them. Often there is a tax implication as well. In the end, the things that managment can deal with in large mainline airlines is somewhat limited.

As I said in the earlier post, it is not so much the wages that cause the problem with unionized workforces. It is all the costs around that unionization. Unions by their nature want to protect full time employment. Once gained, they certainly do not want to let anything go and so we always wait until things become a crisis. Even then, there is the old "it is a management ploy" mentality.

Look at Air Tran as a more positive example. There pilots came together right after 911 and came with a plan to take cuts if no one was put on the street. That willingness to deal that day not months of haggling later made a difference. Contrast that with AMR or UAL and their still trying to get things resolved years later.

This is why labor relations are important. Herb and the others had those type relationships where when the problem came up, there could be a response.

For the most part, it is why we do not have dinosaurs today yet small insects survived.