Looks like United are following DL down the song concept line... This has to be sucessful for UA to ve. Unlike DL Express, United have never succeeded with a leisure airline within airline product. Infact, only BA and DL ever made money from low cost offshoots.
CHICAGO, July 15 (Reuters) - Bankrupt United Airlines said on Tuesday it plans to use 40 planes from its regular fleet for the start-up of a low-cost carrier designed to compete with discount airlines that are eating up its market share.
United and parent UAL Corp. (OTC BB:UALAQ.OB - News) filed the largest bankruptcy in U.S. airline history in December and said that a low-fare airline-within-an-airline would be part of the mix needed to restore profits and emerge from court protection.
"Our initial first-year plan calls for a fleet of approximately 40 aircraft from our mainline fleet operating in key leisure markets," said Sean Donohue, vice president for the low cost operation, in a statement recorded on an employee hotline.
Donohue provided an update on the low-cost carrier, which has been called Starfish internally, to United's executive council during a regular weekly meeting on Monday. A proposed route structure and some financial estimates for the operation were reviewed at the meeting, United said.
Luv2fly From United States of America, joined May 2003, 12016 posts, RR: 50 Reply 4, posted (10 years 4 months 3 weeks 5 days 16 hours ago) and read 4245 times:
Like my parents always said, "Just because your friends were jumping off a bridge would you do the same?" Also they really need to be focused on there core business, United Airlines and getting that in order before trying out this idea.
LH423 From Canada, joined Jul 1999, 6501 posts, RR: 55 Reply 5, posted (10 years 4 months 3 weeks 5 days 16 hours ago) and read 4202 times:
This is truly a bad idea. As much as I can see United's reasoning, they have to realize that if this fails (which, I bet it will) they'll be using the last of their money. The United saga may not be over yet!
« On ne voit bien qu'avec le cœur. L'essentiel est invisible pour les yeux » Antoine de Saint-Exupéry
AirT85 From , joined Dec 1969, posts, RR: Reply 6, posted (10 years 4 months 3 weeks 5 days 16 hours ago) and read 4154 times:
When do they plan on launching this LCC? The summer is almost over and with it goes the majority of whatever profits they hoped to (or may have) make (made) this year. If the winter doesn't drain them dry, this LCC probably will. I'm not understanding the logic. The reasoning is there, but I can't find the logic to go with it. Song isn't 100% proven yet (as far as I know there have been no releases as to the financial stability of Song), so why should UA jump on so soon, especially when its still in stormy water itself?
Beltwaybandit From United States of America, joined Mar 2003, 495 posts, RR: 0 Reply 7, posted (10 years 4 months 3 weeks 5 days 15 hours ago) and read 4072 times:
It's not an LCC unless it has low costs. If it is just a division of United, then it will have very high costs. This is all folly in my view. United needs to look at reducing costs in its ENTIRE operation, not just a select division.
Someone explain to me why or when a high-cost operation is necessary or beneficial in ANY context? The idea that you can create a low-cost part of your operation, to compete with LCCs, and maintain a high-cost part to compete with other mainlines, is senseless. Either reduce costs to competitive levels for your whole operation, or throw in the towel and liquidate.
4everRC From United States of America, joined Jul 2003, 322 posts, RR: 1 Reply 10, posted (10 years 4 months 3 weeks 5 days 15 hours ago) and read 4002 times:
If I'm not mistaken, United Shuttle was shut down because it was UNprofitable -- it sure wasn't making money when I worked for UA in 2000. Can someone explain to me how they plan to make a profit now when they couldn't when the airline business was healthier?
DeltAirlines From United States of America, joined May 1999, 8818 posts, RR: 12 Reply 11, posted (10 years 4 months 3 weeks 5 days 15 hours ago) and read 3994 times:
I too am seeing problems in this plan. The major reason that DL could/can make money on Express/Song was that everything was already in place. DL had an extensive Florida market prior to Express, all DL did was transfer it to smaller planes but added frequencies to make up for it. Florida is a major low-fare market, hence DL pulled it off successfully. MetroJet was hubbed up north and was to a business destination (BWI and IAD, both of which were high-yield pax before MetroJet), and CO Lite was too inconsistent (a CO lite a/c on mainline services wasn't that uncommon). I am very sceptical, this plan seems like it will be United Shuttle Mk II, which was doomed from the already intense LCC competition out west.
Ducky8855 From United States of America, joined Jun 2003, 18 posts, RR: 0 Reply 12, posted (10 years 4 months 3 weeks 5 days 15 hours ago) and read 3961 times:
BAD MOVE FOR UNITED!!! It looks like the exec. Are looking for reason to shut down United for good. They need to focus on trimming down their fleet and transfer their routes to regional carrier, thus allowing them to focus their finance on the high density routes domestic, and international routes in terms of customer service. That is where I see the major carrier need concentrate on and forget about trying to compete with the low fare airlines.
Bestwestern From Hong Kong, joined Sep 2000, 6778 posts, RR: 57 Reply 16, posted (10 years 4 months 3 weeks 5 days 1 hour ago) and read 3553 times:
I would be surprised if UA were to purchase extra fleet for this project... Like DL, I can see UA moving 40% of its 757 fleet (40 aircraft) over to the low cost operation, and downsizing the mainline operation. Expect an operation similar to Song focused on non hub to florida and las vegas flying.
UAL would be loco if they were to re-start shuttle by united using this low cost model.
FlyPNS1 From United States of America, joined Nov 1999, 6278 posts, RR: 24 Reply 17, posted (10 years 4 months 3 weeks 4 days 19 hours ago) and read 3449 times:
Why would UA all of the sudden focus on Florida flying? UA hasn't been a major player in most Florida markets for ages. DL's Song was built on the fact that DL already had a hefty presence in Florida, not plunging into markets that DL never had a presence in.
Luv2fly From United States of America, joined May 2003, 12016 posts, RR: 50 Reply 18, posted (10 years 4 months 3 weeks 4 days 18 hours ago) and read 3440 times:
You said it right on! The problem I see it is that all the majors are more focused on what everyone else is doing than what they should be doing to turn around there airline. Stop trying to keep up with the Jones.
Andersjt From United States of America, joined Jul 2003, 390 posts, RR: 1 Reply 21, posted (10 years 4 months 2 weeks 5 days 10 hours ago) and read 3186 times:
Shuttle by United, later the United Shuttle, was not as unsuccessful as many believe. When started up, it was originally intended to answer Southwest's expansion in California. While it did not surpass Southwest in that type of passenger, United found an unintended benefit - the Shuttle became a low cost feeder to international flights out of LAX and SFO.
When business travel was booming, United could set high fares for city pairs such as LAS-HKG, or SAC-LHR. Pax from LAS and SAC would be fed into LAX and SFO via the low cost shuttle, thus increasing profitability across the line.
The Shuttle was discontinued in response to the drastic downturn in business travel. At some point load factors are going to drop enough where it doesn't make sense to market a separate airline within an airline. Additionally, if you market certain flights as "Shuttle" with dedicated aircraft types, you lose flexibility in positioning. For example, now as a mainline, UA is positioning 767's between LAX and SFO to where they are needed.
Don't get me wrong, I absolutely hated the Shuttle when it started up, but while United doesn't market these flights as shuttle flights, many of the short-hauls are still operated as shuttles (e.g. plastic cups in first class). Before Shuttle by United you could actually get snack service in First on the LAX-SFO flights - it was quick, but it was a nice treat on a Friday night after a long work week.
United has the planes, and they have the flexibility to set new union contracts. Setting up a low cost carrier is a must to capture that market until business travel picks up again. I will however, try to avoid it as much as I can.
Oh how I long for the day when the skies were truly Friendly!
Elwood64151 From United States of America, joined Feb 2002, 2477 posts, RR: 7 Reply 22, posted (10 years 4 months 2 weeks 5 days 9 hours ago) and read 3101 times:
A better idea would be to use the bankruptcy position to renegotiate contracts with labor, vendors, suppliers, airport authorities, etc, to create a leaner, more efficient machine. So far, all I've seen is labor concessions...
United in general has one huge problem: Overcapacity. I don't see this helping.
Those who fail to learn history are doomed to repeat it in summer school.
UA744Flagship From , joined Dec 1969, posts, RR: Reply 24, posted (10 years 4 months 2 weeks 5 days 7 hours ago) and read 3018 times:
A better idea would be to use the bankruptcy position to renegotiate contracts with labor, vendors, suppliers, airport authorities, etc, to create a leaner, more efficient machine.
What do you think United has been doing?
United does not disclose the terms of the deals in these "b2b" transactions... when b2b contracts are renegotiated, even with companies not in BK, press releases are never made.
If you'll look at estimates of United's savings since it entered BK, you'll notice that there are several different number estimates on the cost reductions from said initiatives.
Indeed, the reason why 747-400s are being brought back in service is because of renegotiated leases. And have you not seen the flurry of articles lately (Denver Post especially) on United's negotiations with airport authorities to reduce costs?
United doesn't haver overcapacity.
Its load factor was nearly 83% in June.
The problem is costs, which they are working on, and attracting the right type of passenger/fare mix.
25 Saab340: The point Andersjt made was excellent. Saw your profile.... a CFO???? Explain if you will... Thanks alot Paul
26 ConcordeBoy: United doesn't haver overcapacity. actually, all 6 of the majors do... the primary reason they're in the predicament that they're currently in
27 OzarkD9S: UA should focus on their strengths: good hubs in the US and a great international network. Fly mainline to the top 100 markets domestically and leave
28 Ual777contrail: 1) First off United chose the name STARFISH because when a starfish loses an arm it will grow back. So while United will lose 40 planes in it's fleet(
29 StevenUhl777: Andersjt is probably the most accurate of all the messages. Everything worked well for Shuttle By United for about the 1st three years...it was popula
30 Starrion: "Indeed, the reason why 747-400s are being brought back in service is because of renegotiated leases. " Does this mean that United is going to start p
31 UA744Flagship: United has already started to pull 744s out of the desert for the peak summer schedule. Word is that there are more 777s parked than 744s now -- until
32 AA717driver: I thought UA was already a low cost carrier... Maybe it's just the employees that are 'low cost'... TC
33 Andersjt: First my thanks to Saab340 and StevenUhl for their kind comments. Sources here in LAX is that UA is getting heat and pressure from studios and product
34 MSYtristar: I remember seeing in United's business plan power point that Starfish and UAL mainline would fly some routes jointly. If it's still floating around ou
35 Ual777contrail: United is leaseing 7 747's to SQ right now, they arent even using all our 747's. some of the 777's will be returned and those are the ones sitting in
36 Ctbarnes: Glenn Tilton just doesn't get it. Instead of sinking money they don't have into daft schemes such as Starfish, they need to concentrate on their stren