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10 Things I Would Do If I Were Varig CEO  
User currently offlineCheco77 From Peru, joined Oct 2004, 1345 posts, RR: 8
Posted (8 years 3 months 3 weeks 3 days 15 hours ago) and read 2486 times:

These are 10 steps I would take if I were Varig CEO to save the company:

1). Discontinue some unfritable DOMESTIC routes and sell or stop the lease of some of theirs B737s. Close CCS and all Bolivian destinations.

2). Open new direct flight to Europe and the USA. Not from GRU but from GIG. I would open flights to ZRH, TXL, ATH, BRU, ARL, IAH, ORD and YYZ from GIG. Connections to GRU possible with a sinchronized flight.
From GRU I would begin flight to AKL (flights to Australia possible though ANZ). I would start PEK service as well.

3). Start a huge advertising campaign in these European and North American destinations (and in existing destinations) to promote Varig flight and the city of Rio.

4). Make exclusive deals with European, American and Brazilian companies in Brazil and these continents to incentivize these companies to send their bussines workers with Varig.

5). Make exlusive deals with travel companies to offer tours (packages) to Europe/America or viceversa always flying on Varig.

6). Increase their level of service greatly. Offer full meals on all flights, alcohol for free, etc. But I would make sure the people know this, that is why I would start and advertising campaign to let this know.

7). Raise their price of ticket, but not more than $100 per ticket.

8). Decrease the staff to the optimum number to make the company work and have some reserves.

9). Make more deals with hotels and car rental companies around the world and offer deals and more mileage options for costumers.

10). Try to fight more for money with the Brazilian government. I would be more agressive and possible get some.

What do you things? Do you agree? Do you disagree? Are there any more things you would do or things you would not do?

Adam


Czech Boeing lover living in Lima
17 replies: All unread, jump to last
 
User currently offlineDeltaSFO From United States of America, joined Nov 2000, 2488 posts, RR: 22
Reply 1, posted (8 years 3 months 3 weeks 3 days 15 hours ago) and read 2486 times:

If only it were that easy.....


It's a new day. Every moment matters. Now, more than ever.
User currently offlineZkpilot From New Zealand, joined Mar 2006, 4818 posts, RR: 9
Reply 2, posted (8 years 3 months 3 weeks 3 days 15 hours ago) and read 2451 times:

Quoting Checo77 (Thread starter):
From GRU I would begin flight to AKL (flights to Australia possible though ANZ)

NZ has itself looked at flights to GRU or GIG and found them to be unfeasable at this stage... Too far and weight restricted for 772ER. Not big enough market for 744. Even via say RAR it isn't that feasible... perhaps via PPT (but NZ is restricted to 767/787 size aircraft... once the 787 comes on board then yes it is likely). The only current aircraft that would be suitable would be an A340 (one with a longer range than 100/200) or a 772LR, 773ER (weight restricted). NZ doesn't have A340 or 772LR, I was under the impression that Varig didn't either? I would love to see NZ fly to Brazil tho.. link into Varigs network...that would help Varig out.
If Varig fails (I hope it doesn't), I see AR becoming a member of Star Alliance.



56 types. 38 countries. 24 airlines.
User currently offlineCheco77 From Peru, joined Oct 2004, 1345 posts, RR: 8
Reply 3, posted (8 years 3 months 3 weeks 3 days 15 hours ago) and read 2422 times:

Quoting DeltaSFO (Reply 1):
If only it were that easy.....

That is the job of a CEO to make this easy. An incompetent CEO and management cannot do this. A good CEO and a good management would have done this months ago.

Quoting Zkpilot (Reply 2):
I see AR becoming a member of Star Alliance.

I dont think so. AR will not add that many destinations as RG did.



Czech Boeing lover living in Lima
User currently offlineAirzim From Zimbabwe, joined Jun 2001, 1205 posts, RR: 1
Reply 4, posted (8 years 3 months 3 weeks 3 days 14 hours ago) and read 2395 times:

Quoting Checo77 (Thread starter):
2). Open new direct flight to Europe and the USA. Not from GRU but from GIG. I would open flights to ZRH, TXL, ATH, BRU, ARL, IAH, ORD and YYZ from GIG. Connections to GRU possible with a sinchronized flight.
From GRU I would begin flight to AKL (flights to Australia possible though ANZ). I would start PEK service as well.

This statement alone is a disaster from the get-go. First of all GIG has no steady J market. It can barley sustain JFK flights.

You also seem to forget there is almost no onward connection traffic beyond GIG and GRU that's worth a damn since other than the Brazilian interior, you can fly nonstop to most other southern destination already from the US and Europe. Why would you want to connect?

The rest of your suggestions are a non starter. Spending more money to hopefully get more money is never the answer. More adds, free booze, more agency deals. You must be kidding.

Simple answer for Varig. Shut down. Reduce fleet types to two. Significantly cut back on destinations. Focus on main trunk routes and a few select long haul business destinations from GRU only.

Pretty simple


User currently offlineSOUTHAMERICA From Colombia, joined Dec 2003, 2497 posts, RR: 10
Reply 5, posted (8 years 3 months 3 weeks 3 days 14 hours ago) and read 2366 times:

Quoting Checo77 (Thread starter):
1). Discontinue some unfritable DOMESTIC routes and sell or stop the lease of some of theirs B737s. Close CCS and all Bolivian destinations.

Closing CCS would mean dropping one of the few international routes where Varig still holds a complete monopoly, and where they can charge higher-fares without much risk of losing passengers to other competitor; after all, there will always be demand for the nonstop service.

If there's a station within South America that should eventually be cancelled, it's BOG, unless combined indefinitely with another city, such as MEX or LAX.

Quoting Airzim (Reply 4):
Simple answer for Varig. Shut down. Reduce fleet types to two. Significantly cut back on destinations. Focus on main trunk routes and a few select long haul business destinations from GRU only.

Completely agree.



SOUTHAMERICA


User currently offlineLaxintl From United States of America, joined May 2000, 25076 posts, RR: 46
Reply 6, posted (8 years 3 months 3 weeks 3 days 14 hours ago) and read 2339 times:

Quoting Checo77 (Thread starter):
7). Raise their price of ticket, but not more than $100 per ticket.

You'd be on your way to shutting the entire airline even faster!

Pricing is not something determined by airlines except in the rarest monoploy markets. Instead ultimately pricing is determined in a free market via supply and demand and the consumers reaction.

I'm sure your competitors would be happy to accept the passengers whom you'd be turning away with your fare increase. Remember, GOL & TAM are quite profitable with the current market pricing.



From the desert to the sea, to all of Southern California
User currently offlineLipeGIG From Brazil, joined May 2005, 11429 posts, RR: 58
Reply 7, posted (8 years 3 months 3 weeks 3 days 13 hours ago) and read 2313 times:
AIRLINERS.NET CREW
FORUM MODERATOR

Quoting Airzim (Reply 4):
This statement alone is a disaster from the get-go. First of all GIG has no steady J market. It can barley sustain JFK flights.

Probably you never visited Rio or know about the level of connections on RG network at GRU. Varig is not AA, BA, AF or even AM-Transportes Aereos Meridionais (Brazil)">JJ, as their huge customer base is based in Rio de Janeiro (almost 40%) and not São Paulo (LESS than 20%). Rio can sustain non-stop to many places but keep in mind that connections are made nowadays thru São Paulo but Rio is responsible for almost 40% of all international trips. For your knowledge, the most profitable RG route is GIG-FRA. Also, some routes like JFK has no more than 20% of pax from São Paulo. The pax from SAO uses AA, CO and AM-Transportes Aereos Meridionais (Brazil)">JJ.

Quoting Airzim (Reply 4):
Simple answer for Varig. Shut down. Reduce fleet types to two. Significantly cut back on destinations. Focus on main trunk routes and a few select long haul business destinations from GRU only.

Answer for Varig:
1) Fix all widebodies (5 772, 3 M11 and 1 763)
This is really necessary to obtain market confidence again.

2) Reduce fleet type to three (two in 5 years)
3) reduce their staff to market levels.
4) focus on a better service like 10 years ago
5) expand service to FRA, JFK and MIA.
6) Drop BOG and MAD.
7) Run code-share with AM (MEX), LH (MUC and SCL).
8) Run seasonal services from Northeast to Europe and US during the peak season
9) Run more domestic flights from GIG (where it cost 20% less) using as the alternative to SAO congestion.
10) Update the website (too old) in order to make easier buy a ticket.
11) Create alliance with main tourist operators in Rio and other city's to face CVC (Brazilian Largest tourist operator) & Tam partnership.
12) Run the hub at GIG and run more flights out of São Paulo thru CGH where they can obtain better yields. This will grant RG a competitive advantage as 75% of SAO business are closer to CGH than GRU.

For those who don't know some RG bad decisions:

Since they transferred their international flights to GRU, RG results keep showing losses, they duplicate flights at CGH and GRU and keep using CGH not connected to any hub. Results nowadays are very clear..... Varig is not in condition to face AM-Transportes Aereos Meridionais (Brazil)">JJ and even G3 at GRU, but they can take care of at least 40% of brazilian international traffic using GIG.

Dear Sirs, just take the few international flights out of GIG and will realize Rio does not offer more than 1.200.000 seats on non-stops, but 2,5 million come thru GIG (1,3 mm to GRU where they generally are duplicated as from GIG/to XXX). Also several people use SDU-CGH and then go to GRU.

I live in São Paulo and i can say GRU is Brazil, not only São Paulo. Off-course, RG and AM-Transportes Aereos Meridionais (Brazil)">JJ runs international networks from GRU, so who will fly to Rio if i cannot connect to other city's ?

This is just my opinion.

Felipe



New York + Rio de Janeiro = One of the best combinations !
User currently offlineTeixeim From United States of America, joined May 2005, 131 posts, RR: 0
Reply 8, posted (8 years 3 months 3 weeks 3 days 13 hours ago) and read 2298 times:

Felipe - excellent post. Varig did once run their hub from GIG (70's and 80's). Why did they ever stop?

User currently offlineSOUTHAMERICA From Colombia, joined Dec 2003, 2497 posts, RR: 10
Reply 9, posted (8 years 3 months 3 weeks 3 days 12 hours ago) and read 2271 times:

Quoting LipeGIG (Reply 7):
Rio can sustain non-stop to many places but keep in mind that connections are made nowadays thru São Paulo but Rio is responsible for almost 40% of all international trips.

You are probably right. I would only like to add one question: Do you really think that it would be viable for Varig to start routes out of Rio, such as Rio-Berlin or Rio-Athens, just like the thread-starter mentioned?



S.


User currently offlineLipeGIG From Brazil, joined May 2005, 11429 posts, RR: 58
Reply 10, posted (8 years 3 months 3 weeks 3 days 12 hours ago) and read 2257 times:
AIRLINERS.NET CREW
FORUM MODERATOR

Quoting Teixeim (Reply 8):
Felipe - excellent post. Varig did once run their hub from GIG (70's and 80's). Why did they ever stop?

Thanks Teixeim, they change due to many reasons:

1) Incentives to run international flights out of GRU (like nowadays they are doing at GIG). Run a GRU-MIA become 25% cheap than GIG-MIA.

2) same for domestic. Infraero clearly creates GRU as the connection hub for the south (plus Chile, Uruguay, Paraguay and Argentina) and it's stated on GRU main documents. GRU receive more flights from POA, FLN, IGU and CWB and during the 90's from other regions. Up to 2003 it was easy to get a slot at GRU than GIG.

3) Upon 2001 RG runs flights from both GRU and GIG, but just after 9/11 they returned their 762 fleet and many other aircrafts, so they transfer some connections and flights from GIG to GRU and runs GIG-GRU-xxx on all international flights.

4) In 2004 due to their financial problems, they start to use more widebodies on domestic flights and due to this some international flights drop GRU-GIG leg.
Also, profitable flights like GIG-AJU (oil to oil), GIG-BSB-BEL, GIG-FOR-NAT, GIG-NAT-FOR has been relocated to GRU (and now are run by Gol). Some of those routes nowadays are not operated by RG anymore (BSB-GIG-POA to BSB-POA-EZE and nothing more this week). In other words, flights were profitable from Rio, not because of connections only (GIG is connections + Rio Airport).

5) Economic: São Paulo become even stronger and keep as the main business city (since 1920), many corporates moved from Rio to São Paulo during the 90's : Ambev, Unibanco, Citibank, Bank Boston/BofA, ABN Amro and others.

6) Star *: Unconfirmed old rumors that LH required a SAO hub in order to accept RG into the alliance.

7) Bad decisions: Varig customer base in Rio keep strong and bigger than Tam and Gol, but Gol become the "king" of GIG nowadays with more than 70 daily flights (same as RG in 2001/2002). GIG-CDG was one profitable route dropped in 2004, GIG-MIA the same.

8) FRB bad management.

9) Soletur case. Soletur was the top Varig partnership and due to it's bankruptcy (requested by RG!!!!!), Varig lost almost 10% of their international customers as well as their biggest charter operator (during the weekend RG runs 10 to 20 charters at GIG with Soletur). Soletur was the biggest brazilian operator and was destroyed by FRB (RG main shareholder) decision to create Varig Travel. Just to simplify, Varig Travel was managed by nowadays BRA (new company) staff..... RG keep debits for US$ 30 million because of Varig Travel, and Soletur (who during 80's and 90's was resposible for more than 40% of JFK flight loads) disapear.

10) Bad Marketing against Rio.

GRU and GIG domestic figures are almost the same, the big difference is that Sao Paulo domestic airport is CGH while GRU is used for connections and charters.
CGH will be 60% closed during a runway improvement very soon and as per GRU ATC comments (i visited the GRU ATC last weekend), a clear picture of the market will be shown.

Felipe



New York + Rio de Janeiro = One of the best combinations !
User currently offlineLipeGIG From Brazil, joined May 2005, 11429 posts, RR: 58
Reply 11, posted (8 years 3 months 3 weeks 3 days 12 hours ago) and read 2238 times:
AIRLINERS.NET CREW
FORUM MODERATOR

Quoting SOUTHAMERICA (Reply 9):
You are probably right. I would only like to add one question: Do you really think that it would be viable for Varig to start routes out of Rio, such as Rio-Berlin or Rio-Athens, just like the thread-starter mentioned?

On this SouthAmerica i agree 100% with you. It's not possible in the begining to start Athens, Berlin, even Brussels (note: if you have a strong local partnership it become easier but need further studies, i imagine those pax from ATH and others nowadays connects thru CDG, MAD, LHR and FRA to Brazil).
Thanks for the note, i didn't look so carefully into the routes mentioned.


Felipe



New York + Rio de Janeiro = One of the best combinations !
User currently offlineAirzim From Zimbabwe, joined Jun 2001, 1205 posts, RR: 1
Reply 12, posted (8 years 3 months 3 weeks 3 days 12 hours ago) and read 2231 times:

Quoting LipeGIG (Reply 7):
Probably you never visited Rio or know about the level of connections on RG network at GRU. Varig is not AA, BA, AF or even AM-Transportes Aereos Meridionais (Brazil)">JJ, as their huge customer base is based in Rio de Janeiro (almost 40%) and not São Paulo (LESS than 20%). Rio can sustain non-stop to many places but keep in mind that connections are made nowadays thru São Paulo but Rio is responsible for almost 40% of all international trips. For your knowledge, the most profitable RG route is GIG-FRA. Also, some routes like JFK has no more than 20% of pax from São Paulo. The pax from SAO uses AA, CO and AM-Transportes Aereos Meridionais (Brazil)">JJ.

First I have been to Rio and Sao.

Secondly, I hate to break it to you; Varig is financially bust. Did it occur to you that maybe the airlines that are flying out of GRU are making more money? Rio can sustain "some" nonstops but the vast majority of the business market to/from Brazil is GRU since the business traffic yield is significantly higher. That's where the money is that's where the planes should go.


User currently offlineIncitatus From Brazil, joined Feb 2005, 4009 posts, RR: 13
Reply 13, posted (8 years 3 months 3 weeks 3 days 12 hours ago) and read 2226 times:

11) Have the CEO marry somebody close to the government. TAM's CEO is married into the family of a notorious government figure, Jose' Dirceu. That means VARIG gets no sympathy from the government, much less money. VARIG's roots of success in the 60s were good connections (not those that are made at airports...) as they swiftly took over good international routes from Panair, and then sucked in Cruzeiro as a buffer airline. Lacking an advocate next to the president, now no connections may be VARIG's undoing. It does leave me wondering what kinds of conversation go on between TAM and PT. Let us not forget the president's airplane is an A319.

I realize a lot could be said about improving VARIG's revenues and reducing costs, but that's another posting.


User currently offlineKLM685 From Mexico, joined May 2005, 1577 posts, RR: 19
Reply 14, posted (8 years 3 months 3 weeks 3 days 12 hours ago) and read 2201 times:

TOTALLY DISAGREE!!!
That's probably the plan RG's CEO's had in mind when they thought they wanted to take RG out of problems! ( no offense)

Quoting Checo77 (Thread starter):
Close CCS and all Bolivian destinations.

Closing CCS is probably saying that AA is closing JFK - LHR or something similar. CSS's route. Is not as if they don't have any pax on the route!

Quoting Checo77 (Thread starter):
4). Make exclusive deals with European, American and Brazilian companies in Brazil and these continents to incentivize these companies to send their bussines workers with Varig.

First of all they would need to really invest on their business and first class product. Or even better, eliminate the First class for some time and invest on the business. Otherwise everyone would still prefer more other airlines.

Quoting Checo77 (Thread starter):
7). Raise their price of ticket, but not more than $100 per ticket.



RG would collapse from one day to another. World record

Quoting Checo77 (Thread starter):
10). Try to fight more for money with the Brazilian government. I would be more agressive and possible get some.

they have done that for the past years. The government has its limit as well.

Quoting Checo77 (Thread starter):
8). Decrease the staff to the optimum number to make the company work and have some reserves.

I agree with you totally! This would really help the company more than anything!


Cheers!!

Alonsou



KLM- The Best Airline in the World!
User currently offlineSchipholjfk From United States of America, joined Jan 2005, 579 posts, RR: 6
Reply 15, posted (8 years 3 months 3 weeks 3 days 9 hours ago) and read 2129 times:

Quoting Checo77 (Thread starter):
3). Start a huge advertising campaign in these European and North American destinations (and in existing destinations) to promote Varig flight and the city of Rio.

When you have barely any money and not making profit where do you think $$$ are going to come from for "a huge advertising campaign"? Don't you think every company in the world would like a huge advertising campaign? No free lunch... gotta have the $$$.

Quoting Checo77 (Thread starter):

4). Make exclusive deals with European, American and Brazilian companies in Brazil and these continents to incentivize these companies to send their bussines workers with Varig.

And all the other international airline companies will simply wilt away and not compete for these contracts? Competition my friend... it's not that easy.



The fun of flying... love it !!!
User currently offlineBSBIsland From Brazil, joined Jul 2005, 377 posts, RR: 1
Reply 16, posted (8 years 3 months 3 weeks 3 days 1 hour ago) and read 1962 times:

I believe stop the CORRUPTION there would be the first step... They have high load factors, high fares...( in most international routes and they are not the cheapest for domestic flights).Where is the money? There is no space for inefficient companies like that... sadly...

User currently offlineTeixeim From United States of America, joined May 2005, 131 posts, RR: 0
Reply 17, posted (8 years 3 months 3 weeks 2 days 22 hours ago) and read 1883 times:

I can't help but be curious why a runway closure at São Paulo-Congonhas (CGH) will cause a 60% closure. There are *two* runways at CGH.

I think the closure will be to groove the main runway's surface for better drainage after a recent aircraft hydroplaning incident. Also can't understand why this can't be completed without a runway closure (use night work) - doesn't CGH have a curfew?

Anyway, it will be interesting to see the effect it has on Brazilian air traffic and Varig in particular.


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