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US Major Airlines And Lowcost- Not Working?!  
User currently offlineDebonair From Germany, joined Jan 2004, 2423 posts, RR: 4
Posted (6 years 3 months 10 hours ago) and read 3527 times:

After the announcement of UNITED to shut down the operations of low-cost company TED, I was wondering why all those companies failed?

In other part of the world, this system is working quite good, e.g. Iberia and Clickair, Lufthansa and germanwings, KLM/AF and Transavia or Qantas and Jetstar. Some airlines failed as well, like BA selling off GO and SAS dropped snowflake.

But why didn't survived any US-Major-low-cost-division?  Confused

 tombstone : SONG by Delta, Delta Express, Metrojet, Continental LITE, Shuttle by United, TED by United, "NewCo" by Northwest (never off the ground)


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19 replies: All unread, jump to last
 
User currently offlineNorthStarDC4M From Canada, joined Apr 2000, 3012 posts, RR: 37
Reply 1, posted (6 years 3 months 9 hours ago) and read 3481 times:
AIRLINERS.NET CREW
CHAT OPERATOR

Reasons:

A> They aren't REALLY low cost, just low/no frills for passengers and low fare, they still have the same COSTS as the main airline (same staff, same maintenance, same fuel, etc)

B> They cause long term labor issues because of the main airline offloading "low profit" routes to the other airline and are killed to get unions to sign other concessions.

C> Bad passenger impressions. Passengers buy tickets on mainline, they want mainline service, no tight seat no drinks "LCC" service, especially the high value business traffic. Mr 500 flights a year might take those flights to competitors because of an "LCC" flight.

D> It was an easy way to use older planes but they got TOO old/gas got too high.

E> Mainline's costs got low enough that the LCC subsidiary is no longer needed.

Any of the above may apply.

Also some of your examples don't quite match. Europe has had a few failures too: Go for example. Or Buzz...

Transavia isn't realy KLMs LCC, it's partially an IT/Vacation airline still. Germanwings is only partially aligned with LH and is still partially a regional airline, Jetstar is in a unique situation and is hard to compare to anyone else.



Those who would give up Essential Liberty to purchase a little Temporary Safety, deserve neither Liberty nor Safety.
User currently offlineBobnwa From United States of America, joined Dec 2000, 6465 posts, RR: 9
Reply 2, posted (6 years 3 months 9 hours ago) and read 3474 times:



Quoting Debonair (Thread starter):
SONG by Delta, Delta Express, Metrojet, Continental LITE, Shuttle by United, TED by United, "NewCo" by Northwest (never off the ground)

NewCo by Northwest is now Compass Airlines. NewCo was just a tempory label untill the new company was labeled. It was never intended to be a low cst division.


User currently offlineManfredj From United States of America, joined Mar 2007, 1132 posts, RR: 0
Reply 3, posted (6 years 3 months 9 hours ago) and read 3463 times:



Quoting NorthStarDC4M (Reply 1):
They cause long term labor issues because of the main airline offloading "low profit" routes to the other airline and are killed to get unions to sign other concessions.



Quoting NorthStarDC4M (Reply 1):
They aren't REALLY low cost,

Perfect! Couldn't have put it better myself.



757: The last of the best
User currently offlineB6fll From , joined Dec 1969, posts, RR:
Reply 4, posted (6 years 3 months 9 hours ago) and read 3278 times:

They should leave the Lowcost stuff alone and leave it to WN, B6, and FL. The real LCC's

User currently offlineJlbmedia From United States of America, joined Jun 2002, 622 posts, RR: 0
Reply 5, posted (6 years 3 months 9 hours ago) and read 3259 times:



Quoting Debonair (Thread starter):
But why didn't survived any US-Major-low-cost-division?

I think part of the reason they failed in the US is because, to the price conscious consumer, (coach passenger) with the reduction of service in the main line product, their is no perceived difference in the two products anymore. The line between the two products has been blurred.



JLB54061
User currently offlineFlighty From United States of America, joined Apr 2007, 8492 posts, RR: 2
Reply 6, posted (6 years 3 months 8 hours ago) and read 3135 times:



Quoting Debonair (Thread starter):
In other part of the world, this system is working quite good, e.g. Iberia and Clickair, Lufthansa and germanwings, KLM/AF and Transavia

I would consider the USA to be a view into Europe's aviation future. With deregulation, things like that probably do not survive. I'm talking about 2015, we'll see if they are around. My guess is RyanAir will kill them all.


User currently offlineJoePatroni From United States of America, joined Mar 2007, 203 posts, RR: 0
Reply 7, posted (6 years 3 months 3 hours ago) and read 2948 times:

Don't forget Tango by Air Canada-

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Eek, that was horrendous!

JP



Oh Stewardess, I speak Jive.
User currently offlineSomeone83 From Norway, joined Sep 2006, 3372 posts, RR: 3
Reply 8, posted (6 years 3 months 3 hours ago) and read 2933 times:



Quoting Flighty (Reply 6):

I would consider the USA to be a view into Europe's aviation future. With deregulation, things like that probably do not survive. I'm talking about 2015, we'll see if they are around. My guess is RyanAir will kill them all.

Aviation in Europe is deregulated! And I would say, more deregulated than in the US


User currently offlineCubsrule From United States of America, joined May 2004, 22931 posts, RR: 20
Reply 9, posted (6 years 3 months 3 hours ago) and read 2900 times:



Quoting Someone83 (Reply 8):
And I would say, more deregulated than in the US

...more deregulated? What percentage of major European airports are slot-controlled?



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineSomeone83 From Norway, joined Sep 2006, 3372 posts, RR: 3
Reply 10, posted (6 years 3 months 3 hours ago) and read 2894 times:

Quoting Cubsrule (Reply 9):
What percentage of major European airports are slot-controlled?

That's nothing to do with regulations, that's simply realising that within x-amount of time only y-amount of airplanes are able to take-off or land. Without slot-control we would have had the same mess that you have in the US regarding delays at peak time.

[Edited 2008-06-04 14:22:34]

[Edited 2008-06-04 14:23:32]

User currently offlineCloudboy From United States of America, joined Jan 2004, 816 posts, RR: 0
Reply 11, posted (6 years 3 months 1 hour ago) and read 2831 times:

In Europe, airlines usually fall into two areas - low priced low frills service, which catch those who are looking for the lowest cost option. Then you have the full service, get me there quick market, which is usually the majors. In europe you have another option - rail service, which gives you decent service at a decent price, and is quick enough.

The US market is different. All the service has pretty well dropped to the lowest common denominator. And as much as people like to say Americans only purchase airfare by the lowest price, it never proved out. People simply didn't like what they were getting for the price - they may as well fly the major with better times.



"Six becoming three doesn't create more Americans that want to fly." -Adam Pilarski
User currently offlineCubsrule From United States of America, joined May 2004, 22931 posts, RR: 20
Reply 12, posted (6 years 3 months 1 hour ago) and read 2814 times:



Quoting Someone83 (Reply 10):
That's nothing to do with regulations, that's simply realising that within x-amount of time only y-amount of airplanes are able to take-off or land.

That which we call a rose by any other name would smell as sweet...

If the government interferes with the market, it's a regulation, no? We can argue about whether it's good or bad (and I'm not necessarily arguing that this particular form of regulation is bad), but it's still government interference with the market.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineFlighty From United States of America, joined Apr 2007, 8492 posts, RR: 2
Reply 13, posted (6 years 2 months 4 weeks 1 day 20 hours ago) and read 2727 times:

The sticky part is that certain European airlines like BA, LH inherited slots that they aren't paying for. This allows certain companies (like LH) to survive in perpetuity, free from any competition whatsoever. Our ORD hub is quite similar in that regard, protecting UA and AA's interests while shielding them from competition.

The right solution, both in the EU and USA (which are not "different" in any especially meaningful way), is to charge MONTHLY RENT for all slots into airports. It's really very simple. LH can pay the monthly rent, or a competitor such as RyanAir would have access to the exact same monthly rent. In that scenario, guess what... European air service does indeed begin to track the "American" model.

It's not the "American" model, anyhow. It's just, the free model. Do you really think Europeans would not jump at the chance to have a JetBlue type competitor... we shall see. For example, a JetBlue type airline with hubs in FRA and CDG.

I agree it's possible Europe will go down a slightly different path. But it will be interesting what transpires in Italy. It's a hard business when your means of production can travel at 600 MPH. Aviation is, as they say, "contestable."


User currently offlineCubsrule From United States of America, joined May 2004, 22931 posts, RR: 20
Reply 14, posted (6 years 2 months 4 weeks 1 day 20 hours ago) and read 2719 times:



Quoting Flighty (Reply 13):
Our ORD hub is quite similar in that regard, protecting UA and AA's interests while shielding them from competition.

I'm not sure that's really unfair, though. AA and UA had to cut flights when no others did. Given that sacrifice, why shouldn't they be protected?



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineMutu From United Kingdom, joined Mar 2006, 536 posts, RR: 0
Reply 15, posted (6 years 2 months 4 weeks 1 day 7 hours ago) and read 2593 times:



Quoting Flighty (Reply 13):
The sticky part is that certain European airlines like BA, LH inherited slots that they aren't paying for. This allows certain companies (like LH) to survive in perpetuity, free from any competition whatsoever. Our ORD hub is quite similar in that regard, protecting UA and AA's interests while shielding them from competition.

A significant majority of airlines at LHR didnt "buy" their slots, as the airport was not full until the late 1980's. So any carrier flying in up to that point would have been awarded slots by the committee so long as they "use and perform".

Anyhoo, slots are a one off cost, but every carrier pays rent for parking its plane at a gate, is charged a levy for every passenger it boards or deplanes at the airport, a hefty fine for late pushback from that gate etc etc. So operating costs are the same for all.

Your proposition has some merit however but you must link in your ATC charges as well to that model as ultimately it is ATC capacity that is curtailing growth in europe. Flying from LHR to ATH for example, you fly through anything from 4 to 6 separate ATC systems with overfly fees for each, its complex, causes delays and should have been scrapped for a europe wide single authority for greater efficiency and also to save airlines in overfly fees!


User currently offlineXtoler From United States of America, joined Sep 2007, 953 posts, RR: 0
Reply 16, posted (6 years 2 months 4 weeks 1 day 6 hours ago) and read 2557 times:



Quoting Cubsrule (Reply 14):
I'm not sure that's really unfair, though. AA and UA had to cut flights when no others did. Given that sacrifice, why shouldn't they be protected?

Oh boy, that's a slippery slope between saving jobs or looking out for the consumer. I'd hate to see people lose their jobs, but if something better were to come along and give AA and UA a run for their money, by free market that third airline would win out, or AA and UA would try harder to compete and win over more pax.

Quoting Mutu (Reply 15):
Your proposition has some merit however but you must link in your ATC charges as well to that model as ultimately it is ATC capacity that is curtailing growth in europe. Flying from LHR to ATH for example, you fly through anything from 4 to 6 separate ATC systems with overfly fees for each, its complex, causes delays and should have been scrapped for a europe wide single authority for greater efficiency and also to save airlines in overfly fees!

This is off topic, but aren't the European ATC getting more streamlined under newer and changing EU regulations? I was just under the impression that all EU countries would have the same ATC fare.



EMB145 F/A, F/E, J41 F/A, F/E, because my wife clipped my wings, armchair captain
User currently offlineItalianFlyer From United States of America, joined Nov 2007, 1099 posts, RR: 2
Reply 17, posted (6 years 2 months 4 weeks 1 day 6 hours ago) and read 2506 times:

IMHO the USA's "airline with an airline" experiment was a feeble attempt copying the WN model while offering full service to your high end customers. The theory was that airline systems can unbundle their product, much a like cell phone company...and capture everything from high yield business travelers to price sensitive leisure consumers. Thanks all fine and good for a business school research project but as we can see, it did not pan out in practice.

As I shared in another post about TED, it really befuddled me how we would leave connecting pax behind in say, DEN on an unrealistic 42 minute skd turn so we could get that plane to ONT so it can sit for 2 1/2 hours. In the end, I would venture to say that DeltaExpress, MetroJoke, Ted, Tango and the like actually COST the legacies more money and allot of customer good will and helped speed up the mess we are in today.


User currently offlineXtoler From United States of America, joined Sep 2007, 953 posts, RR: 0
Reply 18, posted (6 years 2 months 4 weeks 1 day 6 hours ago) and read 2495 times:

This is a good example of not being able to be everything to everyone. If that were true, we may just have had Wal-Mart Airlines.


EMB145 F/A, F/E, J41 F/A, F/E, because my wife clipped my wings, armchair captain
User currently offlineCubsrule From United States of America, joined May 2004, 22931 posts, RR: 20
Reply 19, posted (6 years 2 months 4 weeks 23 hours ago) and read 2416 times:



Quoting Xtoler (Reply 16):
Oh boy, that's a slippery slope between saving jobs or looking out for the consumer.

I'm not sure we're there yet. In the current regime, I would argue that UA and AA should get additional slots (if they want them) before a new entrant gets more than 8. That seems like a fair compromise to me.



I can't decide whether I miss the tulip or the bowling shoe more
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