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Changing Of The Guard: WN, F9, B6  
User currently offlineFlashmeister From United States of America, joined Apr 2000, 2900 posts, RR: 6
Posted (12 years 1 month 1 week 3 days 10 hours ago) and read 1637 times:
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The Wall Street Journal has an article (also picked up by Briefing.com) that discusses how we're on the verge of a "changing of the guard" of airline industry leaders as a result of market pressures put on by "new-model" airlines such as Southwest, Frontier, and jetBlue. Many analysts are predicting that "old-model" industry leaders have the choice to adapt or be destroyed.

We're all aware of the precarious positions of many large carriers in the US, and of the dire straits of other carriers in the US (USAirways, America West, etc.).

So, what's your prediction as to who's going to adapt and who's going to die off? What would a large carrier look like if it was to adapt to the new market pressures? Are we on the verge of a sea change in the industry in the US, and if so, what will the airline industry look like 5 or 10 years from now?

Your thoughts, please...

20 replies: All unread, jump to last
 
User currently offlineFrequentflier From United States of America, joined Aug 2000, 422 posts, RR: 1
Reply 1, posted (12 years 1 month 1 week 3 days 7 hours ago) and read 1578 times:

I don't really agree.

Each type of carrier has its niche, whether its leisure, low fare passengers (jetBlue, SW, Frontier), or full fare business passengers. In my opinion, the only reason that the major airlines are faring so badly is because of the economy. Once that picks up again, I'll bet that the majors start to gain some business back.

Also, if the majors start to adapt to the low fare business model, I have a feeling that the airline industry will find itself in a very awkward position down the road.


User currently offlineGoingboeing From United States of America, joined Dec 1999, 4875 posts, RR: 17
Reply 2, posted (12 years 1 month 1 week 3 days 7 hours ago) and read 1563 times:

Puhleeeze - I get pretty tired reading about other airlines catering to the "full fare business passenger" and the low fare airlines catering to the "leisure" passengers. Southwest airlines was created to cater specifically to the business community by offering high frequency flights between cities. Check out the number of "suits" flying between DAL-HOU, LAX-OAK, MDW-MCI, etc. And this was true long before the economy took a dive. Shoot, I was on a "two step" flight from MCI-DAL (via OKC) and I was honestly shocked at the number of "leisure passengers in business attire" that were doing the same thing.

User currently offlineFrequentflier From United States of America, joined Aug 2000, 422 posts, RR: 1
Reply 3, posted (12 years 1 month 1 week 3 days 7 hours ago) and read 1552 times:

Before completely disagreeing, just look at the fact that the more recent start ups offer less frequency, less comfort, and less luxury. Major airlines have more frequency, more luxury, and are absolutely more desirable for the business traveler who is forced to fly to a small city and is forced to connect using the hub and spoke system. I'm not saying that SW and jB have no business passengers, but merely that the majors are more geared towards the average business traveler. If you still disagree, just walk aboard an AA flight from LGA-ORD on a Monday morning.

User currently offlineSjc>sfo From , joined Dec 1969, posts, RR:
Reply 4, posted (12 years 1 month 1 week 3 days 7 hours ago) and read 1549 times:

Exactly, Low-fare carriers simply make sense for business passengers and leisure passengers alike. Lots of frequency for the business traveler, and reasonable walk-up rates. For the leisure traveler, great deals on advanced purchase tickets.

Let's see how they fare on Transcons. If JB A320s and SW B737s can fill up, then the majors are really going to lose out on their bread and butter routes. United and American are both lucky, however, in that their 762s that go Transcon really don't have that many more seats than a JB A320. Maybe 25-35 more max, and they can probably take care of that with connecting traffic. The 763s are a different story.


User currently offlineSrbmod From , joined Dec 1969, posts, RR:
Reply 5, posted (12 years 1 month 1 week 3 days 7 hours ago) and read 1551 times:

Even once the economy picks back up, the low-fare carriers will still maintain most of their passenger gains they picked up during the economic downtown. With many businesses cutting back on travel and shifting over to the lower-fare airlines when travel was necessary, those new customers will more than likely stay with the lower-fare airlines in order to save money, because not all businesses will have their travel budgets increased until their finances get better. With several of the low-fare carriers offering a Business Class service, many businesses will forgo FF miles for cash savings. The equation of low fare=leisure travel is outdated now. People want to get the best value for their money. For the most part, the majors have kept a number of their customers due to loyality and the fact that the low-fare carriers don't always fly to where you want to go. Less than a decade ago, low fare airlines meant old aircraft, sketchy service, delays, mx issues, and for the most part, general uncertainity, which is my most business travellers stayed away from them. Southwest up until five years ago, was flew (no pun intended) under the radar of most of the majors, and of the flying public. People are willing to drive several hours to save $100 on airfare by flying on Southwest. Before Valujet/AirTran, many people in ATL were driving to BHM in order to fly on Southwest because Delta had hiked up the fares out of ATL after the demise of Eastern. Some still do, out of loyality, but AirTran did siphon away some of the Southwest customers that were driving over to Birmingham. The types of people you will see on a low-fare airline are just like those on one of the majors. You will see a guy in a shirt and tie sitting next to someone wearing jeans and a t-shirt. The niche lines are blurring, and the barbarians are at the gate ready to strike.

User currently offlineGoingboeing From United States of America, joined Dec 1999, 4875 posts, RR: 17
Reply 6, posted (12 years 1 month 1 week 3 days 7 hours ago) and read 1540 times:

Frequent flyer...I suppose it boils down to "location location location". From MCI, I can take SWA nonstop to a bunch of different cities. On the others, I am forced to change planes at a hub.

I suppose for a more accurate comparison to what business would demand...drop the Wright Amendment and then compare the suits on AA from DFW to ORD to the suits on SWA from DAL-MDW. When it's been tried in the past where Federal legislation doesn't interfere with the free market (shuttle by United comes to mind), the bulk of the business was still heading to the low cost carrier.


User currently offlinePHXinterrupted From United States of America, joined Apr 2002, 474 posts, RR: 0
Reply 7, posted (12 years 1 month 1 week 3 days 6 hours ago) and read 1528 times:

When flying for pleasure, the last thing I want to be on is a dirty, crowded Southwest or Frontier plane. Christ, I was just on a Frontier flight yesterday and some hillbilly spilled his beer all over me.


Keepin' it real.
User currently offlineGoingboeing From United States of America, joined Dec 1999, 4875 posts, RR: 17
Reply 8, posted (12 years 1 month 1 week 3 days 6 hours ago) and read 1524 times:

Who would you prefer to fly PHXinterrupted? America West? Let me tell you about a flight my wife was on with AWA. The "lady" sitting next to her kept telling her how great it was that the fare was so low...she didn't have to take the bus back home now. Then she excused herself and went back to the lav. When she "finished", she stepped out and announced to the entire rear of the aircraft "Reeeelief! I just lost 10 pounds in there". I'll take the hillbillies beer, thank you very much.

User currently offlinePALMBEACHFLYER From United States of America, joined Jun 2002, 7 posts, RR: 0
Reply 9, posted (12 years 1 month 1 week 3 days 6 hours ago) and read 1507 times:

I have to agree with GoingBoeing.

It all depends on location, here in south florida there are so many choices of airlines, and so many cities you can fly to out of the three airports that it is ppretty level playing ground. For example, Southwests' fares tend to be sometimes higher than the big three(Delta,American,United). So alot of people choose to fly the majors nonstop to their destination then to have to stop in three cities just to get to cities such as Baltimore etc....


User currently offlineDCA-ROCguy From United States of America, joined Apr 2000, 4488 posts, RR: 33
Reply 10, posted (12 years 1 month 1 week 3 days 4 hours ago) and read 1462 times:

The Cartel-network carriers will indeed need to adjust to the reality of low-fare carriers, or they will eventually go under. There are three types of passenger routes: domestic mainline, that is routes that support at least 737-size a/c; domestic regional, that is routes that support only regional a/c; and international.

Only the Cartel carriers can provide domestic regional routes and international routes, because of the cost of providing them. No one has figured out how to successfully run the low-fare model--that is, operating cost of 7-8 cents per seat mile--on regional or international routes. But the vast majority of USA available seat miles is on domestic mainline routes--and those are the routes on which the low-fare carriers operate. And the low-fare carriers are destroying the Cartel on these routes, by choosing carefully.

What I think will happen is that the Cartel carriers will shrink in size, and delegate much more of their flying to their regional partners. Some travelers, and not just business people, always need access to cities too small for low-fare carriers, and of course there is always demand for international travel. And some will want first class. So the Cartel's hub-and-spoke system will continue to exist, but there will be lower traffic volume because most domestic mainline pax will take the low-fare carriers.

US Airways is too far gone to get its cash burn down before it runs out, probably sometime next year. (The ATSB should for this reason turn down its guaranteed loan application, US is not a tenable business). The other five Cartel carriers will probably adjust, but it will be ugly.

Scope clauses will become an increasingly untenable idea in the new environment. That should make for some lively collective bargaining sessions in the next few years, given airline unions' combativeness. Also, as I argue in the article I published here yesterday, the Cartel needs to take the idea of fleet simplification much further than they have so far in order to reduce costs and at least keep some hand in domestic mainline traffic.

As for low-fare planes being "dirty" or the passengers obnoxious, what complete bulls**t. All the AirTran and Southwest planes I've flown on have had plenty of suits, and the passengers were as well-behaved as any on Cartel carriers. Both FL and WN planes have been very clean and comfortable, and the in-flight service exactly what I get on a Cartel carrier--coke and pretzels. Which is all I want on a 1-hour flight anyway.

Jim


User currently offlineOA412 From United States of America, joined Dec 2000, 5231 posts, RR: 25
Reply 11, posted (12 years 1 month 1 week 3 days ago) and read 1429 times:

DCA-ROCguy wrote: As for low-fare planes being "dirty" or the passengers obnoxious, what complete bulls**t. All the AirTran and Southwest planes I've flown on have had plenty of suits, and the passengers were as well-behaved as any on Cartel carriers.


 Big thumbs up DCA-ROCguy! I have become increasingly sick and tired of people on here claiming that those of us who fly on LCCs are somehow lower class, dirty, hillbillies, whitetrash, etc., etc. Either you are completely ignorant or mommy and daddy still purchase your tickets for you. Those of us living in the real world, and especially poor students such as myself, must vote with our wallets at every opportunity and I'll tell you something, I have always received equivalent service, and often better service, from LCCs. We are not dirty, obnoxious, etc. but, by supporting LCCs, we are helping to change the face of aviation by making it accessible to everybody. And yes, I too, have seen a fair number of "suits" on my low-fare flights so the notion that they are only for the dregs of society is patently false.



Hughes Airwest - Top Banana In The West
User currently offline737doctor From United States of America, joined Mar 2001, 1332 posts, RR: 39
Reply 12, posted (12 years 1 month 1 week 3 days ago) and read 1420 times:

I also take exception to this whole notion of our (Southwest) planes and passengers being "dirty". How does wanting to save money on air travel translate into somehow being lower-class or a "hillbilly" as you so eloquently put it? And as far as our planes are concerned, we are in the process of changing all of our planes over to the "Spirit mod" which includes completely refurbished interiors with all-leather seats.


Patrick Bateman is my hero.
User currently offlineBrons2 From United States of America, joined Sep 2001, 3007 posts, RR: 4
Reply 13, posted (12 years 1 month 1 week 3 days ago) and read 1409 times:

What is interesting to me, is that it seems like airlines are evolving back more towards the original model where you have flag carriers (TWA, PanAm) and then domestic carriers. Will the cartel carriers become more like international and trunk only carriers, leaving most domestic routes to the low cost carriers (or the cartel's regional affiliates?)


Firings, if well done, are good for employee morale.
User currently offlineBigo747 From , joined Dec 1969, posts, RR:
Reply 14, posted (12 years 1 month 1 week 3 days ago) and read 1408 times:

All this speculation is stupid... Only a few quarters ago the airlines were reporting record profits. When the economy is good, the mainline carriers do well, when it's bad they do bad. It's not like the majors have JUST started competing with low-cost cariers, southwest, (RIP) people's express, and (RIP) Tower have been around for years. Regular "Joe Beer-spillers" will always fly on southwest or perhaps Frontier, but most premium business travelers would rather walk than take southwest.

-Sean


User currently offlinePROSA From United States of America, joined Oct 2001, 5630 posts, RR: 5
Reply 15, posted (12 years 1 month 1 week 2 days 23 hours ago) and read 1398 times:

Regular "Joe Beer-spillers" will always fly on southwest or perhaps Frontier, but most premium business travelers would rather walk than take southwest.

I'd say both of those statements are wrong.



"Let me think about it" = the coward's way of saying "no"
User currently offlineGoingboeing From United States of America, joined Dec 1999, 4875 posts, RR: 17
Reply 16, posted (12 years 1 month 1 week 2 days 23 hours ago) and read 1394 times:

Regular "Joe Beer-spillers" will always fly on southwest or perhaps Frontier, but most premium business travelers would rather walk than take southwest.

I'd say both of those statements are wrong.


I'd say you're right. Bigo747 will be in for a shock when he gets out of high school and becomes a "premium business traveller" and sees that his company books by fare, and not in first class.


User currently offlineScottb From United States of America, joined Jul 2000, 6710 posts, RR: 32
Reply 17, posted (12 years 1 month 1 week 2 days 23 hours ago) and read 1383 times:

Those who dismiss the low-fare carriers as being full of hillbillies, "beer-spillers," or white trash do so at their own peril -- and also show their lack of understanding of the low-fare carriers' business models. Airlines like Southwest, Airtran, and jetBlue aren't in the market to be everything to everyone; they aim to be the carrier of choice for people who are looking for good value. Note that "value" doesn't mean being the cheapest; it means providing a reliable, attractive product at a reasonable price.

Let's take a closer look at Southwest's business model. They specialize in frequent, reasonably-priced, short-haul service. Why do they offer frequent service on most of their routes? Because business passengers prefer frequent service. Why do they offer reasonable prices? Because business (and even leisure) passengers are more willing to pay walk-up fares if they feel they're being offered a good value. And, as a matter of fact, between 30 and 40 percent of Southwest's passengers are paying the full refundable fare. Business travelers are willing to fly on Southwest *and* pay full-fare because they feel they are receiving a good value (frequent, comfortable, reliable, with good customer service) for their money. The DAL-HOU, OAK-LAX, MDW-STL, etc. flights tend to be fairly heavy on business traffic. Why short-haul service? Because they can do it well and cheaply, and because most business trips are under 500 miles. A business traveler is more likely to be willing to pay $75-100 to travel 300 miles or so; typical leisure travelers will drive instead.

The danger for the full-service carriers is that their recent cutbacks have narrowed the gap between themselves and the discounters. Why fly Delta, for example, if the coach cabin service for a 1000-mile flight is a single drink service and a bag of pretzels? Southwest would provide a snack pack and at least two drink services on that stage length. Why pay $5 to see a movie on a projection screen/television 20 feet away when you can get free satellite TV on jetBlue?

While there will probably always be room for some network carriers aiming to be everything to everyone, I think it's clear that some of them won't survive long-term. Some of the dinosaurs weren't able to adapt to deregulation; a new set of dinosaurs will disappear because they won't be able to adapt to the realities of today's domestic aviation market.


User currently offlineIMissPiedmont From United States of America, joined May 2001, 6278 posts, RR: 34
Reply 18, posted (12 years 1 month 1 week 2 days 22 hours ago) and read 1374 times:

Southwest as a "new model" carrier? That shows that even the WSJ has it's head up it's...never mind, when it comes to airline reporting. I hardly think that 30 years of profit and growth is a "new" airline.

"Regular "Joe Beer-spillers" will always fly on southwest or perhaps Frontier, but most premium business travellers would rather walk than take southwest."
Really? Would you understand if I told you that I know very wealthy people that always fly WN if they can? As for the snobs walking, I say let them. I can just imagine some overbearing yuppie choosing to walk from say, Tucson
to San Diego, for that business meeting. Of course he could spend an extra 2 hours transiting via PHX. With any luck he'd choose to move to Phoenix also.

OK, anti yuppie, anti Phoenix rant done. Anti Bigo747 rant in full effect though.



Quit calling an airport ramp "Tarmac" and a taxiway "runway".
User currently offlineJessman From United States of America, joined Jul 2001, 1506 posts, RR: 8
Reply 19, posted (12 years 1 month 1 week 2 days 21 hours ago) and read 1334 times:

I've been saying something to this effect since I joined this forum. check some of my earliest posts. Anyway; DCA-ROC guy is correct about the three types of travel. I personally believe that there is the segment of society that wants first class, so I think that sometime in the future there will be maybe one or two Midwest Express model carriers flying those folks at a price still more reasonable than the network carriers current first class. I believe most domestic mainline type routes will be taken over by LCCs. Regional carriers will most probably exist relatively unchanged to handle the domestic regional routes that need served. I think they will only grow over the next few years, so they will probably be larger than they are currently. I think current cartel carriers will have to make a decision. The will 1.)convert to a Midwest Express model domestic carrier (my guess; American); 2.)Convert to a LCC model domestic carrier(My Guess; Delta or whats left of US Air); 3.)Convert to a purely International carrier with little change to current international service or structure (Possibly Northwest or United to Asia or Delta or American or Continental to Europe) or 4.)convert domestic operations under option 1 or 2 and keep international as a separate business unit, like how Delta operates the Delta Shuttle separate completely from the rest of Delta.
For option 3 to be viable the Cartel carriers would have to have domestic feed from the other purely domestic carriers under the LCC model or Midwest express model or both. This is not so hard to believe because for example Delta already has necessary ticketing and baggage agreements with Airtran, Vanguard, Frontier, and Midwest express.
Option 4 is what most cartel carriers would like to do because there is money to be had on both sides, but they will have the most problems with this because of the difference in pay and things for pilots/FAs etc. As well as the passengers will not like whatever they choose for their domestic operations.
Or the airlines may be re-regulated in which case none of this will matter.
Actually, though, the more I think about it the more I realize that the network carriers have the right Idea because they cater to those that need the lowest fare with many coach seats and also allow for those that like first class and they have the connections that make it possible to go from Grand Rapids Michigan to Milan, Italy with the least ammount of hassle possible. The problem is that when the LCCs come in they don't make money on their domestic routes, so they cut back. This cuts back on the feed for the longhaul and international feed, so the longhaul and international flights lose money, so the airline loses money. Smarter people than me will figure out the future of the airline industry, but I hope to be a part of it well into the future  Smile
Jessman


User currently offlineOA412 From United States of America, joined Dec 2000, 5231 posts, RR: 25
Reply 20, posted (12 years 1 month 1 week 2 days 21 hours ago) and read 1326 times:

Regular "Joe Beer-spillers" will always fly on southwest or perhaps Frontier, but most premium business travelers would rather walk than take southwest.

I'd say both of those statements are wrong.


I second that. Let's just say that I have seen more than my fair share of "Joe Beer-Spillers" on the likes of DL and other majors as well as more than my fair share of business travellers on WN. In our currently depressed economic enviroment it makes little sense for business travellers to pay top dollar for air tickets when the low costs can get you there for a lot less money with service on par with that offered by the majors. Maybe you don't get food on the low costs but then you don't get a hell of a lot of food on the majors anyomore either.



Hughes Airwest - Top Banana In The West
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