sfointern
Posts: 1104
Joined: Wed Oct 10, 2001 1:19 am

Airlines: Stop Trying To Be Everything To Everyone

Fri Oct 12, 2001 6:35 am

How much you wanna bet AC Tango folds in less than 2 years??? What about KLM's buzz?

When are airlines going to learn: an airline-within-an-airline is a good idea on paper, but a helluva lot harder to execute and make succesful.

One of the pioneers, United Shuttle, just kicked the bucket. Metrojet...gone. DLX...near to gone. BA's "Go" -- sold. CAL lite failed miserably before anyone even noticed it existed.

The only way you can have multiple airlines under one roof is to make them different operational subsidiaries. Cases-in-point: AA/Eagle/TW, Virgin/Virgin Blue/Virgin Sun (heck, even Virgin was trying to sell Virgin Express). The only reasons why the DL and US Shuttles have done well are because they were originally seperate entities, and they cater to a very high-yield market.

AIRLINES... take a clue from Southwest!

STOP TRYING TO BE EVERYTHING TO EVERYONE.

The geographical makeup of business makes it so that markets are unevenly distributed. This is a simple, basic fundamental. Southwest realized this before it even started. It opened up air travel to discretionary travelers who wouldn't have flown before; it created its own market. And it's stuck with them. They are still WN's bread and butter. On the plus side, the reputation pf and respect for WN has attracted biz travellers.

Like all businesses and economies, airlines would do best to specialize by catering to one specific market, region, or audience. Specialization is key.

The current bloodletting and purging of excess capacity provides a window of opportunity to realize this, and perhaps rethink their business plans more dramatically.

We are already seeing United switch to a purely "mainline" carrier due to costs; United is drastically shrinking and shifting smaller stations to lower-cost, lower-frills regionals. However, United has a hidden agenda to: to funnel United Airlines money into a whole new, risky venture.

Spreading an airline's resources across many operations *other* than the airline tends to reduce economies of scale. It's a basic economic principle. At least jetBlue has found its own niche, and is sticking to it.

If WN emerges as the nation's largest airlines in the short-run, or even the long-run, it will have been the best for the country.

When will the airlines learn? Keep it simple, stupid.
 
Tango-Bravo
Posts: 2887
Joined: Sun Jun 17, 2001 1:04 am

RE: Airlines: Stop Trying To Be Everything To Everyone

Fri Oct 12, 2001 7:18 am

Excellent post SFOintern. Experience has abundantly proven the truth of your point. Running an airline that gives customers what they want most, PREDICTABILITY according to Gordon Bethune (and myself), requires the undivided attention of many people to a singular objective (ensuring that "things work the way they're supposed to" in whatever department one happens to be). It is very challenging to pay adequate attention to all the details when there is a clear focus in one direction, and well nigh impossible when management creates "rabbit trails" that divert attention in different directions. That is why, IMO, so-called airlines-within-airlines have had a failure rate approaching 100%.
 
737doctor
Posts: 1291
Joined: Mon Mar 19, 2001 4:52 pm

RE: Airlines: Stop Trying To Be Everything To Everyone

Fri Oct 12, 2001 8:22 am

BRAVO! I whole-heartedly agree.

Of course I am a little biased...
Patrick Bateman is my hero.
 
Jer32382
Posts: 297
Joined: Fri Apr 25, 2003 10:35 am

RE: Airlines: Stop Trying To Be Everything To Everyone

Fri Oct 12, 2001 8:29 am

I agree with you 100%. I have been studying SWA in my aviation class at Ohio State the least few days (I'm gonna bragg here a little because Mary Schiavo is my professor and she really knows her stuff obviously) but I have a huge respect for SWA now. Herb Keleher has to be one of the smartest businessmen alive right now. SWA has the best debt to capital ratio in the industry right at something like 33%. Obviously they are doing something right. I also think that when the laws change and we have true openskies, SWA will become even more profitable operating in the overseas market.

Jer/OSU
 
flygirl
Posts: 196
Joined: Sun Jun 05, 2011 12:06 am

RE: Airlines: Stop Trying To Be Everything To Everyone

Fri Oct 12, 2001 8:55 am

I get the message loud and clear and share many of the concerns related by the facts laid out in the article you shared.

Dare I hope that someone can finally break the mold or am I the impossible dreamer? I gather hope from the fact that the aviation world is so differently structured and is demographically challenging in Canada so maybe it will work here.
 
fallingeese
Posts: 2031
Joined: Sat Apr 28, 2001 2:33 pm

RE: Airlines: Stop Trying To Be Everything To Everyone

Fri Oct 12, 2001 11:24 am

Air Canada has got to be one of the largest examples of what you are saying. They have 80% of the Canadian market...

What do they do? Launch Air Canada Tango and plan on a discount carrier to compete with Westjet.
Mark McWhirter...Contrails Photography
 
flygirl
Posts: 196
Joined: Sun Jun 05, 2011 12:06 am

RE: Airlines: Stop Trying To Be Everything To Everyone

Fri Oct 12, 2001 11:29 am

Not 80%, not for a number of months. Just prior to 9/11 the market share for AC was reported to be 65% and still falling.
 
ILUV767
Posts: 3035
Joined: Mon May 29, 2000 2:21 pm

RE: Airlines: Stop Trying To Be Everything To Ever

Fri Oct 12, 2001 11:36 am

Excellent post SFOintern.

I L U V 7 6 7
 
DCA-ROCguy
Posts: 3895
Joined: Fri Apr 21, 2000 5:03 am

RE: Airlines: Stop Trying To Be Everything To Everyone

Fri Oct 12, 2001 2:25 pm

Amen SFOIntern, to every word. Picking one thing and doing it well is the key to airline success.

Ironically, United's own Atlantic Coast contractor is one of the best examples. Fly multiple commuter a/c daily to small and medium markets. There are lots of these markets, and they need to be hooked to mainline hubs in order to economically be connected to the national system. And get paid fee-for-departure to reduce dependency upon very high load factors. Kerry Skeen has a very good thing going.

One thing that amazes me is the way majors tolerate such complicated fleets. United could do everything it needs with: 744, 772, 763, 752, A320, A319, 735. Unload all 762's, 733's, 732's, 727's. Scoop up some more 735's on the used market to bolster 100-seat capacity. Fleet rationalization should be a major operational and financial priority.

Jim

Need a new airline paint scheme? Better call Saul! (Bass that is)