boxsmasher
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Is WN Airlines Way Of Operation The Future?

Wed Aug 14, 2002 3:33 pm

With all of these drastic cuts that American is doing to their operation, eg. rolling hubs, reducing fleet types, pilots flying more legs per work day. Do you think that an airline has to loose all of the previous frills in order to survive?
 
Guest

RE: Is WN Airlines Way Of Operation The Future?

Wed Aug 14, 2002 4:27 pm

Absolutely, especially on shorthaul operations. Here in Europe it's the no frills, low fare operations such as Ryanair, easyJet and Go that are making ever-increasing profits ... whilst the 'full service' airlines are rapidly going (or have gone, in the case of Sabena and Swissair) bankrupt.

Unlike previous economic cycles that bred airlines such as PEOPLExpress and Valujet, I think that now passengers who defected from the 'full service' airlines to the 'no frills' carriers will not return. They cannot justify paying hundreds of pounds, Euros or dollars for a one hour flight when they can get the same flight for pennies. The conspicuous consumption of the '80s and early '90s has gone.

The biggest problem that these full service airlines have is that they are burdened with huge costs, due in very large part to their unions. The 'no frills' airlines pay their people well, but work them to the limits every month. Compare that with the likes of Delta, American or Continental with their Scope agreements; their maximum of 50 hours work a month and their stupendously high salaries for crews.

American seems to be addressing some of those issues, where they are encouraging 450+ of their most senior (and therefore highest paid) pilots to take early retirement. I believe that their next move will be to get rid of Scope - and not before time, either. Salaries will be cut by a significant amount.

Just over a year ago, when Delta was negotiating their pay deal, I said on many occasions that they were insane to be offering the sorts of terms that they were. I was right; and those chickens are now coming home to roost.

Lean and mean is how airlines will survive ... so by definition those that are 'fat and comfortable' will disappear. It's survival of the fittest - and US and European majors are far from fit.
 
cloudy
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RE: Is WN Airlines Way Of Operation The Future?

Wed Aug 14, 2002 5:09 pm

Yes, but....

I think that airlines of the future will be more focused, trying to do one thing very well. We won't see as many "all-things to all people" UA or AA type airlines. Southwest fills the shorthaul, high-frequency niche. Other profitable niches are being found as we speak -

High End Domestic - Midwest Express

Long Haul International - Virgin Atlantic

Long-Haul Domestic - JetBlue(I think this will be there long
term focus).

Regional Hub-Spoke Network of Small Cities - Comair, Airtran(with vastly different means).

Vacation Market Focus - ATA, SunCountry, Spirit.

It'l be interesting to see which kind of operation will work best for each niche. Southwest-type airlines will be only one part of a huge picture. Note - I don't deny their will be exceptions from time to time, like Southwest's transcons. I am just saying that focus will be the norm.
 
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RayChuang
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RE: Is WN Airlines Way Of Operation The Future?

Thu Aug 15, 2002 12:40 am

However, one thing that many people forget about WN's 737 fleet is that their planes sport a surprisingly amount of legroom--the average seating pitch is just over 33-1/2 inches (854 mm). This is quite a bit more than the seating pitch used on EasyJet and Ryanair planes and is almost as much as the average seating pitch on many of AA's planes.

Indeed, the 737-700 was designed with considerable input from WN.

I think WN may look at getting the 737-800 for the longer transcon routes such as LAX-BWI, LAX-ISP or possibly LAX-MCO.
 
meechy36
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RE: Is WN Airlines Way Of Operation The Future?

Thu Aug 15, 2002 12:54 am

I don't think you'll see the 737-800 in Southwest's colors anytime soon. It would require 4 flight attendants and that goes against everything they stand for. The -700 already does that and it seems to be working fine for them.

Mike-BOS
 
donder10
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RE: Is WN Airlines Way Of Operation The Future?

Thu Aug 15, 2002 1:21 am

The upcoming WN pilot's deal will be interesting to see.Personally,I see WN pilot's pay (or probabrly a tad higher)as the market value for pilot's pay,not some of the deals that the cartel carrier pilot's have.Their is based on the 'tech-bubble' revenues that airlines will not see again with business passengers paying $500 for a walk-up 200mile fare.
Regarding seat pitch.The only Euro low-cost route where seat pitch would be a problem would be Luton-Athens.
 
LoneStarMike
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RE: Is WN Airlines Way Of Operation The Future?

Thu Aug 15, 2002 1:35 am

I don't think an airline has to lose all its frills to be able to survive, but I do think some of the majors will try to simplify their operations to the extent they are able.

Here's a good article from the Wall Street Journal. (Note: the article has been reprinted on another website, so you don't have to be a WSJ subscriber to read it.)

Carriers Discover That Airlines With Simplest Operations Win08/14/2002

http://archives.californiaaviation.org/airport/msg22592.html

The article does state in part:

Finally, American has figured out what Southwest Airlines and others have known for some time: There is a cost to complexity. In fact, folks from American even called up Southwest Airlines and asked if they could come over -- they are based about 30 miles apart in the Dallas area -- and learn more about Southwest's operation. That's a stunning turn for an airline that seemed to regard Southwest as a pesky simpleton. And by some accounts, Southwest's people were surprised at how rudimentary the questions were from American. If you've done things one way through your airline career, it's hard to learn a new way.

LoneStarMike

 
737doctor
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RE: Is WN Airlines Way Of Operation The Future?

Thu Aug 15, 2002 6:53 am

I haven't heard anything about acquiring -800's recently, though I had hear rumors about it in the past. I do know that are new MX hangar in DAL is large enough to accomodate -800's for Heavy checks.

The mechanics group is also very interested to see how the pilot contract goes as well. We are currently in mediation and our contract will have been expired for exactly one year on the 16th.
Patrick Bateman is my hero.
 
jr
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RE: Is WN Airlines Way Of Operation The Future?

Thu Aug 15, 2002 7:15 am

A friend of mine whose dad works for WN mentioned about recent rumors at WN of possible orders for the 800 stemming primarily from enticing offers from Boeing.

Not sure if there is any substance to those rumors. I guess we'll have to wait and see.
I've flown on 9V-SPK.
 
flashmeister
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RE: Is WN Airlines Way Of Operation The Future?

Thu Aug 15, 2002 7:17 am

Is Southwest the way of the future now?

No.

Southwest was the way of the future 10 years ago.
 
sllevin
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RE: Is WN Airlines Way Of Operation The Future?

Thu Aug 15, 2002 9:17 am

While I like Southwest, I also like the idea of being able to fly into ATL, and being able to fly from SJC to DFW. I also like being able to leave the NYC area in the evening after a day of work and be able to get back to SJC that night.

In short, if WN is all that's left, air travel may be cheap, but it won't be nearly as useful. I work as a consultant. In many cases, WN isn't the cheapest option for them because if I end up adding an additional day lost to travelling to my invoice, it more than overwhelms the ticket cost.

Steve
 
DCA-ROCguy
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RE: Is WN Airlines Way Of Operation The Future?

Thu Aug 15, 2002 9:57 am

Yes and no. As Flashmeister noted, Southwest is the way of the present, was the way of the future 10 years ago. An increasingly larger proportion of domestic medium-to-high density coach traffic will be carried by low-fare carriers during the next decade. They have demonstrated beyond question that such service need only cost 7-7.5 cents per seat mile to provide, and too many markets now know it.

That's why businesses are balking at returing to the late 1990's soak-the-expense account fares. Too many markets now have low fare service, or have it within a two hour drive. And you can now get to too many places that have low-fare service, or have it within a two hour drive. People *know* this. And nothing that Hal Rosenbluth or anyone else says will convince business travelers to go back en masse to $500-2500 domestic coach fares as a daily way of life.

Don Carty knows this, which is why he's de-hubbing DFW like he did ORD. Leo Mullin knows it, which is why he's thinking beyond a Florida-based Delta Express. Jack Creighton knows it, which is why he's hinting at a 1Q 2003 bankruptcy.

The Cartel-network carriers will continue to offer international and regional service, and whatever domestic medium-market and large-market service is needed, to get travelers in and out of a vast number of airports. They'll "de-hub" according to yields, which means that major markets will still enjoy same-day or same-afternoon connection service. The medium-size and smaller markets will probably bear the brunt of longer connection times.

And the low-fares, who for some reason don't like to admit that they too run de-facto hub-and-spoke networks, will offer more and more convenient connection times as their market share grows. Maybe not 30-minute connections on a zillion city pairs. But more and more folks will be spending less than two hours between flights at BWI, MDW, and ATL. On an upcoming AirTran trip BWI-MKE, my down time in Atlanta is 55 minutes outbound, 60 minutes inbound. And that's not a Florida route.

How satisfactory all of this will be to business travelers remains to be seen. Steve shouldn't have any difficulty getting to and from a big market like SJC on a convenient schedule; it's probably places like Dayton and Greenville that will have somewhat less convenient connecting times.

Jim
Need a new airline paint scheme? Better call Saul! (Bass that is)
 
FDXmech
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RE: Is WN Airlines Way Of Operation The Future?

Thu Aug 15, 2002 10:33 am

SAS23: Unlike previous economic cycles that bred airlines such as PEOPLExpress and Valujet, I think that now passengers who defected from the 'full service' airlines to the 'no frills' carriers will not return. They cannot justify paying hundreds of pounds, Euros or dollars for a one hour flight when they can get the same flight for pennies. The conspicuous consumption of the '80s and early '90s has gone.

I've heard this before and you know what, they do go back. The majors won't lay down and let "no frill carriers" push them out.
I don't include Southwest in with the "no frills, upstart group (they might be no frills but certainly aren't upstart) as they have probably the best business plan and are the best run airline flying. I think Herbs kidding and irreverance, though sincere, is a perfect facade to mask his genius of running WN. I know practically nothing about the financial aspect of operating an airline but frankly believe that contrary to popular belief, WN's business plan is much more sophisticated than serving peanuts. If it is so easy to replicate, you'd have scores of Southwests.

The same thing being said today about the coming of the cheap fare carriers is word for word what was said in 1981 with PEX and company. The large airlines were dinosaurs verging on extinction, too fat and slow to effectively adapt to the new environment.
Well, the majors obit was a wee bit premature. They learned how to compete and several years later the, "upstarts", were a mere memory. During lean times the majors will effectively compete with the "upstarts", it's just a matter of remembering how they did it previously.
You're only as good as your last departure.
 
737doctor
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RE: Is WN Airlines Way Of Operation The Future?

Thu Aug 15, 2002 10:47 am

I do know that are new MX hangar in DAL is large enough to accommodate -800s for heavy checks.

I meant to say "our", not "are". That's what happens when you get in a hurry.
Patrick Bateman is my hero.
 
Guest

RE: Is WN Airlines Way Of Operation The Future?

Thu Aug 15, 2002 12:17 pm

>>The same thing being said today about the coming of the cheap fare carriers is word for word what was said in 1981 with PEX and company.<<

Peoplexpress lost to yield management at AA by not implementing it when AA did. WN put it in, and still suirvived and fluorished.

Today's batch of low-fare airlines is smarter, leaner, and meaner than v1.0 of startups in the first 15 years of deregulation. There are now premium cabins(FL), entertainment(B6, F9, TZ), frequent flyer programs(F9, B6, FL, WN), great customer service(WN, F9, B6), and hot meals(TZ). Plus, if you looked at the pie chart in USAToday from a couple weeks back, the low-fare carriers have gone from having 10% of pax to almost 25% in the last 10 years.
 
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RayChuang
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RE: Is WN Airlines Way Of Operation The Future?

Thu Aug 15, 2002 1:13 pm

I think one way that the majors can fight back is to reduce the number of classes on their domestic flights and some international flights.

For example, CO has done well without having to introduce a true First Class, thanks to their excellent Business Elite class.

Here's what I think may happen:

1. The smaller narrow-body jets will switch to single-class seating but with roomier seating pitch (e.g., 34"/864 mm).

2. The 757-200's will also switch to single-class seating with the 34"/864 mm pitch.

3. The 767 fleets will switch to two-class seating with 34"/864 mm pitch Economy and 48-50"/1219-1270 mm pitch Business configurations.

4. The 777 fleets will also switch to something akin to 767 seating, but some 777's will still keep flat-sleeper seats for First Class.

5. The UA and NW 747 fleets could eventually have two-class seating with 34"/864 mm Economy and 52-54"/1321-1372 mm pitch Business configuration; the Business seats will be capable of folding to a near-flat configuration.

In short, the days of an ultra-luxurious First Class are over.  Sad However, airlines will offer better Business class seats to compensate.
 
FDXmech
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RE: Is WN Airlines Way Of Operation The Future?

Fri Aug 16, 2002 12:07 am

Today's batch of low-fare airlines is smarter, leaner, and meaner than v1.0 of startups in the first 15 years of deregulation.

The majors also operate smarter , leaner and meaner.

There are now premium cabins(FL), entertainment(B6, F9, TZ), frequent flyer programs(F9, B6, FL, WN), great customer service(WN, F9, B6), and hot meals(TZ).

When WN puts in premium cabins, entertainment systems and hot meals then maybe I'll be less skeptical. Reminds me of many past low fare carriers that flew into oblivian, "yeah, we're modeling our outfit after Southwest...with improvements". History is simply repeating itself, most of these upstarts will be flashes in the pan because they didn't stick to the no frills low overhead script that's made WN a powerhouse. Reminds me of when America West flew 747's, they couldn't resist the temptation to be like one of the "big boys".

Plus, if you looked at the pie chart in USAToday from a couple weeks back, the low-fare carriers have gone from having 10% of pax to almost 25% in the last 10 years.

This stat repeats itself every few years. Also what percent of this 25% belongs to Southwest?
You're only as good as your last departure.
 
DCA-ROCguy
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RE: Is WN Airlines Way Of Operation The Future?

Fri Aug 16, 2002 12:44 am

When WN puts in premium cabins, entertainment systems and hot meals then maybe I'll be less skeptical. Reminds me of many past low fare carriers that flew into oblivian, "yeah, we're modeling our outfit after Southwest...with improvements". History is simply repeating itself, most of these upstarts will be flashes in the pan because they didn't stick to the no frills low overhead script that's made WN a powerhouse. Reminds me of when America West flew 747's, they couldn't resist the temptation to be like one of the "big boys".

Lowfareair is correct. The current generation of low-fare carriers is indeed run differently from the 1.0 version in the decade after deregulation. AirTran and JetBlue won't be flying 747's. David Neeleman and Joe Leonard know much better than that. America West had the good sense to abandon 747's when they didn't work out. Sorry FDXmech, your excessive skepticism is not justified by the evidence. History is not repeating itself, and consumers are the beneficiaries--and will be for years to come.

Jim
Need a new airline paint scheme? Better call Saul! (Bass that is)
 
eugdog
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RE: Is WN Airlines Way Of Operation The Future?

Fri Aug 16, 2002 12:52 am

If the free market applied the WN should of been the way all airlines operate ie point to point and basic service and no travel agents. But the market has been distorted by the fact that the big airlines have got the choice slots and gates at the better airports. And they do not have to pay any rent for those premium slots.

That is the only reason why the big high cost airlines survive. It is location! location! location!!! without the rent, rent, rent!!!!!. As a business man myself I cannot accept that my fellow business travellor are happy to pay $500 for a short haul flight because of the better service. They pay $500 because they have to - there is no alternative cheap short haul flight between say Boston and Washington D.C if you want to return the same day! (Do not confuse business travelors with leisure travelors - the latter are required to stay a Saturday night to get the discount fare. Some people on this web site still do not know that and think no frills airlines are more expensive then the big airlines)

But September 11 has really brought things to ahead. it is made business people think twice! Of course some people including Unions are burying their heads in the sand and resisting any change. This is known as the ratcheting effect - wages go up but they are much harder to go down. Also the airlines have invested very heavily in high cost facilities like call centers and catering departments, office buildings. They do not see the savings from internet bookings and other cost cuts. They are another cost to add on to their current cost! There is also the issue of redundacies payments etc. It seems that only newcomer can take advantage of the new technology!

It is the classic example of the theory of second best - once the current industrial structure is place - it very difficult to change it to the ideal structure. (this also explains why inferior products like Windows, petrol engine cars, driving on the left in the UK survive when there a better products available!)

 
sllevin
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RE: Is WN Airlines Way Of Operation The Future?

Fri Aug 16, 2002 1:25 am

I tend to think that, historic issues aside, the direction we are heading is that air travel amongst first-tier locations will be remain inexpensive, while secondary locations will lose frequency (or service altogether) and prices will rise.

A comparator is the California car insurance market. At one time, in essence, good drivers subsidized drivers with less-than-ideal driving records. Then things were changed to reduce the cost of insurance for good drivers. Insurance companies were told that they no longer had to insure everyone at broadly similar rates, in exchange for government regulation of what they charged good drivers.

The result lowered rates for good drivers, yes, but it sent rates skyrocketing for everyone who didn't qualify.

(please don't pick too much at the details there; I simplified a bit to make the point  Smile )

An airline example would be DSM. I would expect DSM to face much higher fares, if it has air service at all. For inexpensive fares, people will have to drive the 4 hours to MCI.

Steve
 
DCA-ROCguy
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RE: Is WN Airlines Way Of Operation The Future?

Fri Aug 16, 2002 3:50 am

As a business man myself I cannot accept that my fellow business travellor are happy to pay $500 for a short haul flight because of the better service. They pay $500 because they have to - there is no alternative cheap short haul flight between say Boston and Washington D.C if you want to return the same day!

Not so anymore, Eugdog....AirTran flies seven daily nonstops between BWI and Boston-Logan. No Saturday night stay required, and you can easily get back the same day.

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

RE: Is WN Airlines Way Of Operation The Future?

Fri Aug 16, 2002 4:21 am

What will happen to this latest round of unionized low-fare carriers like AirTran when CASM rises due to pay rising with seniority a decade down the road?
 
goingboeing
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RE: Is WN Airlines Way Of Operation The Future?

Fri Aug 16, 2002 4:29 am

Unions haven't seemed to affect Southwest for the past 30 years...
 
ThirtyEcho
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RE: Is WN Airlines Way Of Operation The Future?

Fri Aug 16, 2002 4:35 am

Fine with me if ALL domestic US travel was on Southwest. If all we had other than that was Virgin and KLM for international trips, we'd have a great system of air transportation in the world. At least we could afford to lose the grumpy ones that have no sense of humor or passenger service like Northwest.
 
Guest

RE: Is WN Airlines Way Of Operation The Future?

Fri Aug 16, 2002 4:39 am

Goingboeing:

Southwest's employees are paid just as well or better than their counterparts at other majors. However, their costs are lower as they do more with less employees. While base salary is lower, it is made up for in profit sharing and stock. Southwest is more efficient. They don't stay in stations unless they keep planes running through there steadily on a daily basis.

Compare Southwest and AirTran... let's say they both open a new station in Anytown, USA. AirTran, following formula, comes in with two or three flights a day to Atlanta. Southwest comes in, following formula, with let's say eight flights a day to three different cities. AirTran employees come in and work a shift. They might work two of those flights, and sit the rest of the time with very little work. Southwest employees come in and on that same length of shift will work twice as many flights. Southwest just did twice as much with the same employees. More efficient, labor costs down. Both ways of course work if done correctly, but AirTran is at a comperable CASM to Southwest while AirTran's employees are generally junior to those at Southwest. Labor costs never go down as an airline matures.
 
Guest

RE: Is WN Airlines Way Of Operation The Future?

Fri Aug 16, 2002 4:43 am

Fine with me if ALL domestic US travel was on Southwest. If all we had other than that was Virgin and KLM for international trips, we'd have a great system of air transportation in the world. At least we could afford to lose the grumpy ones that have no sense of humor or passenger service like Northwest.

Southwest is good for some things, and for other things it is not. I have no problem with Southwest for a single hop.... like Jacksonville to Ft. Lauderdale or Omaha to Chicago (both of which I've used Southwest for... this is the kind of flight they do best, and have since their start). However, going longer distances between two of their cities generally takes longer. Example: If I want to go from Jacksonville to St. Louis (both Southwest cities with service to a number of destinations), I could take American non-stop and be there in under two hours. I could also take Southwest, and make two stops and take up to eight hours (on one of the itineraries). I'll take the major airline service for that one, thank you very much.

Losing airlines is never a good thing for the consumer. Whether losing high-fare service or not, it's still a loss of choice, loss of options, loss of competition.
 
DCA-ROCguy
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RE: Is WN Airlines Way Of Operation The Future?

Fri Aug 16, 2002 6:09 am

Southwest employees come in and on that same length of shift will work twice as many flights. Southwest just did twice as much with the same employees. More efficient, labor costs down. Both ways of course work if done correctly, but AirTran is at a comperable CASM to Southwest while AirTran's employees are generally junior to those at Southwest. Labor costs never go down as an airline matures.

That assumes that an airline uses its own employees for all functions. Southwest requires 10 dailies from new markets, AirTran generally requires five. Southwest uses its own employees for ticketing, gate area, and ramp. Does AirTran? That would make a big difference in station costs. The old AirTran contracted at ROC for all ground functions, except for a few customer service people. New AirTran has its own ticket counter and customer service personnel, subleases a gate from United. I don't know if they handle their own ground services and baggage handling.

JetBlue contracted with Monroe County for baggage handling and ramp services when it entered the Rochester market. Only after B6 had been there a year (a phenomenally successful year), did they take over their own ramp services.

Part of the challenge of running a low-fare airline is to keep costs low as the airline matures and employees become more experienced (or, if unions are around, get more seniority). Southwest has done so very successfully. The extremely bright management teams at both AirTran and JetBlue will almost certainly do the same.

Some very unorthodox and heretical questions:

Why does an airline need its own ground crews? Why can't an airport run one collective crew to handle all airlines, and the airlines contract for *only* what ground crew they use? Say, a private company that just does ground services, and for which airlines are billed *only for what they use.* A private company that would be on a renewable contract and could be dismissed if they tried to gouge. Monroe County ran ground services for JetBlue (probably subcontracted from Page, Piedmont Av or one of the other FBO's at the airport, but the tugs, etc. had the cute diamond-jet airport logo).

Of course, unions would probably firebomb the airport, and corporate headquarters, if airlines and airports tried to do that on a large scale. But we're talking survival of the airlines, and running a good business at a feasible price. An airline should *not* have to run 10 flights a day into an airport in order to offer reasonably-priced air service there. And an airport should not be expected to fill that many flights, in order to have service.

Jim
Need a new airline paint scheme? Better call Saul! (Bass that is)
 
goingboeing
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RE: Is WN Airlines Way Of Operation The Future?

Fri Aug 16, 2002 6:20 am

Seiple - You are correct. My point is that unions in and of themselves do not necessarily bring a death knell to an airline. However, those unions that have strict "job rules", where a guy can read the paper instead of help load bags, lest he have a grievance filed against him, are the ones that hurt.
 
Guest

RE: Is WN Airlines Way Of Operation The Future?

Fri Aug 16, 2002 12:04 pm

Seiple: labor is not the only way to cut costs, and there are others AirTran uses. For example, WN has their own catering trucks(which cost money and labor), but instead of using those, AirTran(in markets where food/drink is loaded) keeps food up at the gate area, where a worker takes it to the plane. In PHL, it was located by the 'partition behind the gate D11 counter, and now it is probably behind the F13 and F15 counters.
 
Guest

RE: Is WN Airlines Way Of Operation The Future?

Fri Aug 16, 2002 12:08 pm

I realize that labor is not the only way to cut costs, but labor is typically one of the larger costs in running any business. All other cost-saving programs being equal and continuing to cost their current rate (which is probably the lowest they can cost, hence AirTran has them in operation), labor costs will increase causing costs overall to increase, unless AirTran finds a way to further slice things like staff numbers, catering (can't really get cheaper than their current way of loading it, as you have mentioned), lease rates, etc.
 
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RayChuang
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RE: Is WN Airlines Way Of Operation The Future?

Fri Aug 16, 2002 1:30 pm

A couple of comments:

1. The primary reason why WN wanted the 737-700 was the fact they knew that WN in order to stay competitive with the big boys was going to need 737's that could fly longer flights than possible with the 737-300 and 737-500. This is how WN will soon offer LAX-BWI flights, something not imaginable even just a few years ago. WN has developed MDW to the point that they could now fly anywhere in the continental USA from MDW easily using the 73G now; I wouldn't be surprised that within a few years WN will fly from MDW non-stop to SEA, OAK, SJC, LAX, SNA, LAS, MSY, JAX, FLL and PBI.

2. Despite the potential downside of having to use four flight attendants, I do envision WN getting the 737-800. They'll be primarily used on longer flights such as the long flights from MDW I mentioned. It should be noted that the 738 has enough commonality that it would have relatively little impact on WN's spare parts situation.
 
DCA-ROCguy
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RE: Is WN Airlines Way Of Operation The Future?

Fri Aug 16, 2002 2:13 pm

I realize that labor is not the only way to cut costs, but labor is typically one of the larger costs in running any business. All other cost-saving programs being equal and continuing to cost their current rate (which is probably the lowest they can cost, hence AirTran has them in operation), labor costs will increase causing costs overall to increase, unless AirTran finds a way to further slice things like staff numbers, catering (can't really get cheaper than their current way of loading it, as you have mentioned), lease rates, etc.

"All other cost-saving programs being equal and continuing to cost their current rate" is not a safe assumption over the long term. Aircraft change, competitive situations change, customer demands change, employee needs change, technology changes, political situations change, unforseen issues arise. You're assuming a much too rational marketplace and unseen-factors situation, Seiple.

Cost per seat mile does *not* necessarily have to rise as an airline's workforce matures. Southwest has demonstrated that conclusively. CASM can rise, or it can fall, depending upon decisions large or small along the way, and factors beyond the airline's control. AA and UA didn't plan in 1961 that O'Hare, then surrounded by orchards, would become a NIMBY-snarled mess that would help drive up their costs with delays. In 1965 no one knew about high-bypass-ratio engines that would drastically alter airline economics for the better. Or that it mattered, since OPEC wasn't on anyone's radar screen.

On Sept. 10, no one knew that the industry would suffer a devastating earthquake the next day that would affect aircraft utilization, yields, etc. And in 1971, certainly no one in network-carrier boardrooms thought an attorney in Texas would come up with a model that would revolutionize air travel by lowering costs. Who knows what the next 10 years will hold.

Kelleher has often said in interviews that an airline must constantly be watching costs and thinking of new ways to save money or increase competitive position. The brightest CEO's, such as Kelleher, understand that a business' situation is very fluid and demands constant vigilance, for ways to cut costs, which is also a way to increase yield.

Jim
Need a new airline paint scheme? Better call Saul! (Bass that is)
 
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BNE
Posts: 2921
Joined: Fri Mar 31, 2000 9:37 pm

RE: Is WN Airlines Way Of Operation The Future?

Fri Aug 16, 2002 7:27 pm

As a business man myself I cannot accept that my fellow business travellor are happy to pay $500 for a short haul flight because of the better service. They pay $500 because they have to - there is no alternative cheap short haul flight between say Boston and Washington D.C if you want to return the same day!

Not so anymore, Eugdog....AirTran flies seven daily nonstops between BWI and Boston-Logan. No Saturday night stay required, and you can easily get back the same day. Jim


Baltimore isn't exactly in Washington DC. there would be at least 45minutes to an hour travel to Washington, the saving in fare would be added up in extra time and or expense in travelling.

The major airlines UA, AA, still have the best routes. A slow economy means that people will thing twice before booking that last minute expensive fare. If the fare price is vastly different people will choose the alternative or not fly at all.

Southwest is good at what it does but if you have to fly to a major centre you either have extra to get to your final destination or fly on a major carrier.
I can see smaller markets won't have the many connections they have now.

Why fly non stop when you can connect
 
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RE: Is WN Airlines Way Of Operation The Future?

Fri Aug 16, 2002 8:37 pm

This New York Times article confirms that the low cost no frills model is definitely the way ahead ... http://www.nytimes.com/2002/08/16/business/16AIR.html?tntemail1

 
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RE: Is WN Airlines Way Of Operation The Future?

Fri Aug 16, 2002 10:27 pm

It's actually a 30-40 minute train ride Baltimore-DC. I think that that is worth $400 for 40 minutes roundtrip(estimated time difference going to downtown DC from DCA compared to BWI).
 
FDXmech
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RE: Is WN Airlines Way Of Operation The Future?

Sat Aug 17, 2002 1:26 am

>>>Why does an airline need its own ground crews? Why can't an airport run one collective crew to handle all airlines, and the airlines contract for *only* what ground crew they use? Say, a private company that just does ground services, and for which airlines are billed *only for what they use.* A private company that would be on a renewable contract and could be dismissed if they tried to gouge. Monroe County ran ground services for JetBlue (probably subcontracted from Page, Piedmont Av or one of the other FBO's at the airport, but the tugs, etc. had the cute diamond-jet airport logo).<<<

Well, the airport would need to hire enough people to fulfill the obligation of loading the aircraft. Do you intend to operate at bare minimum manpower? If that's the case which airline gets priority when things get unexpectedly busy or if you run short of people due to other circumstances (normal scenario). Airports don't usually pay minimum wage and would most likely offer benefits, not to mention the profit per manhour supplied to the airline (not a public service you know).
You're only as good as your last departure.
 
DCA-ROCguy
Posts: 3890
Joined: Fri Apr 21, 2000 5:03 am

RE: Is WN Airlines Way Of Operation The Future?

Sat Aug 17, 2002 3:15 am

It's actually a 30-40 minute train ride Baltimore-DC. I think that that is worth $400 for 40 minutes roundtrip(estimated time difference going to downtown DC from DCA compared to BWI).

That's right....the MARC train isn't subject to road congestion, and security lines at BWI are short these days. The airport's security stations have been fully upgraded to meet the airport's traffic. I never wait more than 10 minutes in line at BWI for security, including rush hour. Reagan takes at least 20 minutes from downtown DC to drive, navigate the airport's serpentine roads, and get into the building. That's only 15-20 minutes less than BWI, I find it hard to believe 20 extra minutes isn't worth $400. And at the other end, you still get to fly right into Logan.

FDXMech, the airport or contractor would figure out the needed man-hours, and supply personnel accordingly. Even at rush hour, at many medium size airports, not every airline always has a plane there at once, so it's unlikely they would face ground personnel conflicts. Your comment about an airline "profit per manhour" is incoherent. Airlines would contract for the personnel or services they need and no more; they aren't selling something for a profit, they're contracting for a service. Also, airlines don't pay minimum wage and offer benefits, so there's no financial advantage over a government or private contractor.

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

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