Great post...and background on BA
, since I knew very little about them overall. My reply would be that the domestic aviation market in the UK and US are near polar opposites, just due to mere size of the two countries.
* The UK sees a lot of in-transit customers coming in from one country on their way to another country. To offer support to your statement on BA
not needing to worry about regaining market share from the LCC's, take me for example: if I want to fly from SEA
to say, CPT
, the most efficient way for me is to fly nonstop to LHR
, not even pass through UK customs, and then continue south on BA
to Cape Town. BA
makes money on a non-citizen, twice! The same idea holds true for SAS in Copenhagen and LH
in Frankfurt. With small countries, there isn't really a feeder network at all, but they can capitalize on the in-transit customers instead.
* The US is a different story. While each airline has their "hub" in a selected city, in order to make it even MORE successful and profitable, or these days to minimize their loss, they have to resort to getting additional people from smaller cities to feed into it on their airline. Using myself as an example again, if I wanted to fly to SYD
, I could fly SWA to an LA
/SF area airport to save money, then get to LAX
for the UA
nonstop to SYD
. While United makes money for the SYD
flight, they still lose because they lost potential revenue as I didn't fly UA
to begin with. If everyone flew only LCC's domestically, but then transferred to a network carrier for a longer flight, the network carriers would be in even worse shape, because that's a huge revenue chunk they're not getting, but could. Hence, the repeated attempts by various carriers to emulate their success and regain market share. UA
seems to have learned a little from the first experiment, in that they're aren't taking on SWA directly this time around. Still, the LCC's are a success because they started out that way, not a bastardization of a larger, higher cost structure.
Re: Stephen Wolf...at the extreme risk of becoming flame bait, one of two of the greatest CEO's in United's recent history, the other being Glenn Tilton. Dick Ferris and Eddie Carlson were miserable failures...they only wanted to build a hotel/travel empire, totally departing from the core business model. Remember Allegis? What a joke that was. Wolf knew/knows the industry inside and out, and should be considered along the same lines as Bob Crandall (who I believed he worked for while at AA
) and not Lorenzo, like others want to compare him to. Wolf saw exactly what he had in United in 1987, especially since the Pacific routes from PA came over a year earlier, and quickly sought to get an alliance with BA
, but that broke down because the IAM refused to join in with the management and pilots and BA
. Imagine if that had actually gone through! Connoisseur class, while still with UA
to this day, isn't what it was, and I think it was one of Wolf's brainchilds as part of his efforts to upgrade UA
's international image. He is the reason United is as big as they are today, and UA
probably wouldn't not have got the LHR
slots had he not been there when they came available when PA failed. Anyway...Wolf had to make some tough decisions towards the end of his tenure, and was at one point had contracts drawn up to farm out maint. and other services in 1994 to save money and prevent Ch. 11 back then. He may even have thought of selling off assets, which would have been a mistake. The employees bought the company instead through pay cuts and formation of Shuttle to preserve their jobs, out of necessity, and that hurried approach hurt them in the long run. A great idea at the starting gate, and I still think that was the best idea rather than breaking up the company back then. Turns out that buyout, while successful in the early years, delayed the inevitable, and now we're in an exact repeat of 1994. I think United's recovery in the 2-3 years will mirror the first successful years of the ESOP. The restructuring that took place under Ch. 11 will determine how much further beyond 2-3 years the recovery will last for. I just hope UA
won't be in the same situation they were in last year 7-10 years down the road.
Glenn Tilton, while still very new, is one of the greatest CEOs of UAL, simply because he has far exceeded most everyone's expecations...that of an oil exec. with Chapter 11 management experience, coming in to an embattled company well on the fast track to Ch. 11. I'm amazed at what he and his team have accomplished, as are the outside analysts and DIP lenders. A year ago, I really feared for the future of UA
. It was a 50/50, if not greater, chance of Ch. 7. Now, I'm very optimistic for them, and Ch 7. is only mentioned by the less educated folks on this forum. Still a long way to go, but...anyone less than Tilton in this situation (like Jack Creighton or Jim Goodwin) would have been disastrous and United wouldn't be here today.
Anyway...this has been fun...thanks for the info. on BA
. Sure is great to have an intelligent conversation on this website, for once!
And the winner for best actress is....REESE WITHERSPOON for 'Walk the Line'!!!!!!!!