737doctor
Topic Author
Posts: 1291
Joined: Mon Mar 19, 2001 4:52 pm

Cute New Planes, Same Old Problems - Ted & Song

Wed Feb 25, 2004 9:24 am

Found an interesting article:

http://yahoo.businessweek.com/magazine/content/04_09/b3872053.htm

I believe that the follow excerpts sum thing up nicely:

"...Ted, which will grow from four aircraft today to 45 by yearend, and the 36-plane Song are just a sliver of the size of their ailing parents. Worse yet, they could prove costly distractions to the main event: the need to dramatically lower the costs of the parent airlines, which are still fighting for long-term survival. "If you're going to fix the factory, fix the factory. Don't create a sideshow somewhere else," says airline consultant Robert W. Mann Jr. of R.W. Mann & Co. That's a sentiment shared by American, Northwest, and Continental, which have shunned sub-brands after watching similar efforts fail before.

and

"Ted and Song seem like so much marketing buzz. And buzz won't help the carriers fly though the inevitable industry transformation that lies ahead."

Now, I'm not trying to predict gloom and doom for Ted or Song or rain on anyone's parade, but I have to agree with the main thrust of the article. Ted and Song seem like so much fluff and very little substance. Neither address the real problems of high costs at the parent airlines, nor do I feel that they will be able to do any substantial damage to the LCC's. As demonstrated by the failure of the many "low-cost" incarnations created in the past to do battle with the legitmate LCC's, it's hard to beat them at their own game.

Patrick Bateman is my hero.
 
luv2fly
Posts: 11056
Joined: Tue May 13, 2003 2:57 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Wed Feb 25, 2004 9:30 am

This whole airline with in an airline, which has a history of being a failure. Reminds me of when couples are having troubles in there relationships or marriages, so to correct it they decide to have a baby, problem is still there only now you have the addition of the baby. If two people are having trouble, the fix is not to add a third to the equation.
You can cut the irony with a knife
 
COTXDFW777AA
Posts: 314
Joined: Sun Feb 15, 2004 10:36 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Wed Feb 25, 2004 9:38 am

I am just about sick off all LCCs, whether they are real or not. I like what LCCs do (lower ticket prices on some routes) but I do not enjoy flying many of them, and I hope that one day they won't be my only option. TED and SONG are both bad ideas. The best idea yet is figure out how to actually make it possible to offer low prices, and don't just throw up low fares and expect to make money if the plane is half full. SONG might be the factor that throws Delta in the red, they seem to be failing on all fronts with SONG. TED on paper sounded like a better idea, but it has gotten less than grand reviews.

-COTXDFW777AA
Texas- it's like a whole different country!
 
User avatar
PA110
Posts: 1897
Joined: Sat Dec 06, 2003 1:30 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Wed Feb 25, 2004 9:49 am

Why are folks so anti LCC? These days the difference between a full service carrier and an LCC are virtually nil. True, Southwest does not have pre-reserved seating, but that's about it. JetBlue has IFE, yet if you fly AA's MD80s, some UA 737s some DL 737/757s, NW's infamous DC9s, you are also not likely to get IFE. Many legacy carriers are now selling food on board, the same as LCC's.

The question is whether Ted and Song are going to last. The question might as well be "will any/all of the full service carriers last"? Given past performance and the fact that neither Ted nor Song have significantly lower operating expenses, there's certainly room to doubt long term success. However, who's to say that the full service carriers don't continue a slow long-term trend of becoming more like the LCC's. Then what will everyone bitch about?
It's been swell, but the swelling has gone down.
 
propjock04
Posts: 71
Joined: Fri Dec 12, 2003 1:53 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Wed Feb 25, 2004 9:52 am

My ponderings: If making a LCC within a larger legacy carrier is such a great idea that will guarantee profitability, why not apply it to the entire airline?

I understand the whole business vs. leisure market concept, but other LCCs seem to be doing just fine AND LCCs have proven that you can offer first class which attracts those oh-so-sought-after business travellers.

If there is any MAJOR flaw in my logic please explain, because right now I don't understand Ted and Song.

 
OPNLguy
Posts: 11191
Joined: Tue Jun 15, 1999 11:29 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Wed Feb 25, 2004 9:55 am

Is it just me (and remember that I'm OPNLguy, and not FINANCEguy or EXECUTIVEOFFICEguy), but does it make good economic sense for UAL to be spending all this $$$ to be repainting all these aircraft? I mean, TED, I can halfway understand (not that I agree with the airline-within-an-alirline concept), but also repainting all the other mainline UAL birds, not to mention signage, stationary, and anything/everything else that carries a UAL logo? Wouldn't it have made more sense to accomplish this once out of Chapter 11, and having used the funds for other ways to improve the viability of the company?
ALL views, opinions expressed are mine ONLY and are NOT representative of those shared by Southwest Airlines Co.
 
FA4UA
Posts: 777
Joined: Sat Nov 22, 2003 6:26 pm

RE: Cute New Planes, Same Old Problems - Ted & Song

Wed Feb 25, 2004 9:57 am

This Article doesn't take into account a few basic facts. One in particular is the fact that the fastest growing segment in US aviation is the leisure market. How is a Legacy carrier with an emphasis in Business Destinations supposed to reach leisure markets without something like a TED or SONG.

TED's costs are in line with F9's according to Jack Brace (CFO) at UA so why can't we effectively compete? We're bringing costs down by 25% on mainline but there is no mention of that in this article!

IMO the jury is still out with TED. Song's outlook isn't so great after a couple of weeks ago when DL said they were freezing expansion, however UA's TED is performing well so far. Only time will tell.

I read this article and immediately thought the use of the word "cute" in a news article immediately causes me to discredit it as anything but an opinion article.

just my 2 cents...
FA4UA
The debate continues... Starwood or Hyatt... which is better
 
RiverVisualNYC
Posts: 926
Joined: Fri Nov 07, 2003 4:11 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Wed Feb 25, 2004 10:02 am

Back when LCCs like Ryanair and Easyjet became trendy in Europe, British Airways hired an American woman named Barbara Cassani to start an LCC for them, which was meant to be a 'clean sheet of paper' sort of operation, and was named Go. I am not sure how well they did, but after a few years new management at BA decided it was a distraction from their core European business travel and longhaul services, cancelled their growth plans and sold out to Easyjet. I wonder if something similar will happen with Song and Ted...
 
wireless
Posts: 15
Joined: Tue Jan 13, 2004 8:38 pm

RE: Cute New Planes, Same Old Problems - Ted & Song

Wed Feb 25, 2004 10:55 am

I'm an admitted United whore.

However, while flying Ted this past weekend, I couldn't stop thinking "why can't United just fold these service initiatives into mainline?"

The music selection was better, the flight attendants were friendly (which is hit or miss on just about any airline, so why would UA FA's be nicer just on Ted and not on mainline?)...

I understand that Ted opens up some new leisure markets for UAL, but sheesh. Cost is the bottom line for consumers. Work on improving the perception that LCC's are soooo much cheaper fare-wise.

ah crap, I'm being an armchair airline executive
 
alphascan
Posts: 795
Joined: Mon Nov 24, 2003 12:04 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Wed Feb 25, 2004 12:04 pm

TED's costs are in line with F9's according to Jack Brace (CFO) at UA so why can't we effectively compete?

That isn't exactly what Brice said and if you believe its true, you're in for a big letdown. Additionally, F9's CASM is going to drop like a rock over the next 12 months (ala FL's) as their returned aircraft, pilot training and maintanence costs plummet because of fleet commonality. F9 also expects a 5% increase in aircraft utilization.

"To he who only has a hammer in his toolbelt, every problem looks like a nail."
 
747-451
Posts: 2327
Joined: Wed Oct 04, 2000 5:50 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Wed Feb 25, 2004 3:18 pm

Song--maybe Chopin's Funeral March is more like it. Delta's waste of time cant compete against Lefty Lib Soros JetBlue. Instead of Delta wasting money on lime green paint they should make a concerted effort in matching Jetblue.

Ted - should be called "Duh" since United desn't have the sheckles to waste needless paint jobs and catchy names.

If you want to compete with low cost carriers, lower the fares and match the features to win over customers. Give them a perception of "value" not lime green.

Even though I detest Soros with every fibre of my being, he has the right product mix and value (even though one of the planes tails are a painted like a pair of ugly argyle socks). There is nothing like a new clean plane with a friendly staff and Jetblue has it going on.
 
flynavy
Posts: 2177
Joined: Fri Mar 15, 2002 1:48 am

RE: Cute New Planes, Same Old Problems - Ted & Son

Wed Feb 25, 2004 3:25 pm

Southwest is successful becuase it's an independent company; jetBlue is successful because it's an independent company (and offers a far superior product). These facts are not in dispute.

I'm not anti-LCC, nor am I anti-UA or DL. In fact, I have thousands of Mileage Plus and Skymiles. UA and DL are the airlines I primarily fly.

In today's economy, and the fact that there is a fundamental problem with the menitoned parent company's business model, I have very little confidence that Song and/or Ted will prove cost-effective in the long run.

If I am proven wrong, so be it. At this point, though...I'll vote "neigh."
Change is: one airline, six continents!
 
corey07850
Posts: 2335
Joined: Wed Feb 04, 2004 4:33 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Wed Feb 25, 2004 3:29 pm

I flew song once and liked it a lot... So when the time came to book another flight on the same route I thought I would book another $99 Song ticket. Lo and behold the ticket price has skyrocketed to around $200! The mainline DL ticket on the same route, same day was actually cheaper.

I don't understand how they can say they are a LCC if the mainline airline is less expensive to fly?
 
uadc8contrail
Posts: 1636
Joined: Thu Sep 11, 2003 1:23 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Wed Feb 25, 2004 4:02 pm

i find it interesting how alot of us in here keep this type of thread going in here...only difference is its rebranded last week it was will song /ted make it, this week its cute new planes same old problems. is there any one in here that really knows why ua shuttle went bust??????im sure every one has their opinions but ua shuttle actually made money for ua till contract 2000, until then ua made money...look at the stock holder reports for yrs 98-99 in particular....now ua has come out with ted,, we have the same a.neters in here saying that ua costs are to high. heres some comparisons that make me wonder how ua costs are so much higher than lets say wn 737 wn pilot ca-155.23/hr fo-93.26/hr....ua ca-142.24/hr fo-86.70/hr....ground workers at ua actually make less money topped out than wn counter parts.....do not have numbers for inflite but if wn luvs the f/a as much as they say they do then u can see wn f/a getting a raise soon i hope..with the ua a320 rates the same as a 300/500 rate if ua plays their cards right they should be able to make some money on this.....my 2 centavos
bus driver.......move that bus:)
 
mattnrsa
Posts: 361
Joined: Tue Dec 10, 2002 12:27 pm

RE: Cute New Planes, Same Old Problems - Ted & Song

Wed Feb 25, 2004 4:16 pm

The article at Businessweek says costs need to be lowered at the parent airline. Isn't this exactly what United did? United is a very diverse airline. It's not a Southwest or Frontier where most of the markets are similar. Where UA is similar to them, we have lowered costs further with TED. You can undertake measures to lower costs to LAS and PHX that would not work to Hong Kong or Heathrow.
 
ual777contrail
Posts: 2914
Joined: Sun Feb 17, 2002 11:33 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Wed Feb 25, 2004 4:22 pm

This is a thread started by a WN mechanic, he has a very different out look than most others.

He perceives WN as the best airline in the world, past or present. WN Is making money now, and the legacy carriers will catch up to them, they will take back market share and continue to get healthy.

As far as F9 goes, look at fares to LAS or PHX out of DEN, they match the fares, they may have different rules regarding when the ticket is purchased but the fares are just as low. I priced out a ticket 2 weeks ago to see what it would cost $190.00 round trip DEN-LAS, Now if that isn't cheap then I don't know what is, if I would have read the fare rules I may have gotten it cheaper.

The TED flights are FULL to LAS!!! Even if it is a low yield market TED is filling the planes. A small little A318 full or a A320 full? If the price to work both planes, pilot cost and ground are the same, filling a A320 is going to make more money than the A318.

737DR,
don't let it bother you about TED, it isn't going to put WN under, like shuttle up until 2000, we will be profitable.

I dont know anything about SONG and i dont care to, but TED has a good plan, and like those who said UAL wouldnt be here, we are so lets see what little TED can do for US.


UAL 777 CONTRAIL
 
richardw
Posts: 3137
Joined: Tue May 08, 2001 3:17 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Wed Feb 25, 2004 11:50 pm

Go was sold by BA to Go's management and venture capital investors because Rod Eddington decided it had no contribution to make to BA. The venture capital investor had the majority shareholding and they sold to easyJet and now BA has to codeshare with IB and Swiss to fight the might of easyJet. This could happen to Delta or United if TED or Song end up in competitor's hands at some point in the future.
 
JGPH1A
Posts: 15080
Joined: Thu Aug 14, 2003 4:36 pm

RE: Cute New Planes, Same Old Problems - Ted & Song

Wed Feb 25, 2004 11:58 pm

Richardw - not that I'm a big fan of BA, but they seem to be fighting their corner pretty well against U2 and FR - they might not be as cheap, but their marketing has been focussed on the difference in service they offer - worldwide connections, big airports close to where you need to be, on board service, self-service and phone and web checkin - you can get roundtrip within Europe on BA (and BD) for around EUR100 incl tax - segment fares from EUR39.00 ow but you have to buy a rt - its not FR's 50p, but you get a fair bit for your EUR100.00. They still manage to fill 757's and 763's LHR-NCE 5 times a day in the summer, so they must be keeping some customers happy.
Young and beautiful and thin and gorgeous AND BANNED ! Cya at airspaceonline.com, losers
 
luv2fly
Posts: 11056
Joined: Tue May 13, 2003 2:57 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Thu Feb 26, 2004 12:02 am

JGPH1A

I agree BA took the right approach, more value for your money. So they can charge a tad more and get it. They have shown you do not have to chase the low fares or match the LCC's fare to survive.
You can cut the irony with a knife
 
alphascan
Posts: 795
Joined: Mon Nov 24, 2003 12:04 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Thu Feb 26, 2004 12:13 am

If the price to work both planes, pilot cost and ground are the same, filling a(n) A320 is going to make more money than the A318.

The point is, the costs are not the same.
"To he who only has a hammer in his toolbelt, every problem looks like a nail."
 
slider
Posts: 6812
Joined: Wed Feb 25, 2004 11:42 pm

RE: Cute New Planes, Same Old Problems - Ted & Song

Thu Feb 26, 2004 12:14 am

Flynavy makes a good point indirectly...if he's a guy who has a bunch of UA miles, or whatever airline we happen to be discussing, then chances are he'd like a FC upgrade. Can't get that with Ted, Song, et al.

So if he's conencting through DEN, and finds himself on Ted, there's an adverse perception there. In the end, UA and DL are risking vulturing their own passenger base.

In the case of Ted, the A-320s are configured to 156 seats correct? Considering the mainline config is 148 (someone pls correct me if I'm off here), I don't see the incremental revenue being a savior. (Braniff, hello?)
 
VC745D
Posts: 208
Joined: Tue Feb 03, 2004 5:52 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Thu Feb 26, 2004 12:23 am

I realize that the point of Song is to create an operation with lower costs than mainline flights, but, as a New Yorker I wish DL had put the startup money into its very bad JFK facilities. The current conditions there are the primary (though, sad to say, definitely not the only) reason I avoid DL.
 
VectorVictor
Posts: 384
Joined: Tue Mar 01, 2005 5:31 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Thu Feb 26, 2004 12:27 am

WN Is making money now, and the legacy carriers will catch up to them, they will take back market share and continue to get healthy.

777Contrail, please post just one Wall Street/Industry analyst who holds the viewpoint in the second half of you comment.
 
richardw
Posts: 3137
Joined: Tue May 08, 2001 3:17 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Thu Feb 26, 2004 1:17 am

I was making the point that BA had to respond to the strength of easyJet.
I did BA LHR-NCE in November 1998 and paid approximately £110 even quite well in advance. Now the fare would be about £69.
United and Delta could end up doing the same.
Why don't Delta and United improve the full service product for economy flights longer than 2 hours?
 
uadc8contrail
Posts: 1636
Joined: Thu Sep 11, 2003 1:23 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Thu Feb 26, 2004 1:30 am

richardw,
"why dont delta and united improve full service product for economy flights longer than 2hours??,,,,,are you talking flts to lax or las,phx,tpa,mco...

how can you improve the y product on the den-mco route if price is the driven factor....better ife????meals????only difference on the den-mco route is f9 has direct tv and ted does not...other than that the price is the same the a/c are the same and they both depart from concourse a in den...teds only advantage on this is it ff program...f9 can not hold a match to ua or any big lines ff program....as a value driven consumer and if the only differences were the above mentioned i would choose ua as the biggest difference is e+....have not flown f9 but would take my chances and get a e+ seat on ua,,,

now if we are talking den-lax.....if ua and f9 had a flt at the same time and the price is the same would you choose a a318/319 over a 767/777/747???i would rather do the wide body.........
bus driver.......move that bus:)
 
User avatar
Richard28
Posts: 1622
Joined: Thu Aug 14, 2003 5:42 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Thu Feb 26, 2004 1:36 am

I agree with the article quoted in post 1 completely.

The other thing that strikes a cord is that a lot of TED routes were United routes previously - the board are simply ducking the issue of low fares.

The position with GO, from BA's perspective, was that BA's involvement helped give the LCC market credibility, and aided its growth, to the loss of BA's euro fleet.

BA then sold GO, reduced (and continue to reduce) their cost base, kept a proper product to differentiate from LCC's (i.e. free beverage and food service & newspapers), and reduced fares to increase loads.

This has worked with BA, where the euro fleet is now operating at a profit. United and Delta need to take note.
 
ord
Posts: 1356
Joined: Tue Jul 20, 1999 10:34 pm

RE: Cute New Planes, Same Old Problems - Ted & Song

Thu Feb 26, 2004 1:39 am

"...but does it make good economic sense for UAL to be spending all this $$$ to be repainting all these aircraft? I mean, TED, I can halfway understand (not that I agree with the airline-within-an-alirline concept), but also repainting all the other mainline UAL birds, not to mention signage, stationary, and anything/everything else that carries a UAL logo?"

The airplanes are only being painted with the new livery when they would have been repainted anyway as part of their checks. That is why only 70+ airplanes will be repainted this year. As for signage, ticket jackets, etc., all that stuff already has the "new" look. It was implemented starting in 1997-98, so it's only that planes that need to "catch up."


"Wouldn't it have made more sense to accomplish this once out of Chapter 11, and having used the funds for other ways to improve the viability of the company?"

Marketing a company is hugely important. It is necessary to allocate dollars to marketing the airline, especially a new image. Besides, UA alone does not make these decsiions as the bankruptcy judge has to okay any spending. So, obviously the judge agrees with this spending as part of the overall plan.
 
alphascan
Posts: 795
Joined: Mon Nov 24, 2003 12:04 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Thu Feb 26, 2004 4:28 am

only difference on the den-mco route is f9 has direct tv and ted does not......teds only advantage on this is it(s) ff program...f9 can not hold a match to ua or any big lines ff program.




Contrail:

I'm sure even UA has the marketing muscle to lure their own elite MP members to TED. Thereby, filling the E+ section with the gravy fliers who would have gladly paid more to fly mainline and sticking the target market in the cramped and uncomfortable 31" seat pitch section. Whereas, had you ever flown F9 you would know, the F9 passengers are all seated in the lap of luxury 33" seat pitch seats with LIVETV. No Seinfeld reruns for them!

As for a better FF Program. Well that's in the eyes of the beholder. There is no doubt that you can get to more places, domestic and especially international with the MP program. How important is that to the targeted leisure traveler who only flies a few times a year? How many years is it going to take to rack up 25,000 miles to get a free Saver Award ticket to Peoria, let alone the 50,000 miles needed for the elusive Saver Award to Paris?

Whereas, on F9 it only takes 15,000 miles to get a free ticket to anywhere they fly in the US and Mexico. Much more attainable for the leisure traveler.

Considering UA's primary reason for the (ill-advised IMO) decision to initiate TED service was to stem or at least slow down the hemorrhaging of passengers to the LCCs (read F9 at DEN hub), it must also be pointed out that most of this passenger loss at DEN is DEN O&D traffic. Fully 66% of F9 passengers fit into this category. F9's DEN traffic grew 30% from Jan through Nov. '03 as UA's fell.

With the Denver perspective, suddenly to the "value driven consumer" the destination choices of the Early Returns Program look pretty good and the awards much easier to attain. The seats more comfortable and yes, no reruns.

"To he who only has a hammer in his toolbelt, every problem looks like a nail."
 
User avatar
FlyCaledonian
Posts: 1741
Joined: Mon Dec 29, 2003 6:18 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Thu Feb 26, 2004 5:25 am

I think the points made about BA and Go are pretty much spot on. Bob Ayling thought BA setting up Go was the way to tackle FR and U2. If I remember correctly the plan was that BA could look at withdrawing from low yielding routes and let Go take them over, thus keeping a piece of the action. Rod Eddington decided Go didn't fit in with BA's and sold it in summer 2001. Then came 9-11, the low-costs continued to make money and BA was criticised was ditching Go (As if it could have foreseen 9-11!).

Look where we are now. BA has addressed, and is continuing to address, the cost issue, still provides full service without charges for "extras" and is making money again. Ok, routes have been axed, but it has another way of maintaining a presence on low-yielding leisure routes - franchises. GB Airways provides coverage for BA in the leisure resorts of Spain, France, Portugal, North Africa, Malta and Cyprus. BA makes money from GB using its brand and gets the network coverage. GB makes its money from having a lower cost base than BA and benefits from its association with BA. Likewise BMed and Loganair allow BA access to markets it couldn't support itself.

I guess the point being made with regard to Ted and Song is that do they distract from United and Delta making real progress on costs, etc. I'm not saying it can't work, look at how QF has created Australian to operate longhaul leisure routes and is launching JetStar to compete with virginBlue. But QF has taken a real grip with costs and is probably considered to be in a position of strength to manage sub-brands. Are UA and DL looking for a quick fix until the goodtimes return? BA and QF have, and will really benefit when things pick up. Will UA and DL too? New paint, new brands look good, but if the structure isn't sound? Only time will tell.
Let's Go British Caledonian!
 
BeltwayBandit
Posts: 474
Joined: Tue Mar 11, 2003 4:25 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Thu Feb 26, 2004 5:57 am

im sure every one has their opinions but ua shuttle actually made money for ua till contract 2000, until then ua made money...

You can't put much weight on the accounting that determines that a captive LLC made money. How much general overhead was allocated to the captive LCC?

Anyway, nobody doubts that a captive LCC (with it's own cost structure) can make money. But how does this help the network carrier that sponsors it? Either fix the whole thing, or find a way to make money with higher costs.
 
User avatar
mariner
Posts: 18257
Joined: Fri Nov 23, 2001 7:29 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Thu Feb 26, 2004 6:32 am

Ual777contrail:

Frontier doesn't use the A318 on DEN/LAS. They use the A319 or the 737.

As for FF miles, you can use F9 miles to fly to London, or South Africa, or India, or Japan, or anywhere else that Virgin Atlantic flies.

cheers

mariner
aeternum nauta
 
ual777contrail
Posts: 2914
Joined: Sun Feb 17, 2002 11:33 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Fri Feb 27, 2004 3:10 pm

First off lets get the seat numbers right. SLIDER, TED will have 156 seats, a mainline A320 only has 12 first and 126 coach my math comes to 138 seats of COACH making the difference 18 seats, much of a difference? I think it is.

what's your VECTOR victor?

show me an airline analyst who didn't think we were done or washed up after 9/11
Michael Boyd even had negative things to say about us, are we still here? I'll let you decide that answer.

ALPHASCAN,
United did a lot of surveys and feedback about TED before they even launched it. Do you think UAL would spend the time and man power hours to get TED off the ground and not research it enough to know Premiers wanted it.
Look at the destination, I don't remember a DEN-FLL or our DEN-LAS being full. If you have 25 premiers onboard the plane, only 8 can upgrade into first, so the other 17 will fly other airlines because they cant have first? No, that is why we have TED. I am not trying to win you over on the TED issue, I could careless who doesn't like it, I think it will work and that is my humble opinion.
I had talked with a UAL guy and he was saying that the premiers wanted it over express, not that DEN-LAS would EVER go express.


UAL 777 CONTRAIL
 
KKMolokai
Posts: 741
Joined: Tue Feb 22, 2000 2:06 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Fri Feb 27, 2004 3:15 pm

How can TED succeed? They're a low-fare airline, rather than a low-cost carrier. Cheap seats, same high labor costs. What's the point?
We are the people of American Airlines. And we know why you fly.
 
FA4UA
Posts: 777
Joined: Sat Nov 22, 2003 6:26 pm

RE: Cute New Planes, Same Old Problems - Ted & Song

Fri Feb 27, 2004 8:52 pm

KKMolokai: with slightly higher utilization, a reduced cost basis of over 25%, more seats and a load factor of over 83% on TED... it's working. That's the point.

UADC8contrail: while I think it's totally obnoxious that you never capitalize your words on your posts and some of your posts are kinda cynical, you've done good work on this thread! Welcome to my respected users list! Excellent arguments above.

Concerning the argument over no first class: nobody is paying for first anymore. The market has totally dried up domestically!! Just 24 hrs ago USA Today's travel section said that AA has 106 first class seats on their JFK-DFW route daily which is traditionally a business market. Out of those 106 seats only ONE was a full fare first class ticket, the rest were all upgrades and discounted deals. ONE out of 106!

Take that example and lets apply it to TED's marketplace... the leisure destination and leisure travelers. If 1 in 106 on a premium business route like JFK-DFW is paying, then who is going to pay for first class on a leisure market??

I've said it before and I'll repeat on this thread: UA invited our frequent flyers to design TED. They said seat availability and route choices were more important then a few seats up front!

FA4UA
The debate continues... Starwood or Hyatt... which is better
 
User avatar
Starlionblue
Posts: 17117
Joined: Fri Feb 27, 2004 9:54 pm

RE: Cute New Planes, Same Old Problems - Ted & Song

Fri Feb 27, 2004 10:40 pm

I think you're (all) looking at it from an airline perspective, not from an investor perspective. While I understand why, you're not thinking like the decision makers.


There are two basic reasons to rebrand a certain part of a company.

1. Fresh new brand which can be perceived as not having the "problems" as the parent company, but even more importantly as having a different "message". You can, if nothing else, get away with taking away all the perks without an uproar. Look at GM. You have Chevrolet, Oldsmobile, Pontiac and so on. While you may know in the back of your mind that "it's all the same company", it really isn't perceived that way, and the market can be attacked differently with different brands. If you try selling the same product to business and leisure travelers, you are in for a tougher ride, since the message becomes confused.

2. Separation of accounting and thus risk. This is the most important one. If you attempt to reform a company like Delta in one go, it will take FOREVER. You will run into union problems, culture problems, logistics problems. For example, catering. Say you have a contract with the catering company for x meals of type y every day, valid for another 2 years. You can't just cancel the contract because you stop serving those meals and go for sandwiches. Also, creating a separate company allows you to dump it in case it goes badly without affecting (as much) the finances of the parent. When IBM launched the PC, it was so uncertain about the new machine's future that it started a separate company. Lower risks. Also, as in the case of Go! you can sell off a complete unit if the need arises. It takes much less time to sell off the whole lock, stock and barrel than some bits here and there of a larger company. Conversely, as in the case of 3com selling Palm, if the company really takes off, you can sell it off for a big profit, thus raising capital for your "core business".


So my point is that Song and Ted are good ideas if they work, but trying to apply the same principles to the whole of Delta or United is a bad idea. What if a certain idea doesn't work? Do you really want to risk your (admittedly on life-support) cash cow on an unproven concept?


Some points about earlier posts:

Slider said:
"Flynavy makes a good point indirectly...if he's a guy who has a bunch of UA miles, or whatever airline we happen to be discussing, then chances are he'd like a FC upgrade. Can't get that with Ted, Song, et al."

- You get what you pay for. But if you care about miles, you are probably a business flyer and you should understand the disadvantages of LCCs for business. Granted I often fly Ryanair on biz, but I prefer BA if the price difference is reasonable.


VC745D said:
"I realize that the point of Song is to create an operation with lower costs than mainline flights, but, as a New Yorker I wish DL had put the startup money into its very bad JFK facilities."

- I understand your point, but if you only have a certain amount to invest, you put it where will (potentially) return most.




"There are no stupid questions, but there are a lot of inquisitive idiots." - John Ringo
 
KKMolokai
Posts: 741
Joined: Tue Feb 22, 2000 2:06 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Sat Feb 28, 2004 1:03 am

FA4UA,

"KKMolokai: with slightly higher utilization, a reduced cost basis of over 25%, more seats and a load factor of over 83% on TED... it's working. That's the point."

I look forward to reading their financial reports! It will take a miracle for UA to pull this off. Wasn't this UA's intent with Shuttle by United? That didn't quite work, did it.

If I remember correctly, I recently read in the paper that DL's "Song" isn't quite living up to its expectations either, as predicted by many in the industry.

The "airline-within-an-airline" concept historically has not worked, and I don't think TED or SONG will prove any differently.
We are the people of American Airlines. And we know why you fly.
 
User avatar
Starlionblue
Posts: 17117
Joined: Fri Feb 27, 2004 9:54 pm

RE: Cute New Planes, Same Old Problems - Ted & Song

Sat Feb 28, 2004 1:17 am

KKMolokai:
The "airline-within-an-airline" concept historically has not worked, and I don't think TED or SONG will prove any differently.

Not entirely true:
SAS has Air Botnia, Skyways, Spanair, Snowflake, etc.
Alitalia had ATI and AerMediterranea
BA had "Deutsche BA"
KLM had "KLM Cityhopper".

This seemed to work fine. But "airline within an airline" has always been there, albeit not visible. For example, Concorde was it's own business unit within BA. Domestic, European and Intercontinental routes are their own business units.

Edit: Just remembered! There are other business units too. SAS Flight Academy trains Ryanair, Wideroe and a host of others. This is a separate unit. SAS also owned (owns?) a stake in Radisson.

Airlines are complicated.

[Edited 2004-02-27 17:19:38]
"There are no stupid questions, but there are a lot of inquisitive idiots." - John Ringo
 
travatl
Posts: 1943
Joined: Sat Mar 03, 2001 4:57 pm

RE: Cute New Planes, Same Old Problems - Ted & Song

Sat Feb 28, 2004 1:57 am

I know this was a statement made earlier in the post, but it really caught my eye. Also, I'd like to preface my response by saying I typically have views similar to Ual777contrail, despite my working for a "LCC".

He said:

WN Is making money now, and the legacy carriers will catch up to them, they will take back market share and continue to get healthy.

HUH?

The "legacy" carriers are going to do this, how? Because they've been doing such a good job of "taking back market share" from Southwest for the last 30+ YEARS?

I'm sorry... 40 airplanes do not fix a 500 airplane problem. (...for the 50th time).

Travis





 
User avatar
Starlionblue
Posts: 17117
Joined: Fri Feb 27, 2004 9:54 pm

RE: Cute New Planes, Same Old Problems - Ted & Song

Sat Feb 28, 2004 2:04 am

Travatl said:
"I'm sorry... 40 airplanes do not fix a 500 airplane problem. (...for the 50th time)."

I agree wholeheartedly. If 40 airplanes did fix a 500 airplane problem, there would be no need for a separate business unit in the first place. The reason for the separate BU is to distance yourself financially from a risky new venture.

IMHO, the majors need to "focus on their core competencies" to use the management jargon. Business travellers who will pay for the perks. This does not excuse them from lowering costs, but they should do it by decreasing number of types and that sort of thing, not decreasing service level to a bare minimum. I see airlines in the future as having two basic components: one business oriented (SAS) and one leisure oriented (Snowflake). Of course, some airlines will have only one component (Ryanair).

Business travellers WILL pay a premium for loyalty programs, better airports, better connections, assigned seating and so on. Use this to your advantage instead of becoming an LCC. That said, the premium cannot be too great.

"There are no stupid questions, but there are a lot of inquisitive idiots." - John Ringo
 
ual777contrail
Posts: 2914
Joined: Sun Feb 17, 2002 11:33 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Sat Feb 28, 2004 5:14 pm

Travel,
Where do you see a 500 airplane problem? NONE Of the majors are thriving, look at the industry and you will see they are all sick, just because WN is making cash and CO and NW are barely getting by doesn't mean they are all doing well.

Now you have to understand my position and that is an employee of UAL, a legacy carrier, you on the other hand working for an LLC so our opinions are going to probably differ.

Ual and the others have always done business a certain way, offer routes, drop routes, buy planes and sell planes, we have been in a rut for way to long. The old business plan isn't working, so we hire innovated and very educated people to try and help us get lean or learn a new way to save money, cut costs so we can be around for many more years. It isn't going to happen over night and nor will it take place in a year. The only reason UAL is on the hot seat is because we are in BK, we will be a model to the rest of the legacy carriers about how to survive and cut cost. AA Isn't doing well, and neither is DL, lets talk of their pilots and their need to take a pay cut. We have been more efficient in this last 1 1/2 at ual making less money, maybe this is the new trend?

now to the LCC's,
you say 40+ planes aren't going to make a difference? I TOTALY DISAGREE, UAL may only use 40+ planes but you will see the legacy carriers start taking back old turf. An article in the local paper here stated how F9 is feeling the heat from TED, do I believe it? Hell yes, not only is it cheaper to operate a TED A320 but we have so much more to offer. One year ago I would have said TED wont work, shuttle died in the hands of one of our own, the pilots.

All the legacy carriers are now targeting the LCC's UAL with F9 in DEN, AA with JETBLUE in JFK, and a slew of others that are being watched by the legacy bad boys, it is going to be an all out war, NW was pissed at F9 for their MSP increase, it isn't like they are sitting back wait and wanting them to take more and more market share, they legacy carriers will hurt them all but WN, they are strong and can hold their own, but the rest beware.


UAL 777 CONTRAIL

 
User avatar
Starlionblue
Posts: 17117
Joined: Fri Feb 27, 2004 9:54 pm

RE: Cute New Planes, Same Old Problems - Ted & Song

Sat Feb 28, 2004 5:58 pm

British Airways has pretty much proven that a major CAN make money in this market. They just made the biggest profit in 13 years. They managed to cut costs without alienating their core customer base, and in the UK, where the LCCs are dense on the ground.

I repeat that 40 planes don't make a difference. If they did, there would be no need to set up LCC subsidiaries.
"There are no stupid questions, but there are a lot of inquisitive idiots." - John Ringo
 
737doctor
Topic Author
Posts: 1291
Joined: Mon Mar 19, 2001 4:52 pm

RE: Cute New Planes, Same Old Problems - Ted & Song

Sun Feb 29, 2004 5:46 am

I have been away from my computer for a couple of days and was surprised to see this thread still going. I knew that it would only be a matter of time before the UA supporters would chime in.


I read this article and immediately thought the use of the word "cute" in a news article immediately causes me to discredit it as anything but an opinion article.

Yeah, BusinessWeek is such a rag...

UaDC8contrail, as a mechanic for Southwest, I know how much we make vs. our counterparts at the other airlines (we are paid industry leading wages). Our other work groups already make or will make very competitive wages. This is not in dispute. We are also one of the most heavily unionized airlines in the industry and have been for quite some time. However, we save money in other areas. Labor costs are just one piece of the pie (albeit a good-sized one).

UA777contrail,

I admit that I am biased for my own company. I wish that some others here would admit that. However, that doesn't mean that the points raised in the article are any less valid. When I post something, I use facts to back it up, rather than throw out some wishful thinking disguised as a valid point.

The "legacy" carriers are going to do this, how? Because they've been doing such a good job of "taking back market share" from Southwest for the last 30+ YEARS? LOL  Big thumbs up


Patrick Bateman is my hero.
 
ual777contrail
Posts: 2914
Joined: Sun Feb 17, 2002 11:33 am

RE: Cute New Planes, Same Old Problems - Ted & Song

Thu Mar 04, 2004 6:23 am

737DR,

Although I feel the same kind of loyalty for MY company and I would rather work for UAL rather than WN, just my opinion because we offer so much more, BK and all. After we emerge from BK we WILL be stronger and wiser, my opinion.

you need to re-read my post, never did I say we are going to take back market share from WN, you need to get your facts straight, and never did I say you report topics without fact to back it up, another reason for you to think before you post, you may have me mixed up with another member.

when I think of WN I think of cockroaches, not in a bad way but once they are here it is hard to get rid of them. F9 is younger than WN and the same for B6, but before UAL and any other legacy carriers allow them to grow and breed if you will, they need to get some bug spray and get rid of them.

I know it is a horrible analogy but it works.

ual 777 contrail