RIOJANEIRO
Topic Author
Posts: 118
Joined: Tue Dec 26, 2000 4:41 am

Struggling Legacy Carrier Solution?

Tue Jul 13, 2004 10:47 am

Hello all,
I have been a lurker for about 4 years now, and I think I am going to try to get a little bit more involved in this very informative website. Thanks for 4 great years!

We have all heard about the difficulties that the legacies are facing, specifically on the increasing competition that they are facing on domestic routes in their proper countries. I have often thought, do you think if a legacy carrier spun off its domestic networks(granted, realistically, this would NEVER work with labor groups, emp. morale) into an "LCC" with a lower cost structure and still feed its high-yield international routes, could it make a profit? Flying is becoming increasingly a commodity in the United States, and passengers are becoming more and more willing and adapted to "no-frills" flying domestically. Even now, the traditional high-yield, business markets like LAX-JFK, airlines are filling up their planes showing the passenger demand for low-fares is paramount over anything else.

In other words, how come and airline like United doesn't reshape its ENTIRE domestic network into Ted, let's say, bring low fares and a low cost-structure to that segment, yet still have a traditional cost-structure for the long-haul, high-yield international markets. Granted, I fully realize, that this change could only be gradual and would not work realistically with labor groups, however.

It appears that Virgin could be hinting at this type of a business model by creating low-cost domestic operations (Virgin Blue, America, etc) in order to "feed"(that is debatable, I guess...) it's lavish Virgin Atlantic operation.

Long-haul international markets are an extremely touchy area for LCC's, because it is still in doubt if customers will go without "frills" for 6+ hours in addition to it being a viable environment fare-structure-wise.
Thoughts?
 
luv2fly
Posts: 11056
Joined: Tue May 13, 2003 2:57 am

RE: Struggling Legacy Carrier Solution?

Tue Jul 13, 2004 10:55 am

Virgin really does not need to feed its flights to London, if you see the gateways they fly out of you are talking about strong O & D numbers. Now it is true that the model is flawed at best, the one that the so called majors are feverishly holding on to. I remember a time when the upstarts flew everyone else's old planes, schedule were never kept and a real lack of customer service. Now that has all changed. The majors planes are old, they offer no on board service to speak of. Now the upstarts are flying new planes right from the factory, FF programs, online check in, business cabins, and the list goes on. Like everything this is a cycle and it will continue, now the LCC's are on top and the majors are hurting soon it could change or the majors could learn and improve moving forward to compete....
You can cut the irony with a knife