xlpants
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UA PS Service= Plane Stupid?

Sun May 08, 2005 8:37 am

I heard that UA's PS service has not been able to attract the high yields needed to make it work. Anybody know? "PS" don't tell me they must be making money because the fllight you flew on was full. It doesn't take much to fill a 100 or so seats, particularly if your giving it away.
 
dutchjet
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 8:53 am

I have no specific information on the UA PS transcon flights - but I certainly would not call UA's attempts "stupid" - UA needed a product on the important JFK-LAX and JFK-SFO routes that would be acceptable to its frequent flying premium customers (the bi-coastal commuters) that had gotten accustomed to widebody service, that would allow frequent flights (as required by those same frequent flying premium customers) and that could be clearly differentiated from the low-cost competition. The PS configured 757 is a unique idea and give UA credit for thinking "outside of the box" and not simply throwing 763s on the route (which would be too big) or simply using standard 757s.

UA certainly knew that for this project to work, the very low density (what is, about 130 seats in total?) 757s would have to go out very full in the First and Business Class cabins all of the time. When UA flew 762s on the transcon routes out of JFK, it was very common for F and J class to be fully booked and Y class being more than half empty......so using the 752s with rather few coach seats was not a big issue.

Is UA keeping its F and J class cabins filled on the PS 757s? I do not know. Are the yeilds high enough to make this project work and keep those premium customers happy? Its probably too soon too tell. But give UA some credit for trying to come up with a unique product designed for the routes in mind.
 
commavia
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 9:13 am

I don't see how UA's admirable but flawed FJY 757 plan can possibly work on a regular basis. That plane is simply too small to work because F and J alone have to not only be full, but full with high-yield FJ customers, to make the plane make money. This is in addition to the fact that Y must also need to attract many high-yield customers. Besides, UA's new PS service, while impressive and extremely forward-thinking, has failed in its main attempt: to cut into the premium cabin domination AA has on the routes. So far, that hasn't happened. UA's PS service has had little or no effect at all on AA's flights' loads and yields.

I do want to make it clear, though: I don't think that UA's PS="Plane Stupid." On the contrary, I think the idea of a beefed up, premium service transcon product is very impressive and could work, just not on a 757.

[Edited 2005-05-08 02:23:06]
 
Kahala777
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 10:49 am

Quoting Xlpants (Thread starter):
I heard that UA's PS service has not been able to attract the high yields needed to make it work

You heard correct!

Quoting Dutchjet (Reply 1):
UA needed a product on the important JFK-LAX and JFK-SFO routes that would be acceptable to its frequent flying premium customers (the bi-coastal commuters) that had gotten accustomed to widebody service, that would allow frequent flights (as required by those same frequent flying premium customers) and that could be clearly differentiated from the low-cost competition

More than half of the Premium passengers are comp upgrades!

Quoting Dutchjet (Reply 1):
Are the yeilds high enough to make this project work and keep those premium customers happy?

Obviously not since the program is limited to a certain market and no additional flights are being added to match the deluge of flights that Delta is adding on the Los Angeles-New York market!

Quoting Commavia (Reply 2):
On the contrary, I think the idea of a beefed up, premium service transcon product is very impressive and could work, just not on a 757

Bingo, per a few NYC based United Flight Attendants passengers are pissed that they miss the 767! In addition the price tag per Installation for each seat for the First product was at a staggering $45,000.00 - A lot of money for a Bankrupt airline!


Regards - Kahala777

[Edited 2005-05-08 03:58:02]
 
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mariner
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 10:53 am

Quoting Kahala777 (Reply 3):
In addition the price tag per seat for the First product was at a staggering $45,000.00

$45,000?

Um - I'm sorry, but I'm having a lot of trouble with that figure.

For less than one third of that amount of money, I can fly First Class around the world.

cheers

mariner
aeternum nauta
 
roseflyer
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 10:56 am

Quoting Commavia (Reply 2):
That plane is simply too small to work because F and J alone have to not only be full, but full with high-yield FJ customers, to make the plane make money. This is in addition to the fact that Y must also need to attract many high-yield customers. Besides, UA's new PS service, while impressive and extremely forward-thinking, has failed in its main attempt: to cut into the premium cabin domination AA has on the routes. So far, that hasn't happened

I am curious as to how you justify all of those strong claims. Where is any proof? The 757 is an extremely efficient plane. It just has fewer seats, but still provides better seat comfort then the AA 767s. Also if UA can't fill the planes, they don't need 6 or 7 flights a day 1-2 hours apart. AA is happy to advertise that they have the most seats daily from LAX to JFK, but that is not what UA covets. The yields are important, and if UA can fill 6 or 7 757s a day between the cities with enough seats up front occupied, then they will succeed. I am not ready to dismiss PS just because it is a narrowbody. Its a smaller plane, but has more comfortable seats. I honestly feel that if it was the disaster that some are implying here, then UA would have cut frequency to 4 or 5 flights a day, but correct me if I am wrong, but that hasn't happened.

[Edited 2005-05-08 03:58:40]
If you have never designed an airplane part before, let the real designers do the work!
 
AeroWesty
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 10:57 am

Quoting Mariner (Reply 4):
$45,000?

Um - I'm sorry, but I'm having a lot of trouble with that figure.

I'm sure that was the cost of the seat itself, not what they charge to sit in it per flight.
International Homo of Mystery
 
SHUPirate1
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 10:59 am

Quoting Mariner (Reply 4):
$45,000?

Um - I'm sorry, but I'm having a lot of trouble with that figure.

For less than one third of that amount of money, I can fly First Class around the world.

cheers

mariner

I think he means, that was the price it cost United to install the seat and all equipment related to that seat, not the price it costs a passenger to sit in it for five to six (hopefully) hours.
Burma's constitutional referendum options: A. Yes, B. Go to Insein Prison!
 
Kahala777
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 11:02 am

Quoting RoseFlyer (Reply 5):
Also if UA can't fill the planes, they don't need 6 or 7 flights a day 1-2 hours apart

How can you be a "Business Airline" and not offer "Business Friendly" schedules? American Airlines, listens to the needs of its business travellers as does Delta Airlines, and Continental Airlines for that matter.

Regards - Kahala777
 
roseflyer
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 11:10 am

Quoting Kahala777 (Reply 8):
How can you be a "Business Airline" and not offer "Business Friendly" schedules?

United has 4 flights between 8:00 and 12:15pm out of SFO. I know business travelers prefer options, but I think an 8:00am, 10:00am, noon, 4:00pm and 11:00pm would be enough for UA to offer if they are losing as much money as people predict on the route. AA has more seats in the market, but if UA can provide better service, they should be able to get a niche out of the market. Its true that UA is in a quandry, but I am not willing to agree with the claim that PS is a stupid or a disastrous move.

[Edited 2005-05-08 04:11:55]
If you have never designed an airplane part before, let the real designers do the work!
 
commavia
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 11:37 am

Quoting RoseFlyer (Reply 5):
I am curious as to how you justify all of those strong claims. Where is any proof? The 757 is an extremely efficient plane. It just has fewer seats, but still provides better seat comfort then the AA 767s.

The 757 is an extremely efficient plane, and can very successful serve transcon routes, just now with that configuration. The 757 is a great 2-class plane but to make these 757s profitable with this extremely low number of seats, UA is required to fill virtually every premium seat, every flight, with high-yielding customers, plus fill coach with relatively good yields, which is becoming increasingly harder with the B6 presence and now Song. In addition, as to your assertion about "better seat comfort" verses AA 767s, I know for a fact that there are many frequent flyers on this route who think AA's tried and true 767s are plenty comfortable and prefer widebodies.

Quoting RoseFlyer (Reply 5):
The yields are important, and if UA can fill 6 or 7 757s a day between the cities with enough seats up front occupied, then they will succeed.

That is just the point. This plane is so small, relatively, that the cost to operate the flight is spread over a dramatically smaller pool of seats and thus virtually every premium seat must be filled with high-yield customers to make the plane work.
 
roseflyer
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 11:47 am

Quoting Commavia (Reply 10):
UA is required to fill virtually every premium seat, every flight, with high-yielding customers, plus fill coach with relatively good yield

I don't agree with that statement. You are implying that UA needs close to 100% load factors, with higher then average yields. UA would never have started the PS configuration if this was true. Yes they need more higher yielding passengers with only 2/3rds of the seats available. But unless the business class cabin is filled exclusively with upgrades from cheap coach, then UA will not be facing a disaster. Yes the 757 costs more per seat then a 767, but that doesn't mean that it is a failure. Widebodies have the perception of being more comfortable but the world renowned spacebeds in first class, and 54 inch pitch which is up to international standards. UA needs better yields, but it is not true that they need 100% load factors. I just can't agree that PS is a complete failure because there is no information out there on how it is financially performing other the people that keep asserting that it is a failure.
If you have never designed an airplane part before, let the real designers do the work!
 
commavia
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 12:33 pm

Quoting RoseFlyer (Reply 11):
UA would never have started the PS configuration if this was true.

Yes they would have because, as stated above, they really had no choice. They had to offload the old, costly, maintenance-intensive 767-200s and the 757 was the only viable choice.

Quoting RoseFlyer (Reply 11):
I just can't agree that PS is a complete failure because there is no information out there on how it is financially performing other the people that keep asserting that it is a failure.

I never said it was a failure, and I have absolutely no clue whatsoever about United's corporate perception of the p.s. service's financial success, failure, profit or loss but I do have a theory as to why (and how) it came about:

1) UA knew that the 762s were getting on in years and were becoming extremely costly to maintain
2) UA needed to quickly draw down operating expenses, particularly in maintenance, to preserve cash through bankruptcy
3) They chose to get rid of the 762s but couldn't replace them with 767-300s, as that would lead to a glut of capacity and require a frequency cut that would have made UA's offerings uncompetitive with AA's frequency and business traveler appeal
4) Thus UA chose to replace the 762 with the 757s, knowing full well that they would have a huge uphill climb to make the planes profitable, but also knowing that the added cost of the 762 was already making the routes unprofitable
5) They chose to introduce the 757s with a huge splash, a big service upgrade and tremendously upgraded interiors, hoping that the good PR would help them win over some customers and some of the corporate contracts from AA

As I said, I am not stating any of this as fact as I have no idea about the success or failure of p.s. service, but I just think that given the fact that UA is having trouble flying its regular configuration 757s, holding almost 182 passengers, at a profit, I don't see how they could possible be making money with a plane holding just 110 people, especially since I don't see UA garnering much of a yield premium on this route, even in F/J, and even given their upgraded service.

AA, on the other hand, I can quite confidently say has seen almost no impact from these new UA services. AA has seen absolutely no appreciable difference in loads or yields, and some very well-informed people within AA actually think that AA may have benefited from this move by UA as many people prefer widebodies on these routes (we can't discount this fact!).
 
SegmentKing
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 12:51 pm

I know a couple of people who have purchased both full fare coach and advance Biz Class rez's on these flights... I think they paid about $350 one way in coach and $600 and change for business... that's not TOO shabby...

then again I'm not a CEO, so I don't know...
~ ~ ~ ~ pRoFeSsIoNaL hUrRiCaNe DoDgEr ~ ~ ~ ~
 
panamair
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 1:23 pm

Quoting SegmentKing (Reply 13):
think they paid about $350 one way in coach and $600 and change for business... that's not TOO shabby

Actually, those fares are lower than a few years ago primarily because of Delta Simplifares. A one-way full Business Class fare a year or two ago on those 3-class transcons was easily over $1000.
 
N1120A
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 1:43 pm

Quoting RoseFlyer (Reply 5):
Where is any proof? The 757 is an extremely efficient plane.

The 757 is an amazingly efficient plane when it has 170+ seats, not when it has fewer than 120.

Basically, the reason UA introduced p.s. is because they lost most of their premium traffic to AA on a route both used to dominate. UA lost many of their corporate contracts to AA (particularly out of LAX) about 4-5 years ago and has not recovered. The idea with p.s. is to protect what yield they have left at the front of the cabin, and it isn't really doing the job as well as they wanted.
Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
 
padcrasher
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 1:44 pm

What does it cost to operate a 757 on a transcon? $30K? Divided by 110 seats at and 80% load factor. A $340 yield needed to break even? That' not out of the realm of possibility. AA get's a $309 for their 11 widebodies with 158 seats.
 
UALPHLCS
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 1:46 pm

Quoting Xlpants (Thread starter):
I heard that UA's PS service has not been able to attract the high yields needed to make it work. Anybody know? "PS" don't tell me they must be making money because the fllight you flew on was full. It doesn't take much to fill a 100 or so seats, particularly if your giving it away.

So you HEARD this from someone, but others can't make an argument based on ancedotal evidence. Apparently only your source is good enough. Well then call up UA and lets tell them. It's important for UA to know that someone heard what they were doning was stupid so they will stop right away.

I heard we have alien bodies at Wright Patterson ABF. Don't tell they are there just becasue you haven't seen them.
A little less Hooah, and a little more Dooah.
 
N1120A
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 1:52 pm

Quoting Padcrasher (Reply 16):
What does it cost to operate a 757 on a transcon? $30K? Divided by 110 seats at and 80% load factor. A $340 yield needed to break even? That' not out of the realm of possibility

Well, fuel alone probably costs about $10,000 and you still have to add landing fees, MX, capital, crew, etc. Also, if it were that simple, UA would be making a fortune

Quoting Padcrasher (Reply 16):
AA get's a $309 for their 11 widebodies with 158 seats.

They can also carry a hell of a lot more cargo, as well as having F/J actually paid for.
Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
 
mattnrsa
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 1:56 pm

The seats in FJY on the 757 are more comfortable than their counterparts on the 767-200. I can't imagine the customers would not like them. Did you see the Business seats on the old 767s? They had the "click-click" footrests! I remember those from the Pan Am 747s! Plus the 767s were going to be costing a huge amount to maintain as they all were over 20 years old. The costs of the 757 are much lower, with more comfortable seats and an entire E+ Economy cabin.

As far as other airlines listening to the premium customer (as if UA hasn't), why would DL go to all-Economy flts with Song if they are after these lucrative passengers? They were never a big player with the premium customers in this market, so it makes more sense for them to make this change. Don't look for AA or UA to do this anytime soon.
 
xlpants
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 2:04 pm

Quoting RoseFlyer (Reply 5):
I honestly feel that if it was the disaster that some are implying here, then UA would have cut frequency to 4 or 5 flights a day, but correct me if I am wrong, but that hasn't happened.

They can't, and still remain competitive. They have to maintain the frequency, or they're totally screwed in NY transcons. The've already rolled over and died in EWR against CO.

Quoting Panamair (Reply 14):
Actually, those fares are lower than a few years ago primarily because of Delta Simplifare

Absolutely! UA should have seen this coming. My god, even the genuises at DL saw it coming before Simplifares which is why they put Song on Transcons.

I understand Martin White lost his job, i mean left to persue other opportunities, because of this screw up. i believe he was the "father of PS" Can anyone confirm?

[quote=Dutchjet,reply=1]But give UA some credit for trying to come up with a unique product designed for the routes in mind.

A product that would have been great in the late '90's. This is not thinking out of the box! For a company in UA's condition, this is just plane stupid!
 
N1120A
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 2:09 pm

Quoting Mattnrsa (Reply 19):
The seats in FJY on the 757 are more comfortable than their counterparts on the 767-200. I can't imagine the customers would not like them.

That was UA's decision, not the airplane's

Quoting Mattnrsa (Reply 19):
The costs of the 757 are much lower,

Not by seat-mile, particularly once you count cargo

Quoting Mattnrsa (Reply 19):
As far as other airlines listening to the premium customer (as if UA hasn't), why would DL go to all-Economy flts with Song if they are after these lucrative passengers?

DL never has had the premium end of the LAX market. They made a lot of their presence through the aquisition of Western, as well as having a good part of the market to the south. DL mostly uses the JFK flights to feed international flights, and the front cabin of those planes are normally filled with JFK O&D or ATL/CVG/East Coast connecting passengers
Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
 
padcrasher
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 2:14 pm

3 of those AA widebodies might be full every day at $1000 a pallet. The rest often go empty. I've seen AA go as low as 11 cents a lb for LAX to JFK.

And it is rare that someone on AA is paying full fare. These corporate discounts give a standare 30% off F,C,Y, sometimes more.

And since you seem to know alot about 757 operaing costs why don't you give your best guess on a 757 LAX-JFK flight?
 
N1120A
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 2:26 pm

Quoting Padcrasher (Reply 22):
And since you seem to know alot about 757 operaing costs why don't you give your best guess on a 757 LAX-JFK flight?

I would have to know UA's 757/767 pay rates, along with what the FA's cost (as I believe they use more than the 3 they are required to use), plus the total cost of the refitting to p.s., MX cost, cost of full catering for the flight (you have full meals in every class) etc. The only thing I can tell you is that the route would burn about 5000 gallons of fuel at about $1.6 per gallon. that is $70.18 in fuel per seat at 114 seats (that is just how few the plane has). Add what UA pays for everything else (even forgetting all the interest on the debt the airline isn't paying) and costs begin to outstrip yield.
Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
 
mattnrsa
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 2:26 pm

Quoting N1120A (Reply 21):
That was UA's decision, not the airplane's

Not sure I'm understanding your reply, but the seats were one of the symptoms of flying old planes. If all it takes is putting new seats into an old plane to make them profitable, you would still see 727s, 737-200s and 747-100s. The 767-200s were old. They were expensive, needed more maintenance work, and were going to be retired.

So...what do you replace them with? The international planes are needed on international routes. This is one of the few remaining markets that justifies 3 cabins (at least for UA and AA with all of their money-making contracts with the NY and LA players). I can't think of what else UA could have done that would not have pulled planes off international routes but would also maintain the service levels premium customers are used to on this route.

I would be very curious to see figures that show this is failing, especially after UA has ADDED additional frequencies on the PS routes.
 
uadc8contrail
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 2:51 pm

padcrasher,
will take a stab at the cost of a lax-jfk flt.....conservative-$45000.00..divide that by 110 and it comes out to around 400 per person....happen to know that it costs aol/time warner around 1900 o/w first class lax-jfk(immediate family is in the biz)and have seen the ticket recpts so i do about that...at best its break even and probably eecks out some extra cash for them in the long run...
bus driver.......move that bus:)
 
padcrasher
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 3:12 pm

45K seems to high to me. This is a 2475 mile flight. Song is saying they are getting into the low 7's for their system wide CASM for which the average stage length is much shorter than this. 45K would imply a 9.1 cent CASM for a standard configured 757-200.

Also could this $1900 be round trip? That seems way too high. Time Warner should be a big account. I've seen $500 OWs in Business for large corporations and that was years ago when rates were higher.
 
N1120A
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 3:14 pm

Quoting Mattnrsa (Reply 24):
Not sure I'm understanding your reply, but the seats were one of the symptoms of flying old planes. If all it takes is putting new seats into an old plane to make them profitable, you would still see 727s, 737-200s and 747-100s.

That is not what I was saying. I was responding to someone else who was complaining about the 762 seats.

Quoting Mattnrsa (Reply 24):
The 767-200s were old. They were expensive, needed more maintenance work, and were going to be retired.

UA has some of the oldest 757s out there too.

Quoting Mattnrsa (Reply 24):
(at least for UA and AA with all of their money-making contracts with the NY and LA players

Most of which AA has now

Quoting Mattnrsa (Reply 24):
I can't think of what else UA could have done that would not have pulled planes off international routes but would also maintain the service levels premium customers are used to on this route.

Well, for a while, they had 3 class 763s on the route as the 762s were sold and the 757s were not all online yet. What would have been better for UA is not to have lost their contracts in the first place or to slim down the costs on the route by offering a 2-class service. Either way, you don't decimate the seat-mile of the 757

Quoting Mattnrsa (Reply 24):
I would be very curious to see figures that show this is failing, especially after UA has ADDED additional frequencies on the PS routes.

Yet still trail AA big time

Quoting Uadc8contrail (Reply 25):
..happen to know that it costs aol/time warner around 1900 o/w first class lax-jfk(immediate family is in the biz)and have seen the ticket recpts so i do about that...

Most people sitting up front are UGs
Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
 
uadc8contrail
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 3:17 pm

sounds pretty close on the casm....thats with fuel built in...i highly doubt deltas fuel is included in that low 7s....1900 ow is for first class and that is based on a discount....have tried 3x to ride along on the lax-jfk and 2x f was filled with all rev no ug certs and the 3rd time it was bounced back to a 2 class 57 so it was a mute point.....
bus driver.......move that bus:)
 
padcrasher
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 3:18 pm

N1120A

Anybody ever tell you, you'd argue with a fence post? It's a Texas saying.


LOL...just kidding. Good night...err Good Morning.
 
uadc8contrail
Posts: 1636
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 3:26 pm

N11120A,
Most of the up front pax in f are not ugs as you have elluded too...if they are please post the info for us to see that they are....
bus driver.......move that bus:)
 
N1120A
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 3:36 pm

Quoting Padcrasher (Reply 29):
Anybody ever tell you, you'd argue with a fence post? It's a Texas saying.

Well, there is this dude from Texas who is about as smart as a fence post and I am perfectly willing to argue with Big grin. Aside from that, I am just talking about the truth here. This is not something the 757 was designed for and is indicative of what one of my favorite 3 airlines in the world has been doing over the past 5 years to kill itself.
Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
 
uadc8contrail
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 3:50 pm

N1120A,
aside you talking the truth here and the fact that you state that the 57 was designed for and indicative for 1 of ure fav airlines that you will not post tells me that you still can not post anything that will prove your point about ual or dl op the 57 on trans con mkts....links are helpful... Smile
bus driver.......move that bus:)
 
ua777222
Posts: 2987
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RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 6:45 pm

45K for a seat isn't too bad.

You have to have it made, certified, and tested... and installed and maintained...

Not to mention prices are sky high! And if a lot of the F passengers are upgrades then how are they ever going to meet their needs. Sure to upgrade means they're making $$ on other flights but not on the PS flights. I've also heard that they have had some serious weight issues in order to have a safe flight due to the weight differences...

Quoting N1120A (Reply 31):
Well, there is this dude from Texas who is about as smart as a fence post and I am perfectly willing to argue with .

 rotfl Out smarted by a Frenchman!  rotfl 
 rotfl (No hard feelings between the French and I) rotfl 

Thanks,

Matt
"It wasn't raining when Noah built the ark."
 
ORD2PHL
Posts: 242
Joined: Sun Oct 19, 2003 9:15 am

RE: UA PS Service= Plane Stupid?

Sun May 08, 2005 10:49 pm

Lots of opinion and little to no facts in this thread at all.


ORD2PHL
 
CTHEWORLD
Posts: 463
Joined: Fri Dec 10, 2004 5:27 am

RE: UA PS Service= Plane Stupid?

Mon May 09, 2005 12:19 am

Here are some facts:

30% of UA revenues come from the premium cabin.

Most of the front on JFK transcons are not UG, most of those large corporate contracts allow director level and above to fly in F on JFK flights. However, burning upgrade mile is not a bad thing for the books at the end of the day.

Quoting Commavia (Reply 12):
1) UA knew that the 762s were getting on in years and were becoming extremely costly to maintain

The 767-200 required a costly updgrade in order to fly past February 2005, which the ROI for the project was very low. The smartest thing UA could have done is to replace the a/c with the 757

Quoting Commavia (Reply 12):
3) They chose to get rid of the 762s but couldn't replace them with 767-300s, as that would lead to a glut of capacity and require a frequency cut that would have made UA's offerings uncompetitive with AA's frequency and business traveler appeal

It wasn't so much a glut of capacity as a need for the -300 on other routes that it serves better

Quoting Commavia (Reply 12):
4) Thus UA chose to replace the 762 with the 757s, knowing full well that they would have a huge uphill climb to make the planes profitable, but also knowing that the added cost of the 762 was already making the routes unprofitable

There was no "uphill climb" involved. UA has nearly the same amount of high yield seats in the market with a much more efficient a/c

Quoting N1120A (Reply 18):
They can also carry a hell of a lot more cargo, as well as having F/J actually paid for.

Very little cargo is carried between NYC and the West coast, not enough to make a difference between the 767-200 and the 757-200

Additionally, UA has lost some, but not all of their corporate accounts. As a matter of fact, the need to have 3 class planes on the transcons is because of requirements spelled out in several contracts with large coporate clients.

As for the comfort and quality of the product, until you fly the service, you have no idea what you are talking about. The new full flat sleepers are much more comfortable than those brown, ratty, old shearling seats on AA's 767-200 and the widebody vs narrowbody argument doesn't hold water, surveys of premium travelers show that this is not an issue, it only matters to all of the airplane geeks on these boards.

C

[Edited 2005-05-08 17:23:05]
 
commavia
Posts: 9744
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RE: UA PS Service= Plane Stupid?

Mon May 09, 2005 12:48 am

Quoting CTHEWORLD (Reply 35):
The 767-200 required a costly updgrade in order to fly past February 2005, which the ROI for the project was very low. The smartest thing UA could have done is to replace the a/c with the 757

I agree. UA knew that maintaining the 767-200s was too expensive and the 757 was the smartest thing they could have done given the (limited) fleet options they had.

Quoting CTHEWORLD (Reply 35):
There was no "uphill climb" involved. UA has nearly the same amount of high yield seats in the market with a much more efficient a/c

I disagree. I think UA has, and continues to have, a very big challenge to make a 110-seat 757 profitable. If have no facts, nor any knowledge of internal UA data, but I just find it hard to believe that UA could ever maintain yields on those routes, in any cabin, that would be able to make the plane profitable.

This is because while the 757 is a more efficient airplane the 767, the decrease in operational costs of the 757, on a per seat basis, do not make up for the dramatic increase is CASM (again, on a per-seat basis) created by moving from 160-seat airplanes to 110-seat airplanes. While the 757s costs are lower, the revenue-generating potential of losing 50 Y seats is also much lower, making very strong F/J yields all the more important. UA bet big on these 757s because they thought they could get strong F/J yields with their upgraded project, but I doubt that has happened. I don't think UA has been able to get that big of a revenue premium with their upgraded project.

Quoting CTHEWORLD (Reply 35):
As for the comfort and quality of the product, until you fly the service, you have no idea what you are talking about. The new full flat sleepers are much more comfortable than those brown, ratty, old shearling seats on AA's 767-200 and the widebody vs narrowbody argument doesn't hold water, surveys of premium travelers show that this is not an issue, it only matters to all of the airplane geeks on these boards.

Well, obviously there are many people who don't see too much of a difference from AA to UA, or don't care that much, since AA has seen little or no impact whatsoever from UA's new services. And, per somebody who definitely knows what they are talking about at AA, AA absolutely thinks there maybe something to the widebody preference, it is not just limited to "geeks on these boards."
 
CTHEWORLD
Posts: 463
Joined: Fri Dec 10, 2004 5:27 am

RE: UA PS Service= Plane Stupid?

Mon May 09, 2005 1:00 am

Quoting Commavia (Reply 36):
If have no facts, nor any knowledge of internal UA data, but I just find it hard to believe that UA could ever maintain yields on those routes, in any cabin, that would be able to make the plane profitable.

If you have no facts, then why would you postulate? Your hunch is wrong btw...backed by internal only numbers that can't be shared.
The 757 only loses 50 low yield seats.

Quoting Commavia (Reply 36):
Well, obviously there are many people who don't see too much of a difference from AA to UA, or don't care that much, since AA has seen little or no impact whatsoever from UA's new services.

The travelers that UA is going after are corporate client provided. The corporate sales team has only had 6 months or so to sell in the product. As corporate contracts come up for renewal, and as business and emphasis on Asia connections picks up, the numbers will start changing.

C
 
commavia
Posts: 9744
Joined: Mon Apr 25, 2005 2:30 am

RE: UA PS Service= Plane Stupid?

Mon May 09, 2005 1:19 am

Quoting CTHEWORLD (Reply 37):
If you have no facts, then why would you postulate? Your hunch is wrong btw...backed by internal only numbers that can't be shared.
The 757 only loses 50 low yield seats.

Sorry, but the numbers just don't add up, and you don't need to have internal numbers to see it. The reduction in CASM from shifting from a high-cost 767 to a lower-cost 757 does not make up for the increase in CASM by reducing the number of seats per departure. It doesn't matter how great UA's new F and J products are, I highly doubt that they are garnering too much of a premium over AA's product in the market.

Quoting CTHEWORLD (Reply 37):
The travelers that UA is going after are corporate client provided. The corporate sales team has only had 6 months or so to sell in the product. As corporate contracts come up for renewal, and as business and emphasis on Asia connections picks up, the numbers will start changing.

Well, in this area, I do have facts. AA feels very comfortable and confident about their market position with corporate contracts, and sees virtually no threat from UA's new product.
 
CTHEWORLD
Posts: 463
Joined: Fri Dec 10, 2004 5:27 am

RE: UA PS Service= Plane Stupid?

Mon May 09, 2005 1:27 am

Quoting Commavia (Reply 38):
Well, in this area, I do have facts. AA feels very comfortable and confident about their market position with corporate contracts, and sees virtually no threat from UA's new product.

Well, I happen to know of 2 major LA/NYC companies (large offices in both cities), that were previously UA, moved to AA and, pending the outcome of the CH.11 proceedings, ready to move back to UA.

I your cost assumption, it appears as if you are presuming the 767-200 went out 100% in the back. That assumption is wrong. The load factor as a % in the back of the 757 has gone up. Additionally, that isn't where the money is made on that route. They are moving relatively the same amount of F and J seats in a much more efficient a/c, from a total cost standpoint.

C
 
commavia
Posts: 9744
Joined: Mon Apr 25, 2005 2:30 am

RE: UA PS Service= Plane Stupid?

Mon May 09, 2005 1:40 am

Quoting CTHEWORLD (Reply 39):
Well, I happen to know of 2 major LA/NYC companies (large offices in both cities), that were previously UA, moved to AA and, pending the outcome of the CH.11 proceedings, ready to move back to UA.

And that's great for UA, I applaud them, but I would just reiterate that AA sees virtually no competitive threat whatsoever from UA, including their corporate contracts. Obviously most of AA's corporate customers are satisfied with the fares and service they are receiving.

Quoting CTHEWORLD (Reply 39):
I your cost assumption, it appears as if you are presuming the 767-200 went out 100% in the back. That assumption is wrong. The load factor as a % in the back of the 757 has gone up.

I didn't assume anything, as I have no idea about UA's loads on the route. And, obviously, the Y loads are going to go up as Coach capacity was reducing by almost 50 seats!

Quoting CTHEWORLD (Reply 39):
Additionally, that isn't where the money is made on that route. They are moving relatively the same amount of F and J seats in a much more efficient a/c, from a total cost standpoint.

Again, I agree with you. I know that JFK-LAX/SFO is more dependant on high-yielding F/J traffic than other routes, which is why I think UA is going to have a problem. With an aircraft like the 757, while it is less costly to operate than the 762, still has much higher costs spread across fewer seats when operated in only a 110-seat configuration. Thus, the cost per-seat goes up and I don't think UA's average yields, per-seat, have gone up enough to compensate for it because, as I stated, I doubt they are getting too much of a revenue premium.
 
CTHEWORLD
Posts: 463
Joined: Fri Dec 10, 2004 5:27 am

RE: UA PS Service= Plane Stupid?

Mon May 09, 2005 1:45 am

With 110 seats the CSM for the 757-200 is still lower than what it would have been for the 767-200, it is as simple as that. Also, you can't dismiss the load factor increase when the CSM has gone down. How do you logic decrease in CSM and increase in loads as a bad thing? Not to mention reduced capacity in the Y cabin which leads to increased pricing power for all of the players in the same market?
 
commavia
Posts: 9744
Joined: Mon Apr 25, 2005 2:30 am

RE: UA PS Service= Plane Stupid?

Mon May 09, 2005 1:56 am

Quoting CTHEWORLD (Reply 41):
With 110 seats the CSM for the 757-200 is still lower than what it would have been for the 767-200, it is as simple as that.

Why is it that simple? Spreading the costs of operating a 2,475-mile trip over 110 passengers could definitely make a difference vs. spreading the costs over approximately 160 passengers.

Quoting CTHEWORLD (Reply 41):
Also, you can't dismiss the load factor increase when the CSM has gone down.

I did not dismiss the load factor increase, I used the word "obviously" because it is pretty much a foregone conclusion that when you decrease the number of available seats by nearly half, the load factor is "obviously" going to rise.

Quoting CTHEWORLD (Reply 41):
How do you logic decrease in CSM and increase in loads as a bad thing?

That is just it though, I find it incredibly hard to believe that CASM decreased. Yes, the 757 is more efficient and less expensive than the 762, but not enough to offset the obvious rise in the per-seat cost to operate the flight that results from a 50-seat drop in seats per departure.

Quoting CTHEWORLD (Reply 41):
Not to mention reduced capacity in the Y cabin which leads to increased pricing power for all of the players in the same market?

This is the key, though -- this is the flaw in your assertion. UA has gained absolutely no pricing power in any cabin, First, Business or Coach, with this move. First and Business still must remain competitive with AA's fares, even if UA offers a premium service, and while UA has reduced the number of Y seats on the route, AA has increased it by flying 12 daily JFK-LAX flights, for example. That is in addition to the increased JFK-LGB presence of B6 and, most recently, the decision by Delta to go all-Y Song on JFK-LAX/SFO, which is going to lead to an even greater depression in average per-seat yields on these routes. AA, which is flying bigger planes with more Y seats, will have more flexibility to allocate different Y seats at different fare levels and classes and to withstand the yield hit of lower fares driven by JetBlue/Song, while UA on the other hand is going to have only 72 seats in Y, most of which are going to need to be carrying fairly high-yield passengers.
 
CTHEWORLD
Posts: 463
Joined: Fri Dec 10, 2004 5:27 am

RE: UA PS Service= Plane Stupid?

Mon May 09, 2005 2:06 am

Quoting Commavia (Reply 42):
Yes, the 757 is more efficient and less expensive than the 762, but not enough to offset the obvious rise in the per-seat cost to operate the flight that results from a 50-seat drop in seats per departure.

The numbers are proprietary, but trust me, you are wrong on this.

Additionally, Y has been very full and 50% of revenues are made from the premium cabins. The emphasis isn't on Y, but it might be when less room throuh out coach has to go up against Eco Plus.

C

[Edited 2005-05-08 19:11:40]
 
commavia
Posts: 9744
Joined: Mon Apr 25, 2005 2:30 am

RE: UA PS Service= Plane Stupid?

Mon May 09, 2005 2:10 am

Quoting CTHEWORLD (Reply 43):
The numbers are proprietary, but trust me, you are wrong on this.

I'll take your word for it, then.

Quoting CTHEWORLD (Reply 43):
Additionally, Y has been very full and 50% of revenues are made of the front. The emphasis isn't on Y, but it might be when less room throuh out coach has to go up against Eco Plus.

I don't think AA is too worried about operating planes with slightly less Y legroom up against E+. It has had virtually no impact on AA, anywhere in the system, including JFK-LAX/SFO, and AA is experiencing record load factors and operating profits while UA is in bankruptcy.
 
roseflyer
Posts: 9606
Joined: Fri Feb 13, 2004 9:34 am

RE: UA PS Service= Plane Stupid?

Mon May 09, 2005 2:17 am

First of all please cool off for a second. Commavia keeps repeating the fact that he doesn't believe that it is profitable to operate 757s with fewer but higher yielding seats, while CTHEWORLD disagrees. That is established along with the fact that there are no true concrete numbers to work with, although some people might be privy to some useful information.

Quoting Commavia (Reply 42):
That is in addition to the increased JFK-LGB presence of B6 and, most recently, the decision by Delta to go all-Y Song on JFK-LAX/SFO, which is going to lead to an even greater depression in average per-seat yields on these routes

Economy yields will go down with Song and B6 flying the market. UA acknowledged that and is offering fewer economy seats because of it. They know that the yields in economy are horrible on the route with so much competition. That is why they are proportionally increasing the numbers of first and business class seats, which sell at a higher price and will not be strongly affected by the low yielding economy seats. There is enough product differentiation between economy and business class so that they do not compete. It doesn't matter what the CASM is, because that number means nothing unless it is put in context.

Quoting Commavia (Reply 42):
AA, which is flying bigger planes with more Y seats

I think you brought up a point that argues in the opposite direction that you are going for. American has more economy seats proportionally than UA, so therefore AA will be hit harder if yields in economy decrease since they are more susceptible. It is quite possible that the yields in economy are below the CASM for for AA. If yields are really low then it doesn't matter how many economy seats you have, you are losing money on each seat in the back cabin and have to offset that with higher yielding seats up front. UA has fewer seats in economy that have to be "subsidized" by first and business class.

The actual economics of the plane and number of seats are less important than the yield per seat. If UA averages a yield per seat that his 50% higher on the 757 in a PS configuration because people actually pay for the first and business class seats over a regular 757 where no one at all pays for domestic first class then it can make a profit. Don't get to obsessed about the CASM. It will cost more per seat to fly a PS 757 over a regular one and no one is arguing against that, but sometimes having more seats up front can earn a higher yield. You can cram over 500 people in a 747 like JAL and earn a profit yet UA only puts 350 as they strike a balance between numbers of seats and quality of seats/ yields per seat. The same logic works with the Privatair 737/A319 transatlantic flights. The 737 is a great plane in an all economy (WN), some domestic first/mostly economy (FL), or all business class configuration depending on the route (LH). Take a course in economics and examine how there isn't just one variable that is important (like number of seats on a plane) to hit an equilibrium between costs and revenue. There are many different locations where the curves can cross depending on several factors which can shift each one separately.

[Edited 2005-05-08 19:19:20]
If you have never designed an airplane part before, let the real designers do the work!
 
xlpants
Posts: 55
Joined: Fri Apr 08, 2005 10:36 am

RE: UA PS Service= Plane Stupid?

Mon May 09, 2005 2:19 am

Quoting UALPHLCS (Reply 17):
So you HEARD this from someone, but others can't make an argument based on ancedotal evidence


Based on this thread, i would say most people don't need to use anecdotal evidence to show that it's not working.

Quoting UALPHLCS (Reply 17):
Well then call up UA and lets tell them

I think they've gotten the call! Unfortuneatly, no one's home!

Quoting UALPHLCS (Reply 17):
It's important for UA to know that someone heard what they were doning was stupid so they will stop right away.

For a bankrupt company in their condition, maybe that would'nt be so stupid!
 
CTHEWORLD
Posts: 463
Joined: Fri Dec 10, 2004 5:27 am

RE: UA PS Service= Plane Stupid?

Mon May 09, 2005 2:25 am

Yes, and UA has record load factors, RASM second only to WN and operational efficiency the best in their history and better than most of the other Majors.

No doubt AA is doing as good a job as they can in this environment.

The financial reporting in Ch. 11 is misleading, at best, evidenced by showing a loss, but increasing bank balances for a given quarter. The next few weeks will be telling, but as it stands now, when the last remaining issues are (if) resolved, UA has the assets and product it needs to remain a viable operation.
 
padcrasher
Posts: 1815
Joined: Tue Aug 10, 2004 6:17 am

RE: UA PS Service= Plane Stupid?

Mon May 09, 2005 2:30 am

One thing is for certain. AA is getting hit in coach by Song, and United in Business and First. Both better at what they do than AA because the focus on one type of service. I don't doubt AA is still the big player here, but it might be a whole different ball game next year. Just the fact that Jetblue has gone into BUR with 5 flights should have AA thinking about trimming frequency a little. Many of their base came from the San Frenando valley.
 
dutchjet
Posts: 7714
Joined: Sat Oct 14, 2000 6:13 am

RE: UA PS Service= Plane Stupid?

Mon May 09, 2005 2:37 am

Thank you, RoseFlyer, your post above is a very good analysis of the situation (aside from being cohesive and well thought out). I think your analysis is exactly what UA was thinking when it launched the PS757 on the JFK transcons; UA did gamble on being able to fill up its premium seats on the transcon flights, if UA can keep those seats filled at appropriate fare level, they won, if they can't, UA has a problem.

UA has a unique position on the JFK transcons, they were never the biggest player as far as volume..... and the route in recent years has always been all about premium passengers and corporate accounts. Same is true for the JFK-LHR route, UA offers a fraction of the seats that BA and AA do on that important route, but they keep it going because of the F and J class passengers and the corporate accounts. When PS757 service was first announced, I thought that if this type of service proved to be a success, UA would possibly consider flying 3 or 4 PS757 services on the JFK-LHR route instead of the current schedule.....depending of course on UA's slot situation at LHR.