afrikaskyes
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Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 9:43 am

Is each airline going in different directions? Each have their own plan? Fewer domestic routes and more international routes? Are all the legacy carriers going with a LCC product?

These are a lot of questions and I don't expect anyone to answer all of them. I just need someone to share a basic outlook of the US airline industry. Feel free to share the future of each individual airline if you want.

BTW....I am new to this forum. This is my first post. Should I have done a search?  Smile
 
NWAFA
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RE: Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 9:50 am

Afrikaskyes

First of all, WELCOME!

We legacy's are, sadly, going the LCC way...People care about one thing, the COST of the ticket. If they want the lowest price, things will disappear.

Mergers are going to happen..those go in every 15-20 year cycles. Now we have AmericaWest gone away (the name,) TWA, Western, PSA for starters, but have merged into another carrier for the most part. UA is here. US is still here (not sure how it is, but it is), DL and NW is going to be here...combined, there is a VERY large chance that will happen.
THANK YOU FOR FLYING NORTHWEST AIRLINES, WE TRULY APPRECIATE YOUR BUSINESS!
 
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ZSOFN
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RE: Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 9:51 am

Hey Afrikaskyes, welcome to a.net!

You pose some big questions there. Most of these questions have been discussed but not on such a general level (as far as I'm aware).

With there being a clear overcapacity problem along with increased fuel costs and huge LCC competition, legacy carriers have to distinguish themselves clearly from the competition and offer niche products, or at least better ones. Prices cannot continue at their current levels and people's mindsets are changing - they don't mind less frills and now expect to fly for little money.

There is certainly no room for complacency of any sort, and some tough decisions have to be made, particularly by those airlines under Ch11 restructuring. As has already happened over here in Europe, airlines need to become streamlined and cost-effective, hence people sadly losing jobs. You'll find that last point brings some tensions and strong opinions here on this forum, and it's a difficult but unavoidable issue.

Anyway, what I've said is in no way comprehensive let alone complete, and I'm eager to see what people think!
 
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ZSOFN
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RE: Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 9:53 am

P.S. Just to  stirthepot  a little, I see AA acquiring DL at some point  Smile
 
burnsie28
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RE: Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 10:22 am

Quoting ZSOFN (Reply 3):
P.S. Just to stirthepot a little, I see AA acquiring DL at some point

Its more likely that NW is going to take over Delta.
 
Boeing777LR
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RE: Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 10:25 am

Hi!
I think that the emergence of the LCC carriers has hurt the legacy carriers (on top of SARS and 9/11) in taking a big part of their domestic market hopefully the legacy's can try and recover by developing their international network . I think that there will always be a need for legacy carriers :business related travel and all the other people that are ready to pay a small extra to be able to walk when they get off the plane, get a better seat pitch  Wink and get some better service . Although I really hope that it doesn't happen I believe that at least one legacy carrier will go bust because of the current overcapacity but that's just my opinion. I don't wish this on any employee and feel sorry for all the ones living through the current trouble and I would much rather keep all legacy's alive.
 
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ZSOFN
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RE: Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 10:26 am

Quoting Burnsie28 (Reply 4):
Its more likely that NW is going to take over Delta.

Would NW have funds for that? The merging of two Ch11 airlines who both need major restructuring and are bleeding money all over the shop does not seem like such a good move compared to a relatively strong airline with the funds to make the most of a proper acquisition taking over DL. I may be wrong but I'm just seeing how much potential this option has.
 
soylentgreen
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RE: Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 10:36 am

One legacy carrier left-AA. ANd they came close to bankruptcy filing a year or so ago. Expect no frills and low fares to be the case in all the former and current lagacy carriers. Expect remaining unions to be severely weakened, and agreeing to most demands for future hirees as these contract amendments would not affect them. I also expect one of the LCCs to eventaully delve into higher end service, perks, and attempts to serve all areas and people. That will be the next disaster we'll talk about, but that's probably five years away.

I'd expect USAIR/AmericaWest to be that company based solely on two bad management teams combined to form one bad management team.
 
halls120
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RE: Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 10:45 am

Quoting Burnsie28 (Reply 4):
Quoting ZSOFN (Reply 3):
P.S. Just to stirthepot a little, I see AA acquiring DL at some point

Its more likely that NW is going to take over Delta.

My brother (a DL pilot) has been forecasting a NW/DL merger for the past four years.
"Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself." Mark Twain, a Biography
 
apodino
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RE: Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 10:51 am

Quoting Soylentgreen (Reply 7):
'd expect USAIR/AmericaWest to be that company based solely on two bad management teams combined to form one bad management team.

Two bad management teams? Parker was the guy who turned America West around into a fairly respectable carrier. He is one of the better CEO's (Along with Arpey, Kelly, and Bethune) in the USAirline industry. And the US management who took over a carrier in bad shape has pulled them out of Chapter 11, pulled off the merger, and made US a viable carrier again.

If you want an example of two bad management teams that could join, how about Steenland and Tilton, or Steenland and Grinstein, or someone along those lines.
 
FriendlySkies
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RE: Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 11:04 am

Quoting Soylentgreen (Reply 7):
One legacy carrier left-AA.

So I guess CO, DL, NW, and UA don't exist, right?
 
Boeing777LR
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RE: Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 11:07 am

If AA UA And CO would merge it would make an awesome airline with AA's strong central American and European connections, UA's Asian and Australian connections and they all have a quite similar fleet (other than the a320's,747's and a few pond hoppers)
 
ltbewr
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RE: Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 11:25 am

I think you will see among the legacies (AA, Alaska, CO, DL, NW, UA, US w/American West) greater proportion of business in international long haul and reductions in domestic USA services.
They will drop most short haul to subidiaries and to the LCC's. On certain routes, like from in the eastern USA and Florida, the LCC's will take over (and already have to some extent), with the legacies having few flights to/from those and similar shorter haul and highly competitive locations.
You will see more domestic USA services, even by LCC's to smaller aircraft, like 737's, and >100 pax jets (due to union pilot and F/a's compensation).
Several legacies already have significant service into, and others have and will be expanding, service into Mexico, Central and South America and the Carribbean. We already see a trend for smaller jets on international routes. We will continue to see more service from the USA legacies' major hubs to smaller European cities, to provide more direct services for major international companies between the USA and Europe. CO had been particulary strong in this direction. Services to/from Asia, and highly profitable market, with high demand for premium seats at top fare prices, will be difficult to expand due to protection for their own (and sometimes government subsdised or owned) airlines.
You could also see airlines move in and out of routes more fequently depending on demand and income yeilds. You could see more seasonal service, increasing and decreasing flights as well as shifting of aircraft and crews depending on seasonal demands.
 
centrair
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RE: Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 11:29 am

If DL and NW were to merge, it would be pretty powerful and would need an entirely new name. They would have extensive European, Asian and South American routes.

Just an idea (please don't rip me apart)
Keep the Song product as its domestic and North American component. It would serve the U.S. Mexico and Canada only.

The ATL, DTW, MSP, SLC, AMS and NRT would become International Hubs for their International Product (new name). This product could eventually expand into Africa and Middle East. It would focus on competing with other international carriers (while still maintaining its previous Skyteam agreements) which means it would have to be a much higher quality. Aim to become a 4 or 5 star.

Much of NW's routes and Delta's mainline would be eliminated replaced by Song and regional affiliates/code-shares.

Domestic product: 737s & 757
International product: 757s (as they last) A330s, 787, 777, 747 (as they last)

In other words if you wanted to get from HKG to ATL and then to CWA (to buy medicinal ginseng), you could fly HKG-NRT-ATL (international product), then ATL-MSP (Song-like product) then MSP-CWA on regional affiliate with different name.

Just an idea.
Yes...I am not a KIX fan. Let's Japanese Aviation!
 
DLKAPA
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RE: Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 11:40 am

Quoting ZSOFN (Reply 2):
With there being a clear overcapacity problem along with increased fuel costs and huge LCC competition,

I guess that's why there is an average systemwide load factor of well (very well) above 50%?

Quoting Soylentgreen (Reply 7):
I'd expect USAIR/AmericaWest to be that company based solely on two bad management teams combined to form one bad management team.

Parker turned HP around, and US management after Seigel brought the company back from the brink of one way service to MHV. It was Seigel who said "There is only one reason WN is coming to Philly, they're coming to kill us." Any CEO that has that little confidence has no business anywhere near corporate headquarters. The New US management inked a deal with ZW, Republic, AND HP, which will guarantee the airline stays flying for the forseable future. Bad management? I think not.

Quoting Halls120 (Reply 8):
My brother (a DL pilot) has been forecasting a NW/DL merger for the past four years.

Good for him.

Quoting Boeing777LR (Reply 11):
If AA UA And CO would merge it would make an awesome airline with AA's strong central American and European connections, UA's Asian and Australian connections and they all have a quite similar fleet (other than the a320's,747's and a few pond hoppers)

That would be killed in Court, as a merger that large would surely violate antitrust laws.

Quoting LTBEWR (Reply 12):
They will drop most short haul to subidiaries and to the LCC's.

BIG mistake. You can't have international without a solid domestic base, just ask PeoplExpress (Although that wasn't their only problem). If you drop your domestic capacity, that means less connecting capacity internationally from your hubs, which means you have to raise your prices to cover the losses, and with fares that high, nobody would fly your airline.
And all at once the crowd begins to sing: Sometimes the hardest thing and the right thing are the same
 
AirRyan
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RE: Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 11:45 am

Quoting ZSOFN (Reply 6):
Quoting Burnsie28 (Reply 4):
Its more likely that NW is going to take over Delta.

Would NW have funds for that? The merging of two Ch11 airlines who both need major restructuring and are bleeding money all over the shop does not seem like such a good move compared to a relatively strong airline with the funds to make the most of a proper acquisition taking over DL. I may be wrong but I'm just seeing how much potential this option has.

I don't think you'll see either NW of DL merge but if I had to pick one I'd certainly expect to see DL go somewhere long before NW.

These are legacy carriers who have been flying around since the mid-1920's and have become an icon here in the United States. Because of the current BK laws expect both to take full advantage of them before they are changed and like UA will emerge a leaner and more successful carrier than ever. Now once the laws change it will be an entirely different story, but I don't see either NW or DL ceasing operations under their names.
 
FriendlySkies
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RE: Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 12:27 pm

Quoting DLKAPA (Reply 14):
You can't have international without a solid domestic base, just ask PeoplExpress

Screw PeoplExpress, ask Pan Am (the FIRST one)!
 
deltaguy767
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RE: Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 12:46 pm

Afrikaskyes, welcome to a.net wave 
Here are my armchair CEO picks for mergers/acquisitions
DL/AA: Good route structure and hub placement along with aircraft commonality, with a few exceptions. However this will probably be killed by the DOJ/SEC for Antitrust unless DL becomes extremely weak during the process of BK.
DL/NW: Although they are in the same financial boat they are two completely different airlines in terms of a/c, route and hub structure, and lets not forget the powerful NW unions, compared to the sole DL pilots union which has been fairly cooperative. I don't see this one happening although colleagues of mine on this site seem to think so.
CO/DL: Good route structure and hub placement, but there's some fleet concerns with DL's MD-88 fleet compared to CO's massive 737 fleet. However look for this one to happen as DL made a similar move in 2000 when CO was weak but was rejected by NW's veto power.
CO/AS: I could see this happening as the fleets are the same when it comes to the 737's. However this would seem pointless as this would only strengthen W. Coast operations for CO which shouldn't be their main concern right now.
CO/NW: Just way too different on so many levels
AA/NW or AA/CO: same as CO/NW logic
UA/CO: Quite real as the routes and hubs match up along with some LHR slots, however the Airbii in UA's fleet should be a consideration when UA/CO comes up.
FL/Midwest: Pretty good matchup as this could propel FL into a greater Midwest market presence along with the pretty similar fleets.

In terms of survival
B6: Should continue to expand and make profits.
WN: This will last until Herb stops smoking.(and I mean on the other side too)
FL: See above
Spirit: Who? confused 
Midwest: See Above
ATA: Their fate is pretty much sealed
Fly I: Again Who? confused 

Final Conclusions
I feel that there is an over saturation in the Airline marketplace. The only solution is for airlines to go away either by m&a's or Chapter 7 frown . I believe that in due course the Industry will set itself back on the right track.

Regards from BDL,
DeltaGuy767
A Good Landing is one you walk away from!
 
halls120
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RE: Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 12:59 pm

Quoting DLKAPA (Reply 14):
Quoting Halls120 (Reply 8):
My brother (a DL pilot) has been forecasting a NW/DL merger for the past four years.

Good for him.

Since you are so dismissive of a DL employee's opinion, by all means, why not share the source of your better inside information? Oh, that's right - you don't work for Delta, do you?
"Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself." Mark Twain, a Biography
 
coewr777
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RE: Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 1:09 pm

Quoting DeltaGuy767 (Reply 17):
CO/DL: Good route structure and hub placement, but there's some fleet concerns with DL's MD-88 fleet compared to CO's massive 737 fleet. However look for this one to happen as DL made a similar move in 2000 when CO was weak but was rejected by NW's veto power.

Cle and cvg!!!!!!!!!!!!!!!
 
Co757
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RE: Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 1:14 pm

An American/Continental Merger would be a good Marriage. And 2 Hub's in Texas Would work. Shuttle Service Between DFW & IAH, ORD, EWR, MIA, LAX, ClE(would BE all Co-Ex), American To Europe, CAL's PAcific. Only Fleet Diff is The Md-80's, That they would Phase out, and a Few Airbus's. It Could Happen.
 
soylentgreen
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RE: Sum Up The Future Of US Legacy Carriers

Sun Sep 18, 2005 5:24 pm

Quoting FriendlySkies (Reply 10):
Quoting Soylentgreen (Reply 7):
One legacy carrier left-AA.

So I guess CO, DL, NW, and UA don't exist, right?

Only one that hasn't been through Bankruptcy Court yet that is.
 
deltaguy767
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RE: Sum Up The Future Of US Legacy Carriers

Mon Sep 19, 2005 2:40 am

Quoting COEWR777 (Reply 19):
Cle and cvg!!!!!!!!!!!!!!!

It appears to me that CLE and CVG are eerily alike. However I would think that the new product would merge these two hubs into CVG as DL has more property and market share at CVG over CO at CLE.

Regards from BDL,
DeltaGuy767
A Good Landing is one you walk away from!
 
HunUtazo
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RE: Sum Up The Future Of US Legacy Carriers

Mon Sep 19, 2005 2:54 am

American Airlines.....................nwac.................World-Wide with Strong Asian

Continental Airlines..................ual.....................World-Wide with Strong Asian

Southwest Airlines...................Splintered dal.......

USAir Airlines...........................Splintered dal......





 yes 
dude
 
joeman
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RE: Sum Up The Future Of US Legacy Carriers

Mon Sep 19, 2005 4:27 am

Quoting COEWR777 (Reply 19):
Cle and cvg!!!!!!!!!!!!!!!

JFK and EWR?

A combination of CO and DL might not care about a midwest hub except to tap into smaller northestern city markets west of the New York area heading west/south.

The attention CO gives CLE is a clear indication of its interest in that market. SLC is on the rise for east-west connections. CVG is on the fall.

CVG and CLE are relatively the same distance from New York and CVG even closer to ATL than CLE. If profitability and not convenience is the name of the game, especially during this economic mess, and as it should be, neither one is necessary. CLE is nothing but a focus station in the likes of the current STL and PIT anyway.

The solution is for a CO/DL combination to let AA and UA pack the ever pleasant ORD experience and NW pack DTW with even more of those basically inconsequential numbers and forget about it. Trim the fat from CLE and especially CVG to the point of O&D demand and call them "focus cities". There's just a few more mid-sized city hubs that need the same kind of reductions. Let the bubble burst at places like ATL and ORD and get back to a greater degree of point to point O&D nonstops like in the old days. Then you can get away from itineraries such as SEA-DFW-CLE costing less than a direct CLE-SEA flight (when it happens) and less reliance on squeezing "yield" from a full plane.