NW748i
Topic Author
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CO And Skyteam

Fri Jul 20, 2007 12:14 am

Hi All,

I'm sitting here listening to the CO earnings call (which began about a half-hour ago). One of the analysts, Robert Barry, asked a good question: what is CO's take on DL's application to operate with AF/NW/KL as what is essentially an NW/KL style JV and why is CO not in on it?

CO's answer (my paraphrase) was that while they see Skyteam as important, they are happy going at it in a more 'singular' fashion.

I find this attitude somewhat worrisome, as it seems that CO is not really wanting to be a team player (no pun intended... sorta)

Can someone enlighten me as to why CO seems to want to remain somewhat peripheral in the alliance?

[Edited 2007-07-19 17:15:35]
Hail! to the victors valiant, Hail! to the conqu'ring heroes, Hail! Hail! to Michigan the leaders and best! Go Blue!
 
masseybrown
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RE: CO And Skyteam

Fri Jul 20, 2007 12:33 am

Quoting NW748i (Thread starter):
Can someone enlighten me as to why CO seems to want to remain somewhat peripheral in the alliance?

CO knows that codesharing doesn't make any money and they feel that their EWR and IAH hubs can support flights just about anywhere they want to fly themselves. Thus they only codeshare to destinations they cannot serve themselves but feel they must offer to their customers. They also feel that their product is very competitive and will win in the marketplace.

They don't think that anti-trust immunity offers them any profitable advantage at the moment.
 
NW748i
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RE: CO And Skyteam

Fri Jul 20, 2007 12:39 am

An addendum of sorts: Is it perhaps the case that CO was not invited by DL to join the immunity appliaction? Seeing as they compete rather fiercely with one of the 'co-leaders' in NYC and in the South, maybe they were left out? Certainly such competitive issues are aligned with MasseyBrown's thought immediately above.
Hail! to the victors valiant, Hail! to the conqu'ring heroes, Hail! Hail! to Michigan the leaders and best! Go Blue!
 
dutchjet
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RE: CO And Skyteam

Fri Jul 20, 2007 2:53 am

Quoting NW748i (Reply 2):
An addendum of sorts: Is it perhaps the case that CO was not invited by DL to join the immunity appliaction? Seeing as they compete rather fiercely with one of the 'co-leaders' in NYC and in the South, maybe they were left out?

My feeling is that CO wanted to left out of the application......while CO is a full SkyTeam member, there never has been any real interest by CO in closely alligning and coordinating with the other carriers in the alliance. CO and NW are well coordinated on US domestic schedules and codesharing, CO and KL do work together here and there, and thats about it aside from things like lounge access and FF programs. The KL/NW transatlantic deal works well for those airlines, but CO is not looking to ""joint venture"" on its (growing and very profitable) transatlantic network. DL has another agenda, DL and AF are moving closer and, I think, as Delta become more and more global in its operations, we will see more and more coordination between AF and DL.

As for the CO and DL relationship.....while both are growing their international networks and while both have big operations in the NYC area, the two airlines seem to be co-existing rather well without too much tension. Of course, DL and CO will get in each other's way from time to time, and we will occasionally see some ""off-color"" marketing with one of the airlines saying something not very kind about the other.....but the fact that CO is at EWR and DL is at JFK, and the fact that CO's EWR hub is a bit more connection oriented and DL's JFK hub/gateway is a bit more O&D oriented are subtle differences that seem to allow both airlines to grow and succeed without trying to kill each other. As long as both carriers produce profits, things will be OK.....if and when there is a downturn, things may become less pleasant between fellow Skyteam members CO and DL.

KL+NW have worked together for years and their relationship pre-dates SkyTeam, DL+AF are founding Skyteam members and are moving towards more coordination, and CO is the odd man out and will be on the perimeter of Skyteam, picking and choosing its alliances with airlines both inside and outside of the Skyteam group.

Its a different approach......and it probably will work out.
 
102IAHexpress
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RE: CO And Skyteam

Fri Jul 20, 2007 3:19 am

If CZ decides to enter the NYC market, which Skyteam operation will they choose, EWR or JFK?
 
fllcontinental
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RE: CO And Skyteam

Fri Jul 20, 2007 3:26 am

Quoting 102IAHexpress (Reply 4):
If CZ decides to enter the NYC market, which Skyteam operation will they choose, EWR or JFK?

I would probably say JFK but because of the little competition at EWR I'd say we'll have to wait.
 
Curiousflyer
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RE: CO And Skyteam

Fri Jul 20, 2007 3:36 am

Although CO cooperates less than other airlines in SkyTeam, when they do they do it pretty well. In particular, their website lets travellers enter other SkyTeam frequent flyer numbers, recognizes elites, gives them elite seating, elite access at check-in etc... with Delta, you need to make a phone call to get this taken care of.
 
Qazar
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RE: CO And Skyteam

Fri Jul 20, 2007 3:39 am

I like a lot what Dutchjet has to say with regards to this matter, and agree with it. For the sake of avoiding repetitive comments, I will not repeat any comments already eloquently expressed by Dutchjet.

However I must say that part of me feels an undercurrent in the US airline industry, and what ever it is I doubt that it will be anything concrete in the next year or two, but maybe on a longer term basis. I have a feeling that CO's membership in Skyteam will only be short-lived and quite frankly I was personnally surprised with its enrollement into the alliance when it was first announced.

United's latest comments about looking for a partner with a hub in the southern US, as well as how both airline's networks can be easily adjusted to be complementing to each other... I just can't help but forecast probable future defection on behalf of CO towards *A.

I know, I know,... I'm about to get clobbered by a lot of you, but what the heck!!! Give it to me, and I guess only time will tell.

Cheers!
 
Lemurs
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RE: CO And Skyteam

Fri Jul 20, 2007 3:50 am

Quoting CuriousFlyer (Reply 6):
Although CO cooperates less than other airlines in SkyTeam, when they do they do it pretty well. In particular, their website lets travellers enter other SkyTeam frequent flyer numbers, recognizes elites, gives them elite seating, elite access at check-in etc... with Delta, you need to make a phone call to get this taken care of.

It's actually very insidious on their part, if you ask me. Their booking engine will give you crazy routings through IAH and EWR for most flights before it will give you codeshared flights on partners...but they recognize Elite status and other very nice perks at the same time, as you said. Their goal is: "We'll make you like our service so much you'll want to fly our metal more."

Personally I like that a lot, but it's not always the best place to get fares to secondary and terrtiary cities when you're not near a CO hub.
There are 10 kinds of people in the world; those who understand binary, and those that don't.
 
CO777DAL
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RE: CO And Skyteam

Fri Jul 20, 2007 6:01 am

Speaking of code shares, does anyone know if CO is going to code share with Emirates on IAH-DXB? I would like to give CO my money, but I’m not going to be doing DAL-IAH-LGW-DXB and deal whole mess in the London, when I can go to DXB non stop from IAH.
Worked Hard. Flew Right. Farewell, Continental. Thanks for the memories.
 
worldtraveler
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RE: CO And Skyteam

Fri Jul 20, 2007 7:27 am

Quoting MasseyBrown (Reply 1):
CO knows that codesharing doesn't make any money and they feel that their EWR and IAH hubs can support flights just about anywhere they want to fly themselves.

plenty of airlines regularly quote how much additional revenue codesharing generates with very little investment.

Quoting NW748i (Reply 2):
An addendum of sorts: Is it perhaps the case that CO was not invited by DL to join the immunity appliaction?

Not really. ATI is a very complex process and no two US carriers currently hold it in the same alliance. DL and NW are asking for something that has never been done. NW's relationship with KL dictated that they would join DL and AF. CO doesn't have that relationship.

Quoting Dutchjet (Reply 3):
CO and NW are well coordinated on US domestic schedules and codesharing,

CO and NW CANNOT coordinate schedules. That is against the law - and why carriers seek ATI.

Quoting Qazar (Reply 7):
I have a feeling that CO's membership in Skyteam will only be short-lived and quite frankly I was personnally surprised with its enrollement into the alliance when it was first announced.

you may be right.

Quoting Qazar (Reply 7):
I just can't help but forecast probable future defection on behalf of CO towards *A.

but US has to leave Star first.
 
masseybrown
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RE: CO And Skyteam

Fri Jul 20, 2007 7:32 am

Quoting WorldTraveler (Reply 10):
plenty of airlines regularly quote how much additional revenue codesharing generates with very little investment.

Usually less than $100 million on which their profit is what? $2 million tops???? They sweep that much off the floor on Fridays. Codeshares exist only to please the customer base; they are not seriously profitable.
 
worldtraveler
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RE: CO And Skyteam

Fri Jul 20, 2007 9:28 am

you might want to read AMR's transcript... they quoted several hundred million dollars just in the most recent quarter. Whether $100 or three times that much, they don't spend anywhere near that amount to obtain it. It makes no sense not to go after it. I suggest until you study airline finances, you refraim from making comments which are clearly not correct. Companies don't make decisions solely to please customers.... they do them to make money. If airlines wanted to please customers, they'd send chauffer driven limos to pick customers up at home.
 
CO787EWR
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RE: CO And Skyteam

Fri Jul 20, 2007 12:19 pm

Quoting 102IAHexpress (Reply 4):

EWR would be better for sending people all over the east coast, isn't DL's hub at JFK more internationally oriented? Their is probably more O&D to JFK but EWR isn't that far from NYC.
 
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STT757
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RE: CO And Skyteam

Fri Jul 20, 2007 12:24 pm

Quoting CO787EWR (Reply 13):
but EWR isn't that far from NYC.

EWR is closer to all of Manhattan vs JFK.
Eastern Air lines flt # 701, EWR-MCO Boeing 757
 
masseybrown
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RE: CO And Skyteam

Fri Jul 20, 2007 1:02 pm

Quoting NW748i (Reply 2):



Quoting WorldTraveler (Reply 12):
you might want to read AMR's transcript... they quoted several hundred million dollars just in the most recent quarter. Whether $100 or three times that much, they don't spend anywhere near that amount to obtain it. It makes no sense not to go after it. I suggest until you study airline finances, you refraim from making comments which are clearly not correct.

Mmmm...so I listened to CFO Horton's remarks during the conference call. While he specified every profitable item in their revenue line and highlighted the capex items devoted to productivity, he never once mentioned codesharing. Why do you suppose that is?

Because codesharing is not very profitable. AMR's margin was 3.5% on average revenue. If you consider that codeshare revs are segment- not trip-related and often less than average yield, add the expense of interlining, then deduct the commission to the selling airline, you have just about reduced the margin to zero.
 
USPIT10L
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RE: CO And Skyteam

Fri Jul 20, 2007 2:19 pm

Quoting WorldTraveler (Reply 10):

Or after CO and UA merge. That alone would force US' hand and make them leave the alliance.
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NW748i
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RE: CO And Skyteam

Fri Jul 20, 2007 10:10 pm

Quoting WorldTraveler (Reply 10):
but US has to leave Star first.

While I realize that US was in the alliance before the airline went the LCC route, I'm somewhat puzzled that they've remained a member... Last I heard LCC EI was leaving oneWorld. Any update on that? Are there any other LCC's in the alliances?
Hail! to the victors valiant, Hail! to the conqu'ring heroes, Hail! Hail! to Michigan the leaders and best! Go Blue!
 
ti717
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RE: CO And Skyteam

Fri Jul 20, 2007 11:06 pm

I still think that VS, EK,SQ, and CO will Start their own Alliances. I know a few of them are currently tied up.





[Edited 2007-07-20 16:12:17]
Sir, don't you think we should turn on the runway lights?" "No, that's just what there expecting us to do!"
 
Delta787
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RE: CO And Skyteam

Fri Jul 20, 2007 11:09 pm

Quoting NW748i (Reply 17):
Last I heard LCC EI was leaving oneWorld. Any update on that?

EI left OneWorld earlier this year.
Fly Delta!
 
panamair
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RE: CO And Skyteam

Fri Jul 20, 2007 11:50 pm

Quoting STT757 (Reply 14):

EWR is closer to all of Manhattan vs JFK.

Huh? How do you figure that especially when one lives on the East Side?

According to the PA, JFK is 15 miles from mid-town, LGA is 8 miles, and EWR is 16 miles...

[Edited 2007-07-20 17:07:34]
 
FoxBravo
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RE: CO And Skyteam

Sat Jul 21, 2007 12:01 am

Quoting STT757 (Reply 14):
EWR is closer to all of Manhattan vs JFK.

As the crow flies, yes, but distance does not always equal time. From the east side of Manhattan, it usually takes less time to get to JFK than to EWR (although there are obviously many variables).
Common sense is not so common. -Voltaire
 
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STT757
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RE: CO And Skyteam

Sat Jul 21, 2007 12:11 am

Quoting Panamair (Reply 20):
Huh? How do you figure that especially when one lives on the East Side?

If you have access to Google Earth use their measurement tool to measure the distance in miles between any point in Manhattan and EWR and JFK.

Quoting Panamair (Reply 20):

Huh? How do you figure that especially when one lives on the East Side?



Quoting FoxBravo (Reply 21):
As the crow flies, yes, but distance does not always equal time. From the east side of Manhattan, it usually takes less time to get to JFK than to EWR (although there are obviously many variables).

From the Metropolitan Musuem of Art to the Administration building of EWR, 18.17 miles. 30 Minutes

Driving Directions from 1000 5th Ave, New York, NY to Newark, NJ

From the Met to JFK's Administration building: 18.18 miles, 30 minutes.

Driving Directions from 1000 5th Ave, New York, NY to Jamaica, NY
Eastern Air lines flt # 701, EWR-MCO Boeing 757
 
ChiGB1973
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RE: CO And Skyteam

Sat Jul 21, 2007 12:12 am

Quoting MasseyBrown (Reply 15):
se codesharing is not very profitable. AMR's margin was 3.5% on average revenue. If you consider that codeshare revs are segment- not trip-related and often less than average yield, add the expense of interlining, then deduct the commission to the selling airline, you have just about reduced the margin to zero.

Are you taking into account the business lost without codeshares? I couldn't begin to know what the losses would be, but I am thinking substantial.

Quoting MasseyBrown (Reply 1):
CO knows that codesharing doesn't make any money and they feel that their EWR and IAH hubs can support flights just about anywhere they want to fly themselves

Where they want to fly themselves is really not the purpose, it's flying where your customers want to go. With the codeshare, they make something, even if it's marginal.

You make it seem CO could drop the codeshare and not suffer.

M
 
Lemurs
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RE: CO And Skyteam

Sat Jul 21, 2007 1:51 am

Quoting WorldTraveler (Reply 10):
CO and NW CANNOT coordinate schedules. That is against the law - and why carriers seek ATI.

They can't collude to make their schedules line up, but if it happens on it's own, that's fine. Dutchjet is just pointing out the obvious...with their hubs and the natural scheduling of banks at those hubs, CO and NW have a very compatible set of networks for moving pax between each other. They don't have to go out of their way to make it NOT work, as you seem to be implying.
There are 10 kinds of people in the world; those who understand binary, and those that don't.
 
masseybrown
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RE: CO And Skyteam

Sat Jul 21, 2007 2:21 am

Quoting ChiGB1973 (Reply 23):
Where they want to fly themselves is really not the purpose, it's flying where your customers want to go. With the codeshare, they make something, even if it's marginal.

OK, I guess an example would be Taiwan. CO would probably like to fly to Taipei, but Taiwan makes profit difficult for foreign airlines, so they codeshare with EVA. They please their FF base and make a bit of money. I believe they also have a couple of mail-only codeshares on Asian routes they can't or won't operate on their own.
 
NW748i
Topic Author
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RE: CO And Skyteam

Sat Jul 21, 2007 3:05 am

Quoting ChiGB1973 (Reply 23):
Are you taking into account the business lost without codeshares?

The opportunity cost factor... most astute!

Quoting MasseyBrown (Reply 25):
Taiwan makes profit difficult for foreign airlines, so they codeshare with EVA.

Couldn't they do that with NW. I remember a few years ago NW did have a DTW-TPE flight with a stop in SEA... what happened to that? Looking at the ST PocketPC Schedule (dated from April) I see that NW's only flight to TPE was from KIX. EVA is now codesharing with NW/CO out of SEA and SFO. Any word of EVA joining an alliance???
Hail! to the victors valiant, Hail! to the conqu'ring heroes, Hail! Hail! to Michigan the leaders and best! Go Blue!
 
FoxBravo
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RE: CO And Skyteam

Sat Jul 21, 2007 3:44 am

Quoting STT757 (Reply 22):
If you have access to Google Earth use their measurement tool to measure the distance in miles between any point in Manhattan and EWR and JFK.

Again, maybe as the crow flies, but not when you take roads and river crossings into account. I am not going to post my home address here for obvious reasons, but suffice to say it's on the east side of Manhattan. I just typed it into Mapquest and found 16.14 miles and 28 minutes to JFK, but 17.79 miles and 29 minutes to EWR. If you want another concrete example, try the UN, at 404 E 42nd St., and see what you come up with.

Quoting STT757 (Reply 22):
From the Metropolitan Musuem of Art to the Administration building of EWR, 18.17 miles. 30 Minutes

Driving Directions from 1000 5th Ave, New York, NY to Newark, NJ

From the Met to JFK's Administration building: 18.18 miles, 30 minutes.

Driving Directions from 1000 5th Ave, New York, NY to Jamaica, NY

The Metropolitan Museum is not really a good example of the east side. Fifth Avenue is the dividing line, and the Met is on the west side of it.

Even so, these timing estimates are based solely on distance and don't take traffic into account. Maybe it would take the same amount of time at 3am when roads are empty, but as a Manhattan resident who travels frequently, I can tell you that under normal traffic conditions it would take less time to get from the Met to JFK than to EWR.
Common sense is not so common. -Voltaire
 
masseybrown
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RE: CO And Skyteam

Sat Jul 21, 2007 3:55 am

Quoting ChiGB1973 (Reply 23):
Are you taking into account the business lost without codeshares? I couldn't begin to know what the losses would be, but I am thinking substantial.

No, I'm not. I have no idea what they might be. I am thinking not so substantial, however, since codesharing doesn't represent even a 10% share of any US line's revenues. (Maybe in Europe the percentage would get that high; they've always been more comfortable in cartel arrangements.)

I'm more than willing to learn if there are supporting numbers that say codesharing is a gold mine.
 
Falcon84
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RE: CO And Skyteam

Sat Jul 21, 2007 4:19 am

Quoting Lemurs (Reply 8):
It's actually very insidious on their part, if you ask me. Their booking engine will give you crazy routings through IAH and EWR for most flights before it will give you codeshared flights on partners

Nothing insidious about that at all. When I look for flights on SHARES, it will ALWAYS put CO routing, even with single/double connections first, then go to other carriers next-usually DL/NW flights show up because they're Skyteam partners, then other airlines, usually with AA/UA last on the list. All airline, on their computers, put their service first-be it with single/double connections, in an effort to get their metal booked first, and not have it farmed out, thorugh their system, to other airlines.

Quoting USPIT10L (Reply 16):
Or after CO and UA merge.

Not happening.

But I can see CO leaving Skyteam for another alliance-especially if it can help them get easier access to LHR.
Work Right, Fly Hard
 
CO787EWR
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RE: CO And Skyteam

Sat Jul 21, 2007 4:57 am

Quoting Ti717 (Reply 18):

Lacking in South America and Europe and they need a western US carrier

Also SQ and EK dont like eachother
 
102IAHexpress
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RE: CO And Skyteam

Sat Jul 21, 2007 6:07 am

I’m not sure if it would be wise for CO to leave Skyteam. EWR is a large Skyteam hub with AF, AZ, KL, DL and NW. And IAH is a large Skyteam hub as well with AF, AM, KL, DL, NW and possibly KE.
CO’s relationship with it’s Skyteam partners at IAH and EWR may not be cozy, but if you’re going to have all those carriers at your biggest hubs, then you might as well work with them.
 
CO777DAL
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RE: CO And Skyteam

Sat Jul 21, 2007 6:49 am

Quoting Ti717 (Reply 18):
I still think that VS, EK,SQ, and CO will Start their own Alliances. I know a few of them are currently tied up.

 bigthumbsup   crossfingers 
That is an alliance made in Heaven!!! At least for me, I would be so happy. Get me everywhere I need to go and back. CO would need to beef up service thou if that happened. Welcome to my Respected Members list. That map made my day! Well at least one can dream.

One little thing, you forgot DXB-IAH on EK.
Worked Hard. Flew Right. Farewell, Continental. Thanks for the memories.
 
ConcordeBoy
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RE: CO And Skyteam

Sat Jul 21, 2007 8:03 am

Quoting WorldTraveler (Reply 12):
they don't spend anywhere near that amount to obtain it. It makes no sense not to go after it.

...particularly when one considers the opportunity-cost(s) of not offering it.

Quoting CO787EWR (Reply 13):
Their is probably more O&D to JFK but EWR isn't that far from NYC.

Contrary to popular belief, and despite their hub/major carriers' operational setups... EWR is actually the more O&D reliant of the NYC intercon hubs, not JFK*



*circa 2004, utilizing the last full year of publicized numbers
Faire du ciel le plus bel endroit de la terre c'est impossible sans Concorde!
 
CO787EWR
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RE: CO And Skyteam

Sat Jul 21, 2007 10:33 am

Quoting ConcordeBoy (Reply 33):

Can i see that its not that i don't believe you, I always been said that JFK is O&D, then why don't carriers choose EWR over JFK(more diversity at JFK vs EWR).
 
worldtraveler
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RE: CO And Skyteam

Sat Jul 21, 2007 10:43 am

It's not hard to believe EWR is more O&D focused. The average int'l aircraft size at EWR is lower than at JFK because of the use of 757s and 762s, aircraft which are not seen alot at JFK for int'l flights. Also, the foreign flags are much larger at JFK and they pump lots of traffic into their hubs for connections. AF doesn't fill all 5 or 6 of those 777s and 747s with local passengers... plus, CO serves alot of unique destinations for NYC from EWR. As DL goes after additional unique markets from JFK and starts using 757s, the mix will change a little bit back in favor of O&D at JFK.
 
deltairlines
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RE: CO And Skyteam

Sat Jul 21, 2007 11:52 am

Also, from Midtown, I'd argue that JFK is much more accessible via mass transit. There are 3-4 trains an hour from NYP to EWR; LIRR has about 7-8 trains an hour from NYP to Jamaica (this is during off-peak hours; peak to EWR has about 5 trains/hour; peak to Jamaica is about 10 trains/hour). Considering you've got to take another train to the terminals (monorail at EWR; AirTrain at JFK) that takes about 5 minutes each to the terminal, there are a lot more choices to JFK. That doesn't take into account that the train to Jamaica is about 5-10 minutes faster than the train to EWR (I'm seeing the fastest NYP-EWR train is 21 minutes but most are around 25 minutes; NYP-Jamaica only takes about 20 minutes; fastest train around 18 minutes). Not a huge difference, but a little bit more convenient out of NYP. Also, from downtown via mass transit, it's 30 minutes on the A train through Brooklyn; it's 22 minutes from WTC to Newark-Penn via Path, plus having to connect to another train to get to EWR, so the fastest it can be done is within about 30 minutes if everything is timed perfectly; the connection at Newark just adds the likely possibility of it taking longer due to the fewer EWR trains.
 
Qazar
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RE: CO And Skyteam

Sun Jul 22, 2007 1:40 am

Quoting Ti717 (Reply 18):
I still think that VS, EK,SQ, and CO will Start their own Alliances. I know a few of them are currently tied up.

Cute!!!

But..... no!!!

Although I like a lot your route map... And quite frankly when I looked at it I thought to myself: hmmmmm... That's actually not bad coverage for an alliance..... but, still no!!!

I believe that SQ is actually quite happy with Star Alliance. Thai is the airline that had once raised its voice at SQ's induction and was threatening to defect to SkyTeam. I believe LH had gotten involved in that discussion and used the European market as an example by demonstrating that all airlines were enjoying substantial benefits even though many of their direct competitors were inducted in the same alliance (Keep your friends close and your enemies closer!!!). I haven't heard anything since so I assume everyone is happy.

VS after years of bitching about alliances are on the verge of realizing that they were wrong... The whole BMI thing is complicating the matter, but eventually I forsee a merger and an induction into Star. Call me crazy, but how can anyone not see how perfectly compatible BMI and Virgin are!!!

Besides, VS doesn't have the European network necessary to give it the added value for a global alliance. Its present network is perfect for admission to an existing alliance who wants to take advantage of the great London O&D traffic and LHR slots!!!

Emirates played their game wrong. They completely underestimated the value the alliances bring to the global traveller concentrating instead on offering their clients a limited network with the promise of enormous expansion. They have undoubtedly managed to reach an expansion rate that goes beyond any airline in history for as long as my memory serves me correctly, but regardless of how much they grow they can never compare to the netwrok of any of the alliances. With Egyptair, Qatar, Air India and Indian joining (or eventually joining) Star, Emirates' chance to join the largest global alliance is pretty much gone. And for an airline who's always boasted that bigger is better, they find themselves now having to settle for a 2nd best alliance!

I personally believe that Emirates would make a great addition to an alliance especially with its extensive regional and international route network. Emirates network can account for the needs of an alliance to offer their clients access to both the Gulf and Indian market giving the alliance the opportunity to induct only 1 member instead of 2 for these 2 regions. Add to that the very famous Dubai hub which serves as both a connecting hub and a O&D destination, and Emirates' dowry becomes quite interesting.

Cheers!
 
EXAAUADL
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RE: CO And Skyteam

Sun Jul 22, 2007 1:45 am

Quoting MasseyBrown (Reply 1):
Quoting NW748i (Thread starter):
Can someone enlighten me as to why CO seems to want to remain somewhat peripheral in the alliance?


CO knows that codesharing doesn't make any money and they feel that their EWR and IAH hubs can support flights just about anywhere they want to fly themselves

You obviously have never seen the financial impact from JVs.
 
captaink
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Joined: Wed May 23, 2001 10:43 am

RE: CO And Skyteam

Sun Jul 22, 2007 1:49 am

Quoting NW748i (Reply 17):
While I realize that US was in the alliance before the airline went the LCC route, I'm somewhat puzzled that they've remained a member... Last I heard LCC EI was leaving oneWorld. Any update on that? Are there any other LCC's in the alliances

Isn't US a Low Fare Carrier, which is slightly different from a LCC? US serves international and domestic destinations with two classes, quite like the other carriers in Star. Granted it may be said that their service is not on par, but it is not a one class of service LCC the likes of WN, or B6, it is a US Legacy carrier with two class service.
There is something special about planes....
 
kiwiandrew

RE: CO And Skyteam

Sun Jul 22, 2007 2:03 am

I think the biggest factor in all this is what happens to NW , I simply cannot see them surviving on their own and the moment that they are absorbed by either DL or AA that would negate the "golden share" paving the way for CO to "merge" with UA ( ie take over UA with headquarters in Houston , CO management team but the UA name ) and suddenly it will be goodbye Skyteam hello Star .
 
dutchjet
Posts: 7714
Joined: Sat Oct 14, 2000 6:13 am

RE: CO And Skyteam

Sun Jul 22, 2007 2:05 am

Quoting Kiwiandrew (Reply 40):
I think the biggest factor in all this is what happens to NW , I simply cannot see them surviving on their own and the moment that they are absorbed by either DL or AA that would negate the "golden share" paving the way for CO to "merge" with UA ( ie take over UA with headquarters in Houston , CO management team but the UA name ) and suddenly it will be goodbye Skyteam hello Star

I really really hope that you are very very wrong about this.  Sad
 
masseybrown
Posts: 4413
Joined: Wed Dec 11, 2002 2:40 pm

RE: CO And Skyteam

Sun Jul 22, 2007 2:39 am

Quoting EXAAUADL (Reply 38):
You obviously have never seen the financial impact from JVs.

No I never have. Do you want to offer some data? All we ever see here is enthusiasm, never profit numbers.
 
worldtraveler
Posts: 3417
Joined: Tue Aug 05, 2003 6:18 am

RE: CO And Skyteam

Sun Jul 22, 2007 10:45 am

Quoting MasseyBrown (Reply 42):
Quoting EXAAUADL (Reply 38):
You obviously have never seen the financial impact from JVs.


No I never have. Do you want to offer some data? All we ever see here is enthusiasm, never profit numbers.

There is plenty said in AA, DL, NW, or UA's SEC filings for you to gain a very good understanding of the value of antitrust immunity, codesharing, and joint ventures. The actual numbers will not be made public but the fact that 4 out of 6 US network airlines have them pretty well says that there is something to the idea. And the fact that CO and US don't says more about the fact that they were squeezed away from the table by bigger partners than that they wouldn't take the money if they could - even if they try and tell you how happy they are on their own.

Quoting Dutchjet (Reply 41):
Quoting Kiwiandrew (Reply 40):
I think the biggest factor in all this is what happens to NW , I simply cannot see them surviving on their own and the moment that they are absorbed by either DL or AA that would negate the "golden share" paving the way for CO to "merge" with UA ( ie take over UA with headquarters in Houston , CO management team but the UA name ) and suddenly it will be goodbye Skyteam hello Star

I really really hope that you are very very wrong about this.

It is just about inevitable that NW will not survive as an independent airline. The 3 global alliances need precisely 3 US carriers to fill out their alliances - not 6. There is room for a carrier like CO that can be independent but even their management knows that if consolidation occurs in the US industry, CO has to participate. Skyteam is already US carrier heavy so it is very likely that whatever scenario plays out will involve CO getting the boot since DL and NW already have much deeper ties with AF and KL and those ties are growing stronger by the day.

CO's best defense to alliance musical chairs is to be in the position of acquirer so that they can dictate the terms of the takeover. But you can bet that no alliance will let CO acquire their US partner unless CO agrees to play nicely with the other carriers in the alliance.
 
masseybrown
Posts: 4413
Joined: Wed Dec 11, 2002 2:40 pm

RE: CO And Skyteam

Sun Jul 22, 2007 2:36 pm

Quoting WorldTraveler (Reply 43):
The actual numbers will not be made public but the fact that 4 out of 6 US network airlines have them pretty well says that there is something to the idea.

OK, I'll stop talking until I can offer more data myself. I never claimed codeshares were worthless, only that they are minimally profitable. As always, I claim the right to be wrong.
 
lijnden
Posts: 528
Joined: Wed Apr 02, 2003 1:34 am

RE: CO And Skyteam

Sun Jul 22, 2007 7:06 pm

I think that there are other factors involved; the anti-trust laws of both sides of the pond. If you look good at the whole open skies deal you'll find that one major US carrier is close to one major EU carrier (UA+LH, AA+BA, AF+DL, KL+NW). In the past weeks we all know that AF/KL has made an offer to buy Iberia and stepped away from AZ (the 'former' partner of CO). Iberia is a very good candidate not only for AF/KL, but also for CO. So, I think we will see CO+IB added to the list soon!
Be kind to animals! Next trip: ORF-ORD-NRT-IAH-ORF
 
dutchjet
Posts: 7714
Joined: Sat Oct 14, 2000 6:13 am

RE: CO And Skyteam

Sun Jul 22, 2007 10:09 pm

Quoting WorldTraveler (Reply 43):
There is room for a carrier like CO that can be independent

Good to hear.

Quoting WorldTraveler (Reply 43):
It is just about inevitable that NW will not survive as an independent airline.



Quoting WorldTraveler (Reply 43):
Skyteam is already US carrier heavy so it is very likely that whatever scenario plays out will involve CO getting the boot since DL and NW already have much deeper ties with AF and KL and those ties are growing stronger by the day.

But if NW does not survive, arent they out of SkyTeam? If its DL+NW, then there are only 2 US carriers in Skyteam, mega Delta and CO.

Quoting WorldTraveler (Reply 43):
But you can bet that no alliance will let CO acquire their US partner unless CO agrees to play nicely with the other carriers in the alliance.

Alliances and alliance membership will not be a huge factor in the consolidation of the US airline industry. Its not such a big deal.

--------------------

Anyway, I thought that DL was taking over NW, UA and AS?
 
worldtraveler
Posts: 3417
Joined: Tue Aug 05, 2003 6:18 am

RE: CO And Skyteam

Sun Jul 22, 2007 10:19 pm

Quoting MasseyBrown (Reply 44):
OK, I'll stop talking until I can offer more data myself. I never claimed codeshares were worthless, only that they are minimally profitable. As always, I claim the right to be wrong.

thank you for being a gentleman. I would also mention that the Euro carriers are pushing the concept just as hard.

Quoting Lijnden (Reply 45):
So, I think we will see CO+IB added to the list soon!

But CO can't buy IB and control them. AF, LH, or BA can which benefits their US partners.

Quoting Dutchjet (Reply 46):
But if NW does not survive, arent they out of SkyTeam?

Depends on who buys them. I would be more likely to bet that DL will be the acquirer in which case NW stays part of Skyteam. If its AA - then dynamics change. Right now, DL's balance sheet is in a better position to acquire someone that AMR's. And I don't even want to think about the labor implications of having AA and NW labor under the same umbrella. Phew!

Quoting Dutchjet (Reply 46):
If its DL+NW, then there are only 2 US carriers in Skyteam, mega Delta and CO.

Except that if consolidation among the big six starts, CO goes somewhere.... either they are an acquirer of someone like UA - which they seem to support - or they are acquired.

Quoting Dutchjet (Reply 46):
Anyway, I thought that DL was taking over NW, UA and AS?

The operative word is OR.  
DL said during its BK reorg that it expects to be a survivor and acquirer. They have a long history of acquisitions so they can certainly do it. Other carriers seem more interested in the bottom line at the expense of running their airline as a quality company. I still see the industry consolidating along CO/UA and DL/NW lines with AA going after AS or US (perhaps only parts of it).
DL is also building a worldwide and nationwide network such that isn't necessary for it to merge with someone in order to fill in the holes in its network. And while I think they will fill in some of the holes, they will still be weaker in some areas like the Midwest and Asia than other carriers. That's why NW or parts of UA make sense to DL.

I don't think any Board will rush into mergers but when the time is right - ie carriers start losing money and it becomes apparent that one or two are doing worse than the rest - then consolidation will occur with the better performing carriers becoming the survivors.

Quoting Dutchjet (Reply 46):
Alliances and alliance membership will not be a huge factor in the consolidation of the US airline industry.

In so much as foreign carriers do not have ownership stakes in US carriers, I agree with you. The Boards of each of those US carriers will do what is in the best interest of their company. However, each of the carriers have built their networks around their alliances and it is very problematic and risky to decide to ditch those relationships and restructure their networks and entire business model around a new alliance. The more deeply related US and EU carriers get, the harder it will be to separate them without having major difficulties - just like in marriage.

CO and US' relative lack of involvement in alliances compared with the other 4 network carriers makes them more flexible but also makes them more vulnerable. They will have to eventually fit in with one of the alliances or be left to fend for themselves.

[Edited 2007-07-22 15:32:40]
 
max999
Posts: 946
Joined: Fri Dec 09, 2005 11:05 am

RE: CO And Skyteam

Sun Jul 22, 2007 11:57 pm

Quoting Kiwiandrew (Reply 40):
I think the biggest factor in all this is what happens to NW , I simply cannot see them surviving on their own and the moment that they are absorbed by either DL or AA that would negate the "golden share" paving the way for CO to "merge" with UA ( ie take over UA with headquarters in Houston , CO management team but the UA name ) and suddenly it will be goodbye Skyteam hello Star .

It has been mentioned many times on a.net that CO will take over UA. But has anyone considered the fact that the only thing CO wants out of UA is its Asian operations and nothing else?

Currently, CO has a strong trans-Atlantic network; probably even stronger than UA's. Their domestic network is competitive with all of the other legacies. When compared to UA, the only weak point for CO is its Asian operations. CO is desparate to grow its Asian routes and buying UA's Asian operations would be a quick way to do just that.

I think CO wants to do what UA did decades ago when they bought Pan Am's Asian operations only; UA didn't pick up all of PA. Unless UA is near financial collapse, their management will not sell the company in bits and pieces. So if CO really wanted UA, they would have to merge with the entire company and I don't think that's what they want.

PS
If CO was able to pick up UA's Asian operations...I think the only things they want are the staff and the routes/authorities; the UA Asian fleet is not right for CO. CO doesn't want to fly 747's (too big for them) and UA's 777s don't fly the max range because of the derated P&W engines. CO would rather fly to Asia with its existing 777 fleet and with the upcoming 787's.
All the things I really like to do are either immoral, illegal, or fattening.
 
kiwiandrew

RE: CO And Skyteam

Mon Jul 23, 2007 12:25 am

Quoting Max999 (Reply 48):
It has been mentioned many times on a.net that CO will take over UA. But has anyone considered the fact that the only thing CO wants out of UA is its Asian operations and nothing else?

I would think that CO would also want the DEN and SFO hubs as CO currently lack any sort of hubs in the West , while ORD , congested though it is serves some very important high yield business markets and of course being slot restricted the only real way to increase your presence there is to acquire an incumbent carrier . The only existing UA hub that I dont see as offering huge value to CO is IAD - but as the IAD-BJS and IAD-KWI routes seem to show there are still a lot of possibilities for making money there too

UA also hold a number of LHR slots ( sadly not as many as they once did , although I believe that some of them have only been leased out and in theory could be reclaimed ) remember that Open Skies does not guarantee availability of slots and the easiest way to get hold of some would be to get hold of UA

Waiting until UA is sold off in bits and pieces is a high risk strategy ( assuming that does eventually happen ) who is to say that someone else ( DL / AA ) wouldn't outbid CO for the Asian routes .

I agree that it would be a big risk for CO to take over UA , but if any airline could successfully pull it off my money would be on CO to make it work . Of course all this is hypothetical if NW manages to cling on to life independently , but in comparison to DL the post Chapter 11 NW does not seem to be impressing anyone very much so far

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