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enilria
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Will The US Evolve To This? FR Changes 400 Routes

Wed Apr 18, 2012 3:16 pm

This article says that RyanAir has dropped 130 routes in a year, but added 270. That pace of change is staggering. It's hard to imagine how an airline can even make money with that much churn and setup costs.

Do we think the USA will ever get like this in terms of a carrier shuffling routes with that kind of speed? G4 is not nearly so aggressive about dumping routes, for example.

http://www.anna.aero/2012/04/18/ryan...hts-in-nine-countries-this-summer/
 
mham001
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RE: Will The US Evolve To This? FR Changes 400 Routes

Wed Apr 18, 2012 3:41 pm

Will Canada? What does the USA have to do with this?
 
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enilria
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RE: Will The US Evolve To This? FR Changes 400 Routes

Wed Apr 18, 2012 4:02 pm

Quoting mham001 (Reply 1):

Will Canada? What does the USA have to do with this?

The U.S. has traditionally had the most well developed airline network in the world. If RyanAir has developed a model whereby it can make money while responding extremely quickly to demand changes it would follow that the model should also be in place in the world's largest air market.

I think what RyanAir really does is operate almost like a charter carrier does in the USA. They operate service on a route for a short period of time until the public is bored with it and then move on to something different. Again, this is not a model in place among scheduled airlines in the USA. Should it be?
 
LAXintl
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RE: Will The US Evolve To This? FR Changes 400 Routes

Wed Apr 18, 2012 4:16 pm

IMO nothing wrong with Ryanair practice. Routes simply need to produce or be cut. As market conditions change if a route becomes a marginal or a lemon its dropped.

And in the US, yes a few are already following that path.
Spirit for example have repeatedly said If a flight isn’t working, they will redeploy asset elsewhere. They are not chasing market share, but instead focus on individual segment profitability and will be on the search for ever better opportunities.
I believe a number they used at one of the investment conferences recently was that they expect upwards of 10-20% of routes to be discontinued within 1-year, and they hold a list of 100+ new segment opportunities they can replace the under performing markets with.
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toltommy
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RE: Will The US Evolve To This? FR Changes 400 Routes

Wed Apr 18, 2012 8:17 pm

Quoting enilria (Thread starter):
This article says that RyanAir has dropped 130 routes in a year, but added 270. That pace of change is staggering. It's hard to imagine how an airline can even make money with that much churn and setup costs

It's actually quite easy for Ryanair to do. In most cases, they simply do not bear the costs of the churn or startup. The airports themselves bear the costs. They want Ryanair to fly into the airport, and Ryanair uses them to their advantage. Ryanair gets reduced or waived landing fees, the airport hires a vendor to provide ground staff, I'll bet the airport even supplies a lot of the ground equipment.

I've seen Allegiant do the same thing here. They contract out the customer service function in many of their locations. Landing fee/airport charges are waived in many locations for them, so again, it's a turnkey operation. Easy to enter, easy to leave.
 
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RE: Will The US Evolve To This? FR Changes 400 Routes

Wed Apr 18, 2012 10:28 pm

i don't see how that kind of chaos is good for ANY organization of a certain size.
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RE: Will The US Evolve To This? FR Changes 400 Routes

Wed Apr 18, 2012 10:39 pm

And what about passengers who book flights and then the route is axed?

I couldn't imagine Ryanair gives refunds. Do they just send them an email saying "Sorry, you're SOL, we're not flying from X to Y anymore." ?
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LOWS
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RE: Will The US Evolve To This? FR Changes 400 Routes

Wed Apr 18, 2012 10:51 pm

Quoting Sevensixtyseven (Reply 6):
I couldn't imagine Ryanair gives refunds. Do they just send them an email saying "Sorry, you're SOL, we're not flying from X to Y anymore." ?

They would have to refund the money, at the very minimum. EU Regulations would prohibit otherwise.
 
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RE: Will The US Evolve To This? FR Changes 400 Routes

Wed Apr 18, 2012 10:53 pm

Does this have anything to do with subsidies? It's well known that FR doesn't like to operate to airports where they have to pay. In fact JOL has gone on record stating that airports should be paying airlines for the business they bring in, and not the other way around. Maybe, once the subsidy runs out they pack up and move away.
 
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RE: Will The US Evolve To This? FR Changes 400 Routes

Wed Apr 18, 2012 11:18 pm

Quoting enilria (Thread starter):
Do we think the USA will ever get like this in terms of a carrier shuffling routes with that kind of speed?

FR is one of the largest carriers in the EU providing "EU Domestic" service, based on the number, when UA, DL, US and WN started cutting capacity the numbers combined may be the same, no facts or figures just thinking in writing.

Quoting enilria (Reply 2):
The U.S. has traditionally had the most well developed airline network in the world.

Hmmmmm, you can start a whole thread with that comment  
 
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RE: Will The US Evolve To This? FR Changes 400 Routes

Wed Apr 18, 2012 11:21 pm

Quoting enilria (Reply 2):
I think what RyanAir really does is operate almost like a charter carrier does in the USA. They operate service on a route for a short period of time until the public is bored with it and then move on to something different.

I think it was an AnnaAero study recently that showed how the US/Europe LCC markets differs. Most SouthWest routes are daily at least, while FR have a large % of 1-2 weekly routes. these are the types of routes that FR are chopping and changing, their core daily+ routes are maintained and do very well.
And with a fleet of 290+ aircraft serving 165 airports, is 400 routes that big in % terms?

Quoting airbazar (Reply 8):
Does this have anything to do with subsidies?...........once the subsidy runs out they pack up and move away.

This is sometimes a factor, in recent times FR had a 5 year deal (think it was 5) with SNN and they had quite an operation. In 2010 once the deal was up FR demanded it be extended, the airport refused and so FR packed bags and moved 75% of their operation elsewhere. (But was still able to tap into the SNN market from KIR and NOC)

Quoting toltommy (Reply 4):
It's actually quite easy for Ryanair to do. In most cases, they simply do not bear the costs of the churn or startup. The airports themselves bear the costs. They want Ryanair to fly into the airport, and Ryanair uses them to their advantage.

Good point, in some cases the airport might only have FR flights. By not having large start-up costs the airline does not feel their have to wait for a RoI on the route.

(I read once that the bus service for CCF is timed to depart 30-45 minutes after an FR arrival. I know first hand that PGF does this)
 
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RE: Will The US Evolve To This? FR Changes 400 Routes

Wed Apr 18, 2012 11:53 pm

Quoting enilria (Thread starter):
Do we think the USA will ever get like this in terms of a carrier shuffling routes with that kind of speed? G4 is not nearly so aggressive about dumping routes, for example.

In a word, NO.

North America is a much more homogenous market. Consider that FR serves the U.K., Ireland, all of the EU including non-EU countries, and down into the Mediterranean market. Some tend to think of the EU as being monolithic but in fact, this is alot of countries and places to serve each with their own potential issues. The European debt crisis has wreaked havoc in some of these markets, and that's probably the reason for FR's route changes (probably not the whole reason, but part of it).

FR's route changes are in part issues with Airports and MOL's decision making, but more than likely it's that some routes had issues because of economic distress and some other routes were better for utilizing the aircraft and making money as a result. Remember, too, that this is an economic climate that's already brought down Malev, Blue Line, Spanair, Astreus, EuroCypria, and others.

It's hard to see north America having such geo-economic dislocations because it's only two major markets really, a few more if you count the Caribbean. Although there's geo-economic change from region to region in the United States, it's hard to imagine an economic difference the size of that between Greece and Germany happening between, say, Oregon and Texas.
 
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RE: Will The US Evolve To This? FR Changes 400 Routes

Thu Apr 19, 2012 12:13 am

Quoting GSPSPOT (Reply 5):
i don't see how that kind of chaos is good for ANY organization of a certain size.

I tend to agree.

Quoting Eagleboy (Reply 10):
This is sometimes a factor, in recent times FR had a 5 year deal (think it was 5) with SNN and they had quite an operation. In 2010 once the deal was up FR demanded it be extended, the airport refused and so FR packed bags and moved 75% of their operation elsewhere. (But was still able to tap into the SNN market from KIR and NOC)

Typical FR practice.

Overall though, FR make many moves across its network which look like new services but may actually just be re-comenced routes. Its the way its spun that usually gets the headlines as NEW routes.
 
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RE: Will The US Evolve To This? FR Changes 400 Routes

Thu Apr 19, 2012 12:44 am

This level of shuffling wouldn't work for a hub-and-spoke airline, which most US airlines are.

Southwest (debates about whether or not WN technically has hubs aside, they do have a very considerable point-to-point network) is probably the only airline that could make route changes on that scale (not saying they should or would, nor am I saying it would even be financially a good idea). So, they could hypothetically decide that instead of serving ABQ from A, B, and C, they'll serve it from D, E and F. That would be a relatively low cost change (provided that D, E and F are existing cities they already serve), but it counts as six routes that they've changed. Southwest could decide to do a reshuffling of that sort on a larger scale, and not impact the total number of cities they serve, but still wind up with a few dozen "route" changes.

Hub-and-spoke carriers, on the other hand, don't really have that much flexibility in their routings. Most large cities are already served nonstop from most (if not all) of their hubs. So, that leaves the smaller airports which are connected to just one hub. They could change which hub that city is served from (potentially DL could switch a Midwestern RJ flight from MSP to DTW), but the opportunities are much more scarce.
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enilria
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RE: Will The US Evolve To This? FR Changes 400 Routes

Thu Apr 19, 2012 1:49 am

Quoting LAXintl (Reply 3):
Spirit for example have repeatedly said If a flight isn’t working, they will redeploy asset elsewhere.
Quoting toltommy (Reply 4):
I've seen Allegiant do the same thing here.

Allegiant changes a tiny number of routes compared to RyanAir. On a % basis it is also true, although they are the most similar to FR in the USA.

Quoting toltommy (Reply 4):
It's actually quite easy for Ryanair to do.

Hard to imagine just from a training perspective.

Quoting Eagleboy (Reply 10):
Most SouthWest routes are daily at least, while FR have a large % of 1-2 weekly routes. these are the types of routes that FR are chopping and changing, their core daily+ routes are maintained and do very well.

Yes, but non-daily routes are getting more popular here and G4 has that same model.

Quoting Cargolex (Reply 11):
Quoting enilria (Thread starter):
Do we think the USA will ever get like this in terms of a carrier shuffling routes with that kind of speed? G4 is not nearly so aggressive about dumping routes, for example.

In a word, NO.

North America is a much more homogenous market.

Good comments. That may be the difference.

The other thing that I think is very interesting is that, for the most part, the U.S. LCCs are going back toward the larger airports and the opposite is happening in Europe. NK did add AZA, but they are hubbing DFW and ORD to mostly traditional airports like SAN and PDX. G4 has a mini-hub at LAX and a big one at LAS, both primary airports.
 
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RE: Will The US Evolve To This? FR Changes 400 Routes

Thu Apr 19, 2012 2:04 am

Quoting Cargolex (Reply 11):
Although there's geo-economic change from region to region in the United States, it's hard to imagine an economic difference the size of that between Greece and Germany happening between, say, Oregon and Texas.

What about between Mississippi and Massachusetts?
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RE: Will The US Evolve To This? FR Changes 400 Routes

Thu Apr 19, 2012 2:07 am

I think that the FR methodology on many things works because of the European climate, whereas, like what was mentioned above, the US is much more focused on the hub-and-spoke system, with the exception of perhaps WN/FL/G4.

Quoting enilria (Reply 14):
The other thing that I think is very interesting is that, for the most part, the U.S. LCCs are going back toward the larger airports and the opposite is happening in Europe. NK did add AZA, but they are hubbing DFW and ORD to mostly traditional airports like SAN and PDX. G4 has a mini-hub at LAX and a big one at LAS, both primary airports.

  
Exactly. FR can sustain this process because of their use of smaller airports that offer incentives to gain service to other, perhaps larger, markets.

This wouldn't work in the United States because even the LCCs use larger airports, and even if it's not a major international hub, the airports utilized are centrally located and (generally) offer easy access to a metropolitan region. Take WN, now using BOS where previously they touted MHT as the gateway to the Boston area.
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