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tphuang
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 7:26 pm

Jerseyguy wrote:
tphuang wrote:
I think long term, WN leaving EWR will actually be good for competition at EWR. WN was never really competitive on most of those routes out of EWR. WN leaving + COVID caused reductions will allow B6 and ULCCs to really expand at EWR. B6 had been slot/gate constrained at EWR for a long time and that's not an issue anymore. On many routes, B6 gets just as high yield at EWR as JFK and higher than at LGA. I think you will see over time, B6 will provide real competition to UA as it adds more routes out of EWR over the next few years. And on a lot of remaining routes, NK/F9 will provide sustainable long fare competition that was simply unsustainable for WN.

WN will get more slots at LGA and not return to EWR.


Where do you think B6 will expand to...more flights to florida? Are they going to try to go at long flight like SEA, LAS, LAX? I would love to see competition at Newark, once they get rid of Terminal A even betterr

I think more island stuff is likely + leisure stuff like MSY/LAS/ACK and to LAX if they can get enough mint A321s.
 
Jo8338
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 7:26 pm

The only think WN needs from AA is some 738’s on the cheap. I think that will happen when AA cancels leases in bankruptcy.
 
EWRandMDW
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 8:31 pm

I think WN made a huge mistake in pulling out of EWR. I flew MDW-EWR-MDW a number of times and the flights were always 3/4 or more full. That suggests to me that many other passengers decided LGA was not the right choice for them. Surely WN's management must realize that NJ is not NYC and doesn't necessarily want to be. That would be like calling Texas South Oklahoma. To me it'll be stupid to fly into LGA and then have to work my way back to NJ, often passing EWR, to get where I'm going.
 
williaminsd
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 9:02 pm

DfwRevolution wrote:
kiowa wrote:
williaminsd wrote:
And why wouldn't they? The same capitalism and competition that affords us cheap fares and great frequencies affords the ability for the well-positioned to crush weaker counterparts. It also keeps these competitors sharp and responsive to the flying public to avoid extinction. These executives run Southwest Airlines, not the "Weak Airline Charity Foundation." They are doing exactly what I would expect. It's up to the other airlines to execute the appropriate response.


Didn't Southwest suck up the same taxpayer dollars as the other airlines with the latest government bailout? That is not capitalism or competition. Those words don't even belong in the US airline lexicon for many years to come or until the government gets paid back.


CARES Act is better categorized as disaster relief than a bailout. And I say that as the resident cool-blooded, small government capitalist.


A valid point...
 
NLINK
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 9:24 pm

What helps Southwest a lot is minimal international exposure and not hundreds of tiny jets for those tiny markets. They have the mentality that basically on mid sized and up cities are all they need to serve and people will drive to take them which works.
 
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SEPilot
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 10:57 pm

The airline business is brutally competitive, and WN has gotten to the place they are by being better brutal competitors than the rest. So what does that entail? Strong finances (low debt), efficient use of personnel and equipment, and aggressive pursuit of any advantage that presents themselves, as well as doing their utmost to please their customers. Why should they not do it now? I have not flown domestically recently (all my flights in the past 6+ years has been to the Philippines) but prior to that I had a stepdaughter in Florida (she has now moved here, and in fact is renting from me) and so my late wife and I would fly to Florida once a year. We found WN to be by far the most pleasant experience and did not even look at the others after our first flight with them. If I do need to fly domestically again they will be my first choice. Largely because of their low debt position they are better prepared than any of the other carriers to ride out and take advantage of the present crisis. Ironically the MAX situation is working very much to their advantage, as all of their new planes are MAXs, and so they have not taken delivery of any new ones in over a year, and hence do not have payments on them to worry about. That is certainly helping their financial position, as any planes they park are going to be fully paid for, and likely overdue for retirement. Other carriers, who have more varied fleets, are facing much more painful choices, especially if they have a lot of brand new widebodies that they now cannot fill but still have to pay for. I fully expect WN to take every advantage of this situation that they can.
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wnflyguy
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 2:43 am

[twoid][/twoid]
EWRandMDW wrote:
I think WN made a huge mistake in pulling out of EWR. I flew MDW-EWR-MDW a number of times and the flights were always 3/4 or more full. That suggests to me that many other passengers decided LGA was not the right choice for them. Surely WN's management must realize that NJ is not NYC and doesn't necessarily want to be. That would be like calling Texas South Oklahoma. To me it'll be stupid to fly into LGA and then have to work my way back to NJ, often passing EWR, to get where I'm going.


WN had a MAX problem.
Lack of aircraft and aircraft time to cover the equivalent of 34 aircraft. To fix that problem it saw an opportunity to rebook it's customers via LGA by eliminating EWR.
WN will be back at EWR in my the future.

Flyguy
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HVN2HEL2LAX
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 3:18 am

SEPilot wrote:
The airline business is brutally competitive, and WN has gotten to the place they are by being better brutal competitors than the rest. So what does that entail? Strong finances (low debt), efficient use of personnel and equipment, and aggressive pursuit of any advantage that presents themselves, as well as doing their utmost to please their customers.


Don't forget...they also get really friendly w/ FAA inspectors to "look the other way", "forget" ADs, hire old (drunk) FAA Administrator to help schmooze their way around/through FAA red tape and call in favors, and amazing PR folks who help everyone forget about their accidents.
 
alasizon
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 3:35 am

HVN2HEL2LAX wrote:
SEPilot wrote:
The airline business is brutally competitive, and WN has gotten to the place they are by being better brutal competitors than the rest. So what does that entail? Strong finances (low debt), efficient use of personnel and equipment, and aggressive pursuit of any advantage that presents themselves, as well as doing their utmost to please their customers.


Don't forget...they also get really friendly w/ FAA inspectors to "look the other way", "forget" ADs, hire old (drunk) FAA Administrator to help schmooze their way around/through FAA red tape and call in favors, and amazing PR folks who help everyone forget about their accidents.


Pretty sure WN has burned through most of their goodwill with the FAA compared to the US3.

NLINK wrote:
What helps Southwest a lot is minimal international exposure and not hundreds of tiny jets for those tiny markets. They have the mentality that basically on mid sized and up cities are all they need to serve and people will drive to take them which works.

The lack of RJs also hurts them when it comes to network connectivity. Not saying either model is better than the other but RJs do enable a lot of connectivity at great yields. At some point, Southwest is stuck competing on fares and the more medium and large markets that the rest of the US airlines cause fares to plummet in, the worse off WN is when it comes to pricing power.

WN and AA are taking the risk of being the ones able to provide extra connectivity and options for passengers; if it works for them they will certainly end up with the spoils.
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pmanni1
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 9:57 am

EWRandMDW wrote:
I think WN made a huge mistake in pulling out of EWR. I flew MDW-EWR-MDW a number of times and the flights were always 3/4 or more full. That suggests to me that many other passengers decided LGA was not the right choice for them. Surely WN's management must realize that NJ is not NYC and doesn't necessarily want to be. That would be like calling Texas South Oklahoma. To me it'll be stupid to fly into LGA and then have to work my way back to NJ, often passing EWR, to get where I'm going.

WN only had 15 flights per day at EWR out of 4000 daily system wide. EWR was a tiny station and they had no more slots available to allow for any type of growth.
 
EWRandMDW
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 1:56 pm

pmanni1 wrote:
WN only had 15 flights per day at EWR out of 4000 daily system wide. EWR was a tiny station and they had no more slots available to allow for any type of growth.


Well, they have an opportunity to return possibly in a big way. Not all pre-Covid services on other carriers will make a comeback anytime soon if ever, so the door is open to WN and anyone else who cares to step through.
 
SWADawg
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 2:09 pm

WN will return to EWR in the not too distant future. Besides the MAX being grounded and being short nearly 70 Airplanes between those grounded and deliveries that weren’t able to be taken. EWR Terminal A was a disaster at the time the decision to leave was made. The bathrooms had already been shutdown because of the new Terminal construction and there were literally porta potties inside the Concourses for passengers to use. It was truly a miserable experience. I’m sure once the new Terminal is finished, WN will procure some gates in the new facility.
My posts are my opinion only and do not reflect the views of Southwest Airlines
 
tphuang
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 2:30 pm

The problem with WN at EWR is that its performances were just so horrible. I'm sure if it wants to make a go at it, it could. But there are just way more fish to fry for WN than at EWR. An obvious target for it would be PHL as AA will be significantly weaker coming out of this.
 
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IrishAyes
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 2:32 pm

So over the weekend I was able to get more context about the statement from the VP of flight ops and a lot of my initial suspicions were confirmed. I worked at Southwest for several years, and left around two years ago this time. The VP had apparently been hired in between then and now. Whatever. The point I’m trying to make here is, we are all missing the point on this thread. My friend, who I have known since 1995, and I were catching up yesterday. They worked at HR at Southwest up until very recently before they left to work for new firm in Dallas. What they said to me was, quite alarmingly, the situation and messaging internally is actually getting to be pretty grim in the fall. And a ton of missteps are taking place at HQ in the midst of this crisis as we speak.

Quite frankly, it is really careless of this VP to make a statement like he did, because what it definitely doesn’t speak of is good confidence in their business plan. This is not the time to be talking about the Southwest “effect” (didn’t that effectively die in years past? Since when is anyone ever said that they get a much cheaper fare on Southwest these days compared to flying one of the big three? ) and how they’re gonna be able to take advantage of competitive weaknesses from OALs. They posted a loss for Q1, and that was really only with one month of decline in performance. That was MARCH. And it wasn’t even really the entire month. Come July, when the Q2 numbers are going to come out for all of the US airlines and globally alike, it’s going to be utter carnage.

If anyone thinks that Southwest is On-track to retain its employee headcount and remain the size that it is come Oct, particularly with all of the excess weight that they have from nearing 50 years of operations given seniority, union contracts, a lot of people who have been working there for ever and a half who play tug of war over limited resources and simply believe that the gravy train that they’ve been following for all this time is going to stay intact, are likely seeing this whole thing through tinted glasses.

WN is not an agile company. No discussions of network opportunities that they can potentially “exploit “in the event/aftermath of one of their competitors suffering, will spare them from succumbing to similar fates. This statement from Leadership was really reckless, and frankly, it’s gonna bite him in the you know what.

Hang in there, guys. Be safe
 
hiflyeras
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 2:49 pm

Great post. Anyone thinking that WN is going to escape the carnage coming in October is not paying attention. And even if they DO operate more departures in comparison to their competitors that just means they're operating more money-losing flights. Even at load factors of 60-70% no one would be making money unless the fares were outrageously expensive.
 
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PA727
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 3:30 pm

There’s an old cliche, “Luck is where preparation and opportunity meet.” I definitely agree with IrishAyes, any organization as “inbred” and long-tenured as WN is going to have huge problems with institutionalized thinking. But the way the deck is currently stacked plays entirely to WN’s strengths.

For starters, through no effort of its own, WN’s Max problem became a Max opportunity. How? The Max groundling was a chokepoint on WN’s growth and strategic execution. With the COVID downturn, this issue became not just moot, but a bonus. WN has already negotiated its compensation with Boeing (not sure to what extent though, I’m sure there is future negotiating still to be done.) They can put that in the bank for future discounts. Meanwhile, their schedule never had to account for grounding a fleet that was already grounded.

Now, as passenger numbers begin to come up, they have an already grounded fleet to pad the schedule while recertification of the Max continues. Should Max RTS dovetail somewhat with future passenger growth, it would certainly help fuel WN expansion.

All of that is independent of WN’s strategy. Where WN can really take advantage of the opportunity is through what it does best. After Oct. 1, there will most likely be plenty of Max delivery slots available whenever WN would like to take delivery, given the previous cancelations and penalties paid to other airlines. Add to that WN’s position as the assumed-to-be-best financially-positioned airline coming out of the COVID crisis, and you have the recipe for low-cost, fuel-efficient fleet growth on your own timeline. Now if that isn’t part of the formula WN used to become what it is today, it’s certainly a major part of it.

In summary, my point is not that this is what will happen or that WN is assured a path to glory and world ((US) domination. My point is, there is most likely a path for WN to come out of this and continue to strengthen itself in a way no other airline in the U.S. can. Even if organizationally WN is old and monolithic, how many key moments in an airline’s history relied solely on strategic brilliance? Very few. In the vast majority, it has been a combination of leadership and opportunity. Given WN’s history, I know where I’d put my money.
 
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Midwestindy
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 3:33 pm

IrishAyes wrote:
So over the weekend I was able to get more context about the statement from the VP of flight ops and a lot of my initial suspicions were confirmed. I worked at Southwest for several years, and left around two years ago this time. The VP had apparently been hired in between then and now. Whatever. The point I’m trying to make here is, we are all missing the point on this thread. My friend, who I have known since 1995, and I were catching up yesterday. They worked at HR at Southwest up until very recently before they left to work for new firm in Dallas. What they said to me was, quite alarmingly, the situation and messaging internally is actually getting to be pretty grim in the fall. And a ton of missteps are taking place at HQ in the midst of this crisis as we speak.

Quite frankly, it is really careless of this VP to make a statement like he did, because what it definitely doesn’t speak of is good confidence in their business plan. This is not the time to be talking about the Southwest “effect” (didn’t that effectively die in years past? Since when is anyone ever said that they get a much cheaper fare on Southwest these days compared to flying one of the big three? ) and how they’re gonna be able to take advantage of competitive weaknesses from OALs. They posted a loss for Q1, and that was really only with one month of decline in performance. That was MARCH. And it wasn’t even really the entire month. Come July, when the Q2 numbers are going to come out for all of the US airlines and globally alike, it’s going to be utter carnage.

If anyone thinks that Southwest is On-track to retain its employee headcount and remain the size that it is come Oct, particularly with all of the excess weight that they have from nearing 50 years of operations given seniority, union contracts, a lot of people who have been working there for ever and a half who play tug of war over limited resources and simply believe that the gravy train that they’ve been following for all this time is going to stay intact, are likely seeing this whole thing through tinted glasses.

WN is not an agile company. No discussions of network opportunities that they can potentially “exploit “in the event/aftermath of one of their competitors suffering, will spare them from succumbing to similar fates. This statement from Leadership was really reckless, and frankly, it’s gonna bite him in the you know what.

Hang in there, guys. Be safe


How will that statement come back to bite them?

They say they'll be at 70% of capacity by YE, which is leaps and bounds higher than their competitors, & they have the liquidity to sustain their current burn rate for nearly 2 years.

No where did the statement at the employee event say that layoffs were not going to be part of the equation, in fact WN has been out front from the beginning saying layoffs were entirely possible, and management has repeated it time and time again. I think everyone is aware of the risk of job losses at WN, however despite possible job losses they have the ability & will to aggressively compete in this new environment.

Even Gary said back in the earnings call in April (when the situation was much more dire) that they were ready to compete aggressively in this new environment. None of the US3 made statements like that.

hiflyeras wrote:
Great post. Anyone thinking that WN is going to escape the carnage coming in October is not paying attention. And even if they DO operate more departures in comparison to their competitors that just means they're operating more money-losing flights. Even at load factors of 60-70% no one would be making money unless the fares were outrageously expensive.


Every airline has said capping capacity is a very near-term solution, but even if it does get extended out, WN is the best positioned to compete in a low LF world.

Remember even though yield is down, Fuel/CapEX/Labor/Food is also down significantly, therefore WN could theoretically get fairly close to break even on their flights (at least compared to the US3)
Image
Last edited by Midwestindy on Mon May 25, 2020 3:37 pm, edited 1 time in total.
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United1
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 3:36 pm

tphuang wrote:
The problem with WN at EWR is that its performances were just so horrible. I'm sure if it wants to make a go at it, it could. But there are just way more fish to fry for WN than at EWR. An obvious target for it would be PHL as AA will be significantly weaker coming out of this.


AA will be weaker coming out of this but WN already tried building up PHL against a relatively weak US without much success.
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United1
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 3:51 pm

Midwestindy wrote:
hiflyeras wrote:
Great post. Anyone thinking that WN is going to escape the carnage coming in October is not paying attention. And even if they DO operate more departures in comparison to their competitors that just means they're operating more money-losing flights. Even at load factors of 60-70% no one would be making money unless the fares were outrageously expensive.


Every airline has said capping capacity is a very near-term solution, but even if it does get extended out, WN is the best positioned to compete in a low LF world.

Remember even though yield is down, Fuel/CapEX/Labor/Food is also down significantly, therefore WN could theoretically get fairly close to break even on their flights (at least compared to the US3)
Image


Yield is not just down it's utterly in the gutter...a few anecdotal points about that were even in this thread. A WN flyer was bragging about how he picked WN over UA on DAL-MDW because WNs fare was $90 roundtrip. The actual revenue to WN will be less if that fare includes taxes and fees but let's assume it's all revenue. That works out to 5.6 cents a mile. Do you think WN can generate a profit at that yield even flying 100% load factors?
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joeblow10
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 4:03 pm

United1 wrote:
Midwestindy wrote:
hiflyeras wrote:
Great post. Anyone thinking that WN is going to escape the carnage coming in October is not paying attention. And even if they DO operate more departures in comparison to their competitors that just means they're operating more money-losing flights. Even at load factors of 60-70% no one would be making money unless the fares were outrageously expensive.


Every airline has said capping capacity is a very near-term solution, but even if it does get extended out, WN is the best positioned to compete in a low LF world.

Remember even though yield is down, Fuel/CapEX/Labor/Food is also down significantly, therefore WN could theoretically get fairly close to break even on their flights (at least compared to the US3)
Image


Yield is not just down it's utterly in the gutter...a few anecdotal points about that were even in this thread. A WN flyer was bragging about how he picked WN over UA on DAL-MDW because WNs fare was $90 roundtrip. The actual revenue to WN will be less if that fare includes taxes and fees but let's assume it's all revenue. That works out to 5.6 cents a mile. Do you think WN can generate a profit at that yield even flying 100% load factors?


WN had been running a lot of sales - I picked a lot of them up too for $98 RT in markets like DAL-DEN, but that was several weeks ago. The fares are creeping back up, and close in, its no longer like $99 OW for a walk up like I had seen throughout March and early April.

I don’t think Southwest is going to turn a profit in 2020 - but I would say they are definitely now in the drivers seat to ride this out and hurt the competition, a marked turnaround from a year ago and the MAX debacle. They have a giant cash reserve for a reason
 
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Midwestindy
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 4:55 pm

United1 wrote:
Midwestindy wrote:
hiflyeras wrote:
Great post. Anyone thinking that WN is going to escape the carnage coming in October is not paying attention. And even if they DO operate more departures in comparison to their competitors that just means they're operating more money-losing flights. Even at load factors of 60-70% no one would be making money unless the fares were outrageously expensive.


Every airline has said capping capacity is a very near-term solution, but even if it does get extended out, WN is the best positioned to compete in a low LF world.

Remember even though yield is down, Fuel/CapEX/Labor/Food is also down significantly, therefore WN could theoretically get fairly close to break even on their flights (at least compared to the US3)
Image


Yield is not just down it's utterly in the gutter...a few anecdotal points about that were even in this thread. A WN flyer was bragging about how he picked WN over UA on DAL-MDW because WNs fare was $90 roundtrip. The actual revenue to WN will be less if that fare includes taxes and fees but let's assume it's all revenue. That works out to 5.6 cents a mile. Do you think WN can generate a profit at that yield even flying 100% load factors?


Yes I do, for the US3 the yield situation is significantly worse than WN. Remember while people "luv" to hate on WN for being the low cost carrier that doesn't actually offer low fares, WN is actually used to competing on ULCC fares, given their enormous presence in places like MCO, FLL, LAS, e.t.c.

This is from 2019, and as you can see average fares aren't way higher than what G4 is pricing.
Image

If you go by the analysis done in the break-even study I referenced above:

In the example they use, each flight would cost $26,741, and 100% load would be $36,889 in revenue

Assuming a conservative cost savings of 15% per flight, the new cost per flight would be $22,730, so essentially even with a 40% reduction in revenue per flight (aggressively low average fare of $93) they would still be close to break-even.
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tphuang
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 5:03 pm

United1 wrote:
tphuang wrote:
The problem with WN at EWR is that its performances were just so horrible. I'm sure if it wants to make a go at it, it could. But there are just way more fish to fry for WN than at EWR. An obvious target for it would be PHL as AA will be significantly weaker coming out of this.


AA will be weaker coming out of this but WN already tried building up PHL against a relatively weak US without much success.


Not saying they will succeed at PHL, but at least they still have a presence there. Whereas at EWR, they got chased out because they have no point of sale at all.

Either way, I think there is enough opportunities out there that trying EWR again so soon after they got chased out of it is kind of crazy.

wnflyguy wrote:
WN had a MAX problem.
Lack of aircraft and aircraft time to cover the equivalent of 34 aircraft. To fix that problem it saw an opportunity to rebook it's customers via LGA by eliminating EWR.
WN will be back at EWR in my the future.

Flyguy

They didn't leave EWR because of MAX. They left because their performances were dreadful. Why would they go back to EWR anytime soon when they had such horrible experience trying to get anything to work for years?

I could only see a return in the near future if they merge with NK or B6.

here is Andrew Watterson talking about their departure from Newark. Does that sound like someone that wants to come back anytime soon? Especially in this demand environment?
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United1
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 5:24 pm

joeblow10 wrote:
United1 wrote:
Midwestindy wrote:


Every airline has said capping capacity is a very near-term solution, but even if it does get extended out, WN is the best positioned to compete in a low LF world.

Remember even though yield is down, Fuel/CapEX/Labor/Food is also down significantly, therefore WN could theoretically get fairly close to break even on their flights (at least compared to the US3)
Image


Yield is not just down it's utterly in the gutter...a few anecdotal points about that were even in this thread. A WN flyer was bragging about how he picked WN over UA on DAL-MDW because WNs fare was $90 roundtrip. The actual revenue to WN will be less if that fare includes taxes and fees but let's assume it's all revenue. That works out to 5.6 cents a mile. Do you think WN can generate a profit at that yield even flying 100% load factors?


WN had been running a lot of sales - I picked a lot of them up too for $98 RT in markets like DAL-DEN, but that was several weeks ago. The fares are creeping back up, and close in, its no longer like $99 OW for a walk up like I had seen throughout March and early April.


I'm sure fares are going back up a bit, as the US reopens demand is starting to return, I question how long fares will stay up though. The US3 are starting to add capacity back..for instance UA is going from operating 10% of it's pre-covid capacity in May to operating 25% of capacity in June. That will depress fares again and while WN does have lower costs than the US3 the US3 operate in a lot of markets that WN do not. What all that means is the US3 might be able to generate higher yields on average even if they are matching WNs $90 sale flights on trunk routes.

I know a lot of folks on this thread are going on and on about WN dominating the competition and taking advantage of this opportunity ect. Reality is WN is in the same boat all of their competitors are in. All of them have deep pockets, all of them have unique advantages they are going to leverage the heck out of to make it out of this and all of them all of them also have unique weaknesses they are managing around. Simply trying to bleed the competition dry won't work because WN will kill itself off in the process. This WN will dominate the world koolaid has been going on for decades....another reality people seem to forget is all four of them have sort of learned to live with each other. None of them are going to be able to dominate the other.
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Midwestindy
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 8:08 pm

United1 wrote:
joeblow10 wrote:
United1 wrote:

Yield is not just down it's utterly in the gutter...a few anecdotal points about that were even in this thread. A WN flyer was bragging about how he picked WN over UA on DAL-MDW because WNs fare was $90 roundtrip. The actual revenue to WN will be less if that fare includes taxes and fees but let's assume it's all revenue. That works out to 5.6 cents a mile. Do you think WN can generate a profit at that yield even flying 100% load factors?


WN had been running a lot of sales - I picked a lot of them up too for $98 RT in markets like DAL-DEN, but that was several weeks ago. The fares are creeping back up, and close in, its no longer like $99 OW for a walk up like I had seen throughout March and early April.


I'm sure fares are going back up a bit, as the US reopens demand is starting to return, I question how long fares will stay up though. The US3 are starting to add capacity back..for instance UA is going from operating 10% of it's pre-covid capacity in May to operating 25% of capacity in June. That will depress fares again and while WN does have lower costs than the US3 the US3 operate in a lot of markets that WN do not. What all that means is the US3 might be able to generate higher yields on average even if they are matching WNs $90 sale flights on trunk routes.

I know a lot of folks on this thread are going on and on about WN dominating the competition and taking advantage of this opportunity ect. Reality is WN is in the same boat all of their competitors are in. All of them have deep pockets, all of them have unique advantages they are going to leverage the heck out of to make it out of this and all of them all of them also have unique weaknesses they are managing around. Simply trying to bleed the competition dry won't work because WN will kill itself off in the process. This WN will dominate the world koolaid has been going on for decades....another reality people seem to forget is all four of them have sort of learned to live with each other. None of them are going to be able to dominate the other.


I'm fairly certain fares won't go down further than what they have been at, in fact quite the opposite. The US3 are actually charging higher yoy fares, according to one Cowen analyst, and most other analysts are projecting higher fares in the coming months & years.
https://www.barrons.com/articles/airfar ... 1589549611
https://www.forbes.com/sites/marisagarc ... 9c7b4696e1

Also UA is not at 25% for June that is for July
https://www.marketwatch.com/story/unite ... 2020-05-19

WN has been able to gain share in past recessions, I don't see why they wouldn't be able to during this one.
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United1
Posts: 4164
Joined: Wed Oct 08, 2003 9:21 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 8:52 pm

Midwestindy wrote:
United1 wrote:
joeblow10 wrote:

WN had been running a lot of sales - I picked a lot of them up too for $98 RT in markets like DAL-DEN, but that was several weeks ago. The fares are creeping back up, and close in, its no longer like $99 OW for a walk up like I had seen throughout March and early April.


I'm sure fares are going back up a bit, as the US reopens demand is starting to return, I question how long fares will stay up though. The US3 are starting to add capacity back..for instance UA is going from operating 10% of it's pre-covid capacity in May to operating 25% of capacity in June. That will depress fares again and while WN does have lower costs than the US3 the US3 operate in a lot of markets that WN do not. What all that means is the US3 might be able to generate higher yields on average even if they are matching WNs $90 sale flights on trunk routes.

I know a lot of folks on this thread are going on and on about WN dominating the competition and taking advantage of this opportunity ect. Reality is WN is in the same boat all of their competitors are in. All of them have deep pockets, all of them have unique advantages they are going to leverage the heck out of to make it out of this and all of them all of them also have unique weaknesses they are managing around. Simply trying to bleed the competition dry won't work because WN will kill itself off in the process. This WN will dominate the world koolaid has been going on for decades....another reality people seem to forget is all four of them have sort of learned to live with each other. None of them are going to be able to dominate the other.


I'm fairly certain fares won't go down further than what they have been at, in fact quite the opposite. The US3 are actually charging higher yoy fares, according to one Cowen analyst, and most other analysts are projecting higher fares in the coming months & years.
https://www.barrons.com/articles/airfar ... 1589549611
https://www.forbes.com/sites/marisagarc ... 9c7b4696e1

Also UA is not at 25% for June that is for July
https://www.marketwatch.com/story/unite ... 2020-05-19

WN has been able to gain share in past recessions, I don't see why they wouldn't be able to during this one.


You are right I did get June and July backwards...sorry about that but the days, weeks and months have been running together for some strange unknown reason :scratchchin:

As for the US3 charging higher fares right now well yeah because unlike WN they are not trying to stimulate demand to fill their planes...quite the opposite actually. They have eliminated lots of those loss leaders simply because of social distancing. That being said at some point if they want to fill the planes they will have to drop pricing and stimulate demand...especially if business travel doesn't pick up.

This isn't like any previous recession and I don't think WN assuming the same rules apply and using the same tactics will necessarily work. WN was able to take advantage back in 2008 because it stopped being an airline and operated as a fuel trading company that happened to fly planes. That happened because WN got lucky with its fuel hedges. That situation doesn't apply this time...oil is not likely to spike...in fact it can't because as soon as oil hits a certain price it becomes profitable for US oil to ramp up again which will crash the price back down or at least level it out.

In 2008 UA, DL and AA all had to retire 100s of aircraft while WN was able to hang on and grow because the fuel hedges saved their balance sheet...that's how they gained market share. This time around is a bit different. All are hemorrhaging cash right now and none are going to be in a position to expand rapidly once we are on the tail end of this recession because all of them are going to be busy repairing their balance sheets. WN can probably hang onto its market share but I don't think they are going to be able to make inroads on UA, DL or even AA's share.
Last edited by United1 on Mon May 25, 2020 9:05 pm, edited 1 time in total.
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737max8
Posts: 620
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 8:53 pm

hiflyeras wrote:
Great post. Anyone thinking that WN is going to escape the carnage coming in October is not paying attention. And even if they DO operate more departures in comparison to their competitors that just means they're operating more money-losing flights. Even at load factors of 60-70% no one would be making money unless the fares were outrageously expensive.


How do you know how many money-losing flights the airline will run? How do you know what profitable load factors are?

Most of the "information" in this thread is complete garbage.

WN has made a ton of great moves already. And they are getting great publicity over capping flights to leave middle seats open. And flights are filling up to allowed capacities. I doubt cash burn is even as bad as it was projected to be.

We'll just wait and see the results that speak for themselves and not what people on a forum think. We all know Q2 is going to be ugly for everyone. But I am very optimistic for June and leading into Q3.
The thoughts and opinions expressed in my comments do not represent that of any airline or affiliate.
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joeblow10
Posts: 423
Joined: Mon Jun 04, 2018 11:58 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 8:57 pm

737max8 wrote:
hiflyeras wrote:
Great post. Anyone thinking that WN is going to escape the carnage coming in October is not paying attention. And even if they DO operate more departures in comparison to their competitors that just means they're operating more money-losing flights. Even at load factors of 60-70% no one would be making money unless the fares were outrageously expensive.


How do you know how many money-losing flights the airline will run? How do you know what profitable load factors are?

Most of the "information" in this thread is complete garbage.


People also forget that for the foreseeable future- the concept of “cash burn” is key. Maybe southwest can’t be profitable by 10/1. But if they can nearly break-even or cash-neutral, maybe they can feasibly get to a cash burn of say $5M a day. They can run an airline for a very long time with $12B+ (I believe?) in the coffers. And I’m sure they would do it if it means they were gaining market share over competitors.
 
Jerseyguy
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 9:37 pm

SWADawg wrote:
WN will return to EWR in the not too distant future. Besides the MAX being grounded and being short nearly 70 Airplanes between those grounded and deliveries that weren’t able to be taken. EWR Terminal A was a disaster at the time the decision to leave was made. The bathrooms had already been shutdown because of the new Terminal construction and there were literally porta potties inside the Concourses for passengers to use. It was truly a miserable experience. I’m sure once the new Terminal is finished, WN will procure some gates in the new facility.

And here I thought it was horrible when they had indoor plumbing, no way am I flying out of Terminal A now. The terminal is close to 50 years old and did not lend it self to improvements. If security could somehow be moved to where the escalators from ticketing are, things would improve but it still would need more shops and food close to the gate. So for me if I go back to EWR (I prefer PHL even though it is further) Terminal 1 cant come fast enough.
 
tphuang
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 10:03 pm

United1 wrote:
Midwestindy wrote:
United1 wrote:

I'm sure fares are going back up a bit, as the US reopens demand is starting to return, I question how long fares will stay up though. The US3 are starting to add capacity back..for instance UA is going from operating 10% of it's pre-covid capacity in May to operating 25% of capacity in June. That will depress fares again and while WN does have lower costs than the US3 the US3 operate in a lot of markets that WN do not. What all that means is the US3 might be able to generate higher yields on average even if they are matching WNs $90 sale flights on trunk routes.

I know a lot of folks on this thread are going on and on about WN dominating the competition and taking advantage of this opportunity ect. Reality is WN is in the same boat all of their competitors are in. All of them have deep pockets, all of them have unique advantages they are going to leverage the heck out of to make it out of this and all of them all of them also have unique weaknesses they are managing around. Simply trying to bleed the competition dry won't work because WN will kill itself off in the process. This WN will dominate the world koolaid has been going on for decades....another reality people seem to forget is all four of them have sort of learned to live with each other. None of them are going to be able to dominate the other.


I'm fairly certain fares won't go down further than what they have been at, in fact quite the opposite. The US3 are actually charging higher yoy fares, according to one Cowen analyst, and most other analysts are projecting higher fares in the coming months & years.
https://www.barrons.com/articles/airfar ... 1589549611
https://www.forbes.com/sites/marisagarc ... 9c7b4696e1

Also UA is not at 25% for June that is for July
https://www.marketwatch.com/story/unite ... 2020-05-19

WN has been able to gain share in past recessions, I don't see why they wouldn't be able to during this one.


You are right I did get June and July backwards...sorry about that but the days, weeks and months have been running together for some strange unknown reason :scratchchin:

As for the US3 charging higher fares right now well yeah because unlike WN they are not trying to stimulate demand to fill their planes...quite the opposite actually. They have eliminated lots of those loss leaders simply because of social distancing. That being said at some point if they want to fill the planes they will have to drop pricing and stimulate demand...especially if business travel doesn't pick up.

This isn't like any previous recession and I don't think WN assuming the same rules apply and using the same tactics will necessarily work. WN was able to take advantage back in 2008 because it stopped being an airline and operated as a fuel trading company that happened to fly planes. That happened because WN got lucky with its fuel hedges. That situation doesn't apply this time...oil is not likely to spike...in fact it can't because as soon as oil hits a certain price it becomes profitable for US oil to ramp up again which will crash the price back down or at least level it out.

In 2008 UA, DL and AA all had to retire 100s of aircraft while WN was able to hang on and grow because the fuel hedges saved their balance sheet...that's how they gained market share. This time around is a bit different. All are hemorrhaging cash right now and none are going to be in a position to expand rapidly once we are on the tail end of this recession because all of them are going to be busy repairing their balance sheets. WN can probably hang onto its market share but I don't think they are going to be able to make inroads on UA, DL or even AA's share.


If legacies are still 20% smaller by end of 2022 and WN is larger than it was pre-COVID by then, they will automatically be gaining market share. It's really hard to argue that this downturn is not hitting legacies harder. Everyone is admitting that leisure is coming back before business travel and domestic is coming back before international.

It will be interesting for me to see what happens at DEN. I anticipate a huge battle there. If UA devotes a lot of resources to keep its market share at DEN against WN, that's less resources it will have in its other hubs.
 
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Midwestindy
Topic Author
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 10:41 pm

737max8 wrote:
hiflyeras wrote:
Great post. Anyone thinking that WN is going to escape the carnage coming in October is not paying attention. And even if they DO operate more departures in comparison to their competitors that just means they're operating more money-losing flights. Even at load factors of 60-70% no one would be making money unless the fares were outrageously expensive.


We'll just wait and see the results that speak for themselves and not what people on a forum think.


Lol why the hell are you on an aviation forum then?

joeblow10 wrote:
737max8 wrote:
hiflyeras wrote:
Great post. Anyone thinking that WN is going to escape the carnage coming in October is not paying attention. And even if they DO operate more departures in comparison to their competitors that just means they're operating more money-losing flights. Even at load factors of 60-70% no one would be making money unless the fares were outrageously expensive.


How do you know how many money-losing flights the airline will run? How do you know what profitable load factors are?

Most of the "information" in this thread is complete garbage.


People also forget that for the foreseeable future- the concept of “cash burn” is key. Maybe southwest can’t be profitable by 10/1. But if they can nearly break-even or cash-neutral, maybe they can feasibly get to a cash burn of say $5M a day. They can run an airline for a very long time with $12B+ (I believe?) in the coffers. And I’m sure they would do it if it means they were gaining market share over competitors.


:checkmark:

Not a big fan of WN in general, but they look very well positioned (comparatively) for the months & years to come
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United1
Posts: 4164
Joined: Wed Oct 08, 2003 9:21 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 10:58 pm

tphuang wrote:
United1 wrote:
Midwestindy wrote:

I'm fairly certain fares won't go down further than what they have been at, in fact quite the opposite. The US3 are actually charging higher yoy fares, according to one Cowen analyst, and most other analysts are projecting higher fares in the coming months & years.
https://www.barrons.com/articles/airfar ... 1589549611
https://www.forbes.com/sites/marisagarc ... 9c7b4696e1

Also UA is not at 25% for June that is for July
https://www.marketwatch.com/story/unite ... 2020-05-19

WN has been able to gain share in past recessions, I don't see why they wouldn't be able to during this one.


You are right I did get June and July backwards...sorry about that but the days, weeks and months have been running together for some strange unknown reason :scratchchin:

As for the US3 charging higher fares right now well yeah because unlike WN they are not trying to stimulate demand to fill their planes...quite the opposite actually. They have eliminated lots of those loss leaders simply because of social distancing. That being said at some point if they want to fill the planes they will have to drop pricing and stimulate demand...especially if business travel doesn't pick up.

This isn't like any previous recession and I don't think WN assuming the same rules apply and using the same tactics will necessarily work. WN was able to take advantage back in 2008 because it stopped being an airline and operated as a fuel trading company that happened to fly planes. That happened because WN got lucky with its fuel hedges. That situation doesn't apply this time...oil is not likely to spike...in fact it can't because as soon as oil hits a certain price it becomes profitable for US oil to ramp up again which will crash the price back down or at least level it out.

In 2008 UA, DL and AA all had to retire 100s of aircraft while WN was able to hang on and grow because the fuel hedges saved their balance sheet...that's how they gained market share. This time around is a bit different. All are hemorrhaging cash right now and none are going to be in a position to expand rapidly once we are on the tail end of this recession because all of them are going to be busy repairing their balance sheets. WN can probably hang onto its market share but I don't think they are going to be able to make inroads on UA, DL or even AA's share.


If legacies are still 20% smaller by end of 2022 and WN is larger than it was pre-COVID by then, they will automatically be gaining market share. It's really hard to argue that this downturn is not hitting legacies harder. Everyone is admitting that leisure is coming back before business travel and domestic is coming back before international.

It will be interesting for me to see what happens at DEN. I anticipate a huge battle there. If UA devotes a lot of resources to keep its market share at DEN against WN, that's less resources it will have in its other hubs.


You are assuming that WN can continue to grow...I'm not convinced of that for a few reasons. One even before the MAX debacle WN seemed to be loosing its way a bit. They entered IAD and didn't make any inroads, they scaled back their proposed Hawaii service, what little international service they have was scaled back, PHL was scaled back, ATL was scaled back, SFO was scaled back, EWR was eliminated. Two at the height of "we are scaling back service because of the MAX" WN sells 20 73Gs to UA...that doesn't seem like a company that was desperate for aircraft that seems like a company that can't figure out where to put new aircraft profitably. Don't get me wrong I think WN has an incredibly well built out profitable core network...I question their networks profitability once they get outside of that core...and their ability to expand that core.

I do think DEN is going to be interesting as it seems to be one of the home runs in WNs network. I don't know how it's going to all go down but last time there was a battle of DEN everyone counted UA out...we all know how that turned out WN grew, UA grew, the market grew and F9 lost. You are also assuming the US3 will be 20% smaller domestically I'm not. Even if they are smaller overall I think most of those cuts will be overseas not on the domestic network...the cuts certainly will not be on UAs domestic network. Domestic was where the money was being made pre-covid and domestic will be where the money is being made post covid.
I know the voices in my head aren't real but sometimes their ideas are just awesome!!!
 
Cubsrule
Posts: 14488
Joined: Sat May 15, 2004 12:13 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 11:02 pm

United1 wrote:
tphuang wrote:
United1 wrote:

You are right I did get June and July backwards...sorry about that but the days, weeks and months have been running together for some strange unknown reason :scratchchin:

As for the US3 charging higher fares right now well yeah because unlike WN they are not trying to stimulate demand to fill their planes...quite the opposite actually. They have eliminated lots of those loss leaders simply because of social distancing. That being said at some point if they want to fill the planes they will have to drop pricing and stimulate demand...especially if business travel doesn't pick up.

This isn't like any previous recession and I don't think WN assuming the same rules apply and using the same tactics will necessarily work. WN was able to take advantage back in 2008 because it stopped being an airline and operated as a fuel trading company that happened to fly planes. That happened because WN got lucky with its fuel hedges. That situation doesn't apply this time...oil is not likely to spike...in fact it can't because as soon as oil hits a certain price it becomes profitable for US oil to ramp up again which will crash the price back down or at least level it out.

In 2008 UA, DL and AA all had to retire 100s of aircraft while WN was able to hang on and grow because the fuel hedges saved their balance sheet...that's how they gained market share. This time around is a bit different. All are hemorrhaging cash right now and none are going to be in a position to expand rapidly once we are on the tail end of this recession because all of them are going to be busy repairing their balance sheets. WN can probably hang onto its market share but I don't think they are going to be able to make inroads on UA, DL or even AA's share.


If legacies are still 20% smaller by end of 2022 and WN is larger than it was pre-COVID by then, they will automatically be gaining market share. It's really hard to argue that this downturn is not hitting legacies harder. Everyone is admitting that leisure is coming back before business travel and domestic is coming back before international.

It will be interesting for me to see what happens at DEN. I anticipate a huge battle there. If UA devotes a lot of resources to keep its market share at DEN against WN, that's less resources it will have in its other hubs.


You are assuming that WN can continue to grow...I'm not convinced of that for a few reasons. One even before the MAX debacle WN seemed to be loosing its way a bit. They entered IAD and didn't make any inroads, they scaled back their proposed Hawaii service, what little international service they have was scaled back, PHL was scaled back, ATL was scaled back, SFO was scaled back, EWR was eliminated. Two at the height of "we are scaling back service because of the MAX" WN sells 20 73Gs to UA...that doesn't seem like a company that was desperate for aircraft that seems like a company that can't figure out where to put new aircraft profitably. Don't get me wrong I think WN has an incredibly well built out profitable core network...I question their networks profitability once they get outside of that core...and their ability to expand that core.

I do think DEN is going to be interesting as it seems to be one of the home runs in WNs network. I don't know how it's going to all go down but last time there was a battle of DEN everyone counted UA out...we all know how that turned out WN grew, UA grew, the market grew and F9 lost. You are also assuming the US3 will be 20% smaller domestically I'm not. Even if they are smaller overall I think most of those cuts will be overseas not on the domestic network...the cuts certainly will not be on UAs domestic network. Domestic was where the money was being made pre-covid and domestic will be where the money is being made post covid.


I don’t understand your selective reading of the history. Why do you ignore their meteoric growth at BNA and STL? Their running numerous carriers (including CO and UA) out of MDW? Their success at DCA? The list goes on and on.
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United1
Posts: 4164
Joined: Wed Oct 08, 2003 9:21 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 11:09 pm

Cubsrule wrote:
United1 wrote:
tphuang wrote:

If legacies are still 20% smaller by end of 2022 and WN is larger than it was pre-COVID by then, they will automatically be gaining market share. It's really hard to argue that this downturn is not hitting legacies harder. Everyone is admitting that leisure is coming back before business travel and domestic is coming back before international.

It will be interesting for me to see what happens at DEN. I anticipate a huge battle there. If UA devotes a lot of resources to keep its market share at DEN against WN, that's less resources it will have in its other hubs.


You are assuming that WN can continue to grow...I'm not convinced of that for a few reasons. One even before the MAX debacle WN seemed to be loosing its way a bit. They entered IAD and didn't make any inroads, they scaled back their proposed Hawaii service, what little international service they have was scaled back, PHL was scaled back, ATL was scaled back, SFO was scaled back, EWR was eliminated. Two at the height of "we are scaling back service because of the MAX" WN sells 20 73Gs to UA...that doesn't seem like a company that was desperate for aircraft that seems like a company that can't figure out where to put new aircraft profitably. Don't get me wrong I think WN has an incredibly well built out profitable core network...I question their networks profitability once they get outside of that core...and their ability to expand that core.

I do think DEN is going to be interesting as it seems to be one of the home runs in WNs network. I don't know how it's going to all go down but last time there was a battle of DEN everyone counted UA out...we all know how that turned out WN grew, UA grew, the market grew and F9 lost. You are also assuming the US3 will be 20% smaller domestically I'm not. Even if they are smaller overall I think most of those cuts will be overseas not on the domestic network...the cuts certainly will not be on UAs domestic network. Domestic was where the money was being made pre-covid and domestic will be where the money is being made post covid.


I don’t understand your selective reading of the history. Why do you ignore their meteoric growth at BNA and STL? Their running numerous carriers (including CO and UA) out of MDW? Their success at DCA? The list goes on and on.


I'm not selectively reading any part of WNs history. BNA, MDW and STL have been part of their core networks for years...they should be able to grow in those markets..and defend them. It's the non core ones I think they have a problem with.
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frmrCapCadet
Posts: 4252
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Tue May 26, 2020 12:10 am

About every airline, including the ever profitable WN, includes some routes for competitive reasons. Particularly if frequent flyers on other routes want service on those routes.
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tphuang
Posts: 5215
Joined: Tue Mar 14, 2017 2:04 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Tue May 26, 2020 12:18 am

United1 wrote:
tphuang wrote:
United1 wrote:

You are right I did get June and July backwards...sorry about that but the days, weeks and months have been running together for some strange unknown reason :scratchchin:

As for the US3 charging higher fares right now well yeah because unlike WN they are not trying to stimulate demand to fill their planes...quite the opposite actually. They have eliminated lots of those loss leaders simply because of social distancing. That being said at some point if they want to fill the planes they will have to drop pricing and stimulate demand...especially if business travel doesn't pick up.

This isn't like any previous recession and I don't think WN assuming the same rules apply and using the same tactics will necessarily work. WN was able to take advantage back in 2008 because it stopped being an airline and operated as a fuel trading company that happened to fly planes. That happened because WN got lucky with its fuel hedges. That situation doesn't apply this time...oil is not likely to spike...in fact it can't because as soon as oil hits a certain price it becomes profitable for US oil to ramp up again which will crash the price back down or at least level it out.

In 2008 UA, DL and AA all had to retire 100s of aircraft while WN was able to hang on and grow because the fuel hedges saved their balance sheet...that's how they gained market share. This time around is a bit different. All are hemorrhaging cash right now and none are going to be in a position to expand rapidly once we are on the tail end of this recession because all of them are going to be busy repairing their balance sheets. WN can probably hang onto its market share but I don't think they are going to be able to make inroads on UA, DL or even AA's share.


If legacies are still 20% smaller by end of 2022 and WN is larger than it was pre-COVID by then, they will automatically be gaining market share. It's really hard to argue that this downturn is not hitting legacies harder. Everyone is admitting that leisure is coming back before business travel and domestic is coming back before international.

It will be interesting for me to see what happens at DEN. I anticipate a huge battle there. If UA devotes a lot of resources to keep its market share at DEN against WN, that's less resources it will have in its other hubs.


You are assuming that WN can continue to grow...I'm not convinced of that for a few reasons. One even before the MAX debacle WN seemed to be loosing its way a bit. They entered IAD and didn't make any inroads, they scaled back their proposed Hawaii service, what little international service they have was scaled back, PHL was scaled back, ATL was scaled back, SFO was scaled back, EWR was eliminated. Two at the height of "we are scaling back service because of the MAX" WN sells 20 73Gs to UA...that doesn't seem like a company that was desperate for aircraft that seems like a company that can't figure out where to put new aircraft profitably. Don't get me wrong I think WN has an incredibly well built out profitable core network...I question their networks profitability once they get outside of that core...and their ability to expand that core.

I do think DEN is going to be interesting as it seems to be one of the home runs in WNs network. I don't know how it's going to all go down but last time there was a battle of DEN everyone counted UA out...we all know how that turned out WN grew, UA grew, the market grew and F9 lost. You are also assuming the US3 will be 20% smaller domestically I'm not. Even if they are smaller overall I think most of those cuts will be overseas not on the domestic network...the cuts certainly will not be on UAs domestic network. Domestic was where the money was being made pre-covid and domestic will be where the money is being made post covid.



It's not easy to build new hubs when there is existing entrenched competition. That's why you see DL throwing boatload of money at SEA and remains a lot smaller than AS there. That's why these tough economical times are prime chances for airlines that are in better position financially to attack other airlines hubs or go from second place to first place. The legacy airlines will be hurting with a bunch of widebodies and not a lot of places to fly them to. All that feed on RJ is going to be really uneconomical going forward. So if you have the best balance sheet in the business and are among the least effected, how do you take advantage of the situation.

Let's say by next Q3, these are how much each airlines shrinking based on their international/widebody exposure, large corporate travel exposure and liquidity situation
DL will be 30% smaller
UA will be 35% smaller
AA will be 35 to 40% smaller
WN/B6/AS will be 15 to 20% smaller

Which stations do each airlines bring back first. I think all the LCCs are watching legacies moves to see what kind of plans they can make.

If we go by the assumption that all the airlines are trying to get back to cash positive first and protect relative few strategic project, then I think it's not unreasonable to think the following will happen to each of the legacies by end of next summer.
DL - Bring back the core hubs to close to pre-COVID size, although on more RJs. Build back up SEA to close to pre-COVID schedule. LAX will come back to close to pre-COVID schedule, although a little slower recovering than SEA. Bring back LGA to close to pre-COVID size in terms of number of flights. JFK will be slower to come back. I don't see them using all their slots given how international dependent their JFK op is. BOS is done as hub, probably 60 flight station by that time. CVG/RDU probably 30 to 40 flight stations.
AA - Bring back CLT/DFW asap. DCA comes back enough to avoid losing slots. Everything else suffers. In particular, JFK will be down to under 40 flights. LGA will be down to under 125 flights. NYC as a whole will be at least 50% smaller. LAX will be 50% smaller. MIA will be close to 50% smaller. All other stations will be between 30 to 40% smaller.
UA - Try to bring back DEN and ORD first. DEN as their most important strategic project and ORD to edge over AA. IAH also comes back soon, although it will suffer from south america exposure and low oil prices. IAD/LAX will be downsized. Both will be more than 50% smaller. Try to consolidate international stuff through EWR and SFO. Even so, I see EWR as a 250 to 300 flight station rather than over 400 by end of next summer. I see SFO as being 30% smaller too.

I don't think anything here is unreasonable. So, how do LCCs react to that?
 
phluser
Posts: 615
Joined: Wed Jun 15, 2016 2:49 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Tue May 26, 2020 2:56 am

tphuang wrote:
Not saying they will succeed at PHL, but at least they still have a presence there.


Without new flights like BOS-PHL, LAX-PHL, SFO-PHL, SEA-PHL, DTW-PHL, MSP-PHL, and smaller markets like BUF-PHL, CLE-PHL, etc. it'd just be offering the same destinations (STL, DEN, MDW), but not enough destinations to really pressure American. It made the mistake last time not offering a full set of nonstop destinations in the east and top markets across the country, while US did and partner alliance. If it is going to do it half-hearted like last time, it will fail again. Demand is still suppressed, so WN would be losing money adding new destination flights. I don't think WN would really push for PHL, and it's too close to BWI without benefitng in a complementary way that growing in DCA would.
 
jetmatt777
Posts: 4297
Joined: Sun Jun 26, 2005 2:16 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Tue May 26, 2020 3:52 am

Southwest is an airline stuck both technologically and culturally in 1979. Good luck, but they are not God's gift to aviation. They will likely grow in some markets but them using this as an opportunity to leapfrog anyone is simply wishful thinking.
 
Flflyer83
Posts: 69
Joined: Tue Apr 14, 2020 4:40 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Tue May 26, 2020 4:22 am

Why does WN trigger so many users of this forum?
 
WN732
Posts: 782
Joined: Sat Feb 26, 2011 12:49 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Tue May 26, 2020 4:37 am

Flflyer83 wrote:
Why does WN trigger so many users of this forum?


I've often wondered the same thing. It's as age old as the A vs B group.
 
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KPDX
Posts: 2487
Joined: Wed Dec 14, 2005 10:04 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Tue May 26, 2020 5:58 am

You can tell WN is doing the right thing by the sheer derangement people have towards the airline. Nuff said!
 
questions
Posts: 2337
Joined: Thu Sep 15, 2011 4:51 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Tue May 26, 2020 6:13 am

tphuang wrote:
If legacies are still 20% smaller by end of 2022 and WN is larger than it was pre-COVID by then, they will automatically be gaining market share. It's really hard to argue that this downturn is not hitting legacies harder. Everyone is admitting that leisure is coming back before business travel and domestic is coming back before international.

It will be interesting for me to see what happens at DEN. I anticipate a huge battle there. If UA devotes a lot of resources to keep its market share at DEN against WN, that's less resources it will have in its other hubs.


Everyone? Everyone who? Who is admitting that?

You are forgetting the demand was first drastically reduced by the traveling public not wanting to fly then by government intervention.

You’re overlooking how the coronavirus pandemic is expected to play out. The industry will not “rebound” first with leisure traffic, then business and domestic followed by international. Leisure travelers may be packing onto the beaches in Florida and pool parties at the Lake of the Ozarks and WN may be helping getting them there. But as coronavirus hot spots develop and are *properly* reported, those overly confident leisure travelers will lose their sense of immortality.

We are not going to experience a methodical return to pre-COVID-19 traffic levels as you propose. This is not driven by the same factors as an economic recovery. The airline industry will not experience a V recovery or a swoosh recovery or a W recovery. It will be an ascent with a lot of turbulence.
 
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DarkSnowyNight
Posts: 2672
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Tue May 26, 2020 6:35 am

questions wrote:
tphuang wrote:
If legacies are still 20% smaller by end of 2022 and WN is larger than it was pre-COVID by then, they will automatically be gaining market share. It's really hard to argue that this downturn is not hitting legacies harder. Everyone is admitting that leisure is coming back before business travel and domestic is coming back before international.

It will be interesting for me to see what happens at DEN. I anticipate a huge battle there. If UA devotes a lot of resources to keep its market share at DEN against WN, that's less resources it will have in its other hubs.


Everyone? Everyone who? Who is admitting that?

You are forgetting the demand was first drastically reduced by the traveling public not wanting to fly then by government intervention.

You’re overlooking how the coronavirus pandemic is expected to play out. The industry will not “rebound” first with leisure traffic, then business and domestic followed by international. Leisure travelers may be packing onto the beaches in Florida and pool parties at the Lake of the Ozarks and WN may be helping getting them there. But as coronavirus hot spots develop and are *properly* reported, those overly confident leisure travelers will lose their sense of immortality.

We are not going to experience a methodical return to pre-COVID-19 traffic levels as you propose. This is not driven by the same factors as an economic recovery. The airline industry will not experience a V recovery or a swoosh recovery or a W recovery. It will be an ascent with a lot of turbulence.


I do not think you understand. No one is supposing Leisure traffic will bounce back to pre-Covid levels straight away; just that it will come back before business travel.

And even then, Leisure traffic will still not be what it was prior. What is for certain is that Business Travel is largely done-for. Outside of a few exceptional needs, companies that insist on remaining in that past will get slaughtered by their competition. This is even after Covid recovery, as several initially survival based paradigms will become norms.

I do agree that it will be a long time before even Leisure levels are back fully, if ever.

It does look as though WN are well positioned for this. And as for the rest of the Legacies, it is no surprise they are hit hardest. With the most expensive labor contracts and highest levels of encumbered debt, they have a lot of hustling to do if survival is really their plan...
"Nous ne sommes pas infectés. Il n'y a pas d'infection ici..."
 
tphuang
Posts: 5215
Joined: Tue Mar 14, 2017 2:04 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Tue May 26, 2020 11:25 am

questions wrote:
tphuang wrote:
If legacies are still 20% smaller by end of 2022 and WN is larger than it was pre-COVID by then, they will automatically be gaining market share. It's really hard to argue that this downturn is not hitting legacies harder. Everyone is admitting that leisure is coming back before business travel and domestic is coming back before international.

It will be interesting for me to see what happens at DEN. I anticipate a huge battle there. If UA devotes a lot of resources to keep its market share at DEN against WN, that's less resources it will have in its other hubs.


Everyone? Everyone who? Who is admitting that?

You are forgetting the demand was first drastically reduced by the traveling public not wanting to fly then by government intervention.

You’re overlooking how the coronavirus pandemic is expected to play out. The industry will not “rebound” first with leisure traffic, then business and domestic followed by international. Leisure travelers may be packing onto the beaches in Florida and pool parties at the Lake of the Ozarks and WN may be helping getting them there. But as coronavirus hot spots develop and are *properly* reported, those overly confident leisure travelers will lose their sense of immortality.

We are not going to experience a methodical return to pre-COVID-19 traffic levels as you propose. This is not driven by the same factors as an economic recovery. The airline industry will not experience a V recovery or a swoosh recovery or a W recovery. It will be an ascent with a lot of turbulence.


That's what the LCCs and legacies have been saying. Just check the comments from AA in the most recent wolfe research presentation if you don't believe me.

Nobody is saying a V or even U shape recovery. But the flying that's coming back have been VFR first, followed by pure leisure. Corporate travel demand is still stuck at zero right now.
 
User avatar
seahawk
Posts: 9645
Joined: Fri May 27, 2005 1:29 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Tue May 26, 2020 11:53 am

Any airline manager making a prediction for the future is either very brave or very stupid. Nobody knows how much flying will be possible in fall, much less in winter. It depends factors not in the hands of the airline at all. You can have scenarios nothing more.
 
MIflyer12
Posts: 8078
Joined: Mon Feb 18, 2013 11:58 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Tue May 26, 2020 12:47 pm

IrishAyes wrote:
So over the weekend I was able to get more context about the statement from the VP of flight ops and a lot of my initial suspicions were confirmed.

Quite frankly, it is really careless of this VP to make a statement like he did...


WN is not an agile company. No discussions of network opportunities that they can potentially “exploit “in the event/aftermath of one of their competitors suffering, will spare them from succumbing to similar fates. This statement from Leadership was really reckless, and frankly, it’s gonna bite him in the you know what.


This person may know flights ops but is unskilled in the (dark?) arts of corporate communications.

WN has some strengths. Labor productivity (RPMs per employee, revenue per employee) is good. There is faith in - and identification with - the brand. Two of their relative strengths have been margins and balance sheet. For a while, if they're prudent (and that means some furloughs) they'll have money where other carriers do not. They could opportunistically pick up slots, gate leases, and aircraft leases rejected by other carriers in Ch 11. If U.S. passenger demand X avg fare is still off 25% a year from now there will be Ch 11 filings by major U.S. carrier - one of DOT's ten tracked marketing carriers with at least 0.5% share. That could set up WN for a decade or two of growth in important markets when other carriers back out of leases in DEN/LAX/BOS/JFK/FLL etc.
 
jplatts
Posts: 3620
Joined: Sat Mar 18, 2017 6:42 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Tue May 26, 2020 11:49 pm

EWRandMDW wrote:
I think WN made a huge mistake in pulling out of EWR. I flew MDW-EWR-MDW a number of times and the flights were always 3/4 or more full. That suggests to me that many other passengers decided LGA was not the right choice for them. Surely WN's management must realize that NJ is not NYC and doesn't necessarily want to be. That would be like calling Texas South Oklahoma. To me it'll be stupid to fly into LGA and then have to work my way back to NJ, often passing EWR, to get where I'm going.


Downtown Newark is closer to LGA than Downtown Fort Worth is to DAL or Downtown Washington, DC is to BWI. There are some travelers going to Downtown Washington, DC who fly into BWI on WN and some travelers going to Downtown Fort Worth who fly into DAL on WN, even with DCA being closer to Downtown Washington, DC and DFW being closer to Downtown Fort Worth.

LGA is close enough to cities along the NJ-Manhattan border such as Jersey City, Hoboken, Weehawken, Union City, West New York, Guttenberg, North Bergen, Fairview, Cliffside Park, Edgewater, Fort Lee, and Englewood Cliffs for LGA to be a viable option for those traveling to cities along the NJ-Manhattan border.

There are also some travelers going to and from the 5 NYC boroughs who do fly into EWR, even with LGA being closer to Manhattan, Brooklyn, Queens, and the Bronx than EWR.

I do agree that there are some travelers going to the NJ side of the NYC metro area who would prefer to fly into EWR instead of LGA or JFK, especially with some of the further out suburbs on the NJ side of the NYC metro area being more than 30 miles west from EWR.
 
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IrishAyes
Posts: 2430
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Wed May 27, 2020 1:15 am

KPDX wrote:
You can tell WN is doing the right thing by the sheer derangement people have towards the airline. Nuff said!


Feel free to think that way. Nobody has, "derangement" towards Southwest. I certainly don't - I had several amazing years working there and made connections with some fantastic, talented individuals who I would happily work among again. But "triggering" and "A vs. B" whatever was stated is, well, not relevant. For the record, you can't tell by an ANETTER's user name whether they hold stocks in a company, so maybe re-consider whether you think this is a personal thing? Because it's not....

What the rational people on this thread are saying, if I am interpreting it correctly, is that the VP's statement dangerously borders on the tip of brand arrogance + denial, or brazen complacency. Southwest may have metrics that on-paper, COMPARATIVELY to other carriers make them stand-out. However, the key figure here is that the playing field has not only been leveled in COVID-19, but the landscape has become essentially obliterated by a supply/demand shock that is down 90% YoY.

That's not good.

And recovery is nowhere in sight.

Southwest has successfully outmaneuvered a lot of trying times in the past and executed well on being nimble, bold, and leveraging their People to work together and pivot towards success. That was then. This is now. It is larger, slower, and arrogance about the Brand or its People will not save them from these demand and supply figures. Scott Kirby said on the Q1 earnings call for UA, "hope is not a strategy." Neither for them, nor any airline, for that matter. And He's usually right about this stuff. Gary Kelly is an incredible leader, but even his tone has become more grim with each week.

I just caution anyone who sees this as anti-WN sentiments to think a little more rationally, and big-picture about this, because otherwise it can lead to a really, really brutal awakening down the line.
 
Jetport
Posts: 138
Joined: Thu Apr 02, 2015 4:23 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Wed May 27, 2020 1:36 am

DarkSnowyNight wrote:
questions wrote:
tphuang wrote:
If legacies are still 20% smaller by end of 2022 and WN is larger than it was pre-COVID by then, they will automatically be gaining market share. It's really hard to argue that this downturn is not hitting legacies harder. Everyone is admitting that leisure is coming back before business travel and domestic is coming back before international.

It will be interesting for me to see what happens at DEN. I anticipate a huge battle there. If UA devotes a lot of resources to keep its market share at DEN against WN, that's less resources it will have in its other hubs.


Everyone? Everyone who? Who is admitting that?

You are forgetting the demand was first drastically reduced by the traveling public not wanting to fly then by government intervention.

You’re overlooking how the coronavirus pandemic is expected to play out. The industry will not “rebound” first with leisure traffic, then business and domestic followed by international. Leisure travelers may be packing onto the beaches in Florida and pool parties at the Lake of the Ozarks and WN may be helping getting them there. But as coronavirus hot spots develop and are *properly* reported, those overly confident leisure travelers will lose their sense of immortality.

We are not going to experience a methodical return to pre-COVID-19 traffic levels as you propose. This is not driven by the same factors as an economic recovery. The airline industry will not experience a V recovery or a swoosh recovery or a W recovery. It will be an ascent with a lot of turbulence.


I do not think you understand. No one is supposing Leisure traffic will bounce back to pre-Covid levels straight away; just that it will come back before business travel.

And even then, Leisure traffic will still not be what it was prior. What is for certain is that Business Travel is largely done-for. Outside of a few exceptional needs, companies that insist on remaining in that past will get slaughtered by their competition. This is even after Covid recovery, as several initially survival based paradigms will become norms.

I do agree that it will be a long time before even Leisure levels are back fully, if ever.

It does look as though WN are well positioned for this. And as for the rest of the Legacies, it is no surprise they are hit hardest. With the most expensive labor contracts and highest levels of encumbered debt, they have a lot of hustling to do if survival is really their plan...


WN will gain share. We are all seeing the wisdom of LUV's one aircraft business model in this downturn, something many complex fleet loving ANet folks downplay constantly. Many of WN's competitors can't simplify their fleets fast enough. Imitation is the sincerest form of flattery.

I totally disagree with you on business travel. Business travel will probably take a long time to return to 2019 levels, primarily because there was some unnecessary travel (boondoggles) in the past. But most business travel was needed. Sales visits, especially initial ones and annual reviews need to be in person. Are you going to spend millions of dollars with a new supplier you have never met?

I have now done several quarterly reviews on Skype and Teams and on the plus side they are shorter meetings, but they are also far less productive meetings. Most of my travel is for Technical Field Service, try that on Zoom or Teams and let me know how it goes.
 
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DarkSnowyNight
Posts: 2672
Joined: Sun Jan 01, 2012 7:59 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Wed May 27, 2020 3:07 am

Jetport wrote:

WN will gain share. We are all seeing the wisdom of LUV's one aircraft business model in this downturn, something many complex fleet loving ANet folks downplay constantly. Many of WN's competitors can't simplify their fleets fast enough. Imitation is the sincerest form of flattery.


Certainly. But gaining share is not necessarily the same as gaining volume. They will absolutely be larger relative to DL, AA, UA, et al. But the actual ASMs will be smaller.

Jetport wrote:
I totally disagree with you on business travel. Business travel will probably take a long time to return to 2019 levels, primarily because there was some unnecessary travel (boondoggles) in the past. But most business travel was needed. Sales visits, especially initial ones and annual reviews need to be in person. Are you going to spend millions of dollars with a new supplier you have never met?


I certainly understand that people disagree. But that is very often the case where paradigm shifts are concerned. We need to remember that most, if not all, companies exist quarter by quarter. Suddenly reintroducing a cost they've been living without —with increasing comfort— is really a non-starter.

As for spending money on suppliers you have not met? That is not even new, and with things like E-signatures making extraordinary gains in acceptance, it was always only a matter of time before that replaced in-person meets. This is not even limited to long distance either. Transactions involving only city or county wide distances were already going that way too.

In my company's case, we have even purchased properties that way; properties that have only ever been visited by locally employed personnel too. I would have personally seen that as ridiculous as recently as five years ago. But it is happening.


Jetport wrote:
I have now done several quarterly reviews on Skype and Teams and on the plus side they are shorter meetings, but they are also far less productive meetings. Most of my travel is for Technical Field Service, try that on Zoom or Teams and let me know how it goes.


Have done. And very easily. And as for items requiring hands on for that, hiring locally and temporarily makes a lot more sense than utilizing roving personnel. In my experience, these things generally get easier, in terms of finding the most productive work-arounds as time goes by.

What a lot of travelers are not seeing here —likely and not unreasonably for reasons of personal interest— is that your employer really does not care about your concerns there. They will see that what ever "difficulties" people have with remote work are likely resulting more from user adaptation issues than anything structural to the system itself. What they do care about is the three to five times an average salary it costs to maintain an active traveling staff per capita.

There is already enough pressure to reduce those costs as it is. But when a company starts losing clients because they think clients value handshakes more than saving 20 -25% of a given cost, well, you see where this is going. FWIW, I do not see this as something caused by the current events so much as catalyzed by them. These advancements were inevitable.

And even with all that, there is still as much potential for productivity loss with in-person travel as well. That was fine in the past, but trying to justify that in the future will present a challenge.

I am certain there will still be an amount of business travel after this. After all, horses still remain in an age dominated by auto-traffic. But it will not be what it was.




As it pertains here, I do agree that apart from NK, WN is by far the best positioned to deal with these evolutions. Fleet simplicity helps, but the real story is a strongly flexible network and the fact that they have always balanced leisure vs business pretty well for just about every route they operate.
"Nous ne sommes pas infectés. Il n'y a pas d'infection ici..."
 
jplatts
Posts: 3620
Joined: Sat Mar 18, 2017 6:42 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Wed May 27, 2020 3:40 am

EWRandMDW wrote:
I think WN made a huge mistake in pulling out of EWR. I flew MDW-EWR-MDW a number of times and the flights were always 3/4 or more full. That suggests to me that many other passengers decided LGA was not the right choice for them.


WN dropping EWR-MDW nonstop service wasn't the only mistake that WN made at MDW.

While WN doesn't currently serve RIC nonstop from MDW, WN should have added RIC-MDW nonstop service 7 years ago with RIC-CHI having higher PDEW's than OKC-CHI, TUS-CHI, ABQ-CHI, BHM-CHI, or ALB-CHI. WN would be able to offer 1-stop connecting service to RIC from at least 14 additional cities if WN adds RIC-MDW nonstop service, and WN has a FF base in the Chicago market to support RIC-MDW nonstop service.

In addition to dropping EWR-MDW nonstop service and not adding RIC-MDW nonstop service, WN had also discontinued BOI-MDW, GEG-MDW, GSP-MDW, and TUL-MDW nonstop service. WN can probably make BOI-MDW, GEG-MDW, GSP-MDW, and TUL-MDW nonstop service work on a summer seasonal basis as WN had previously been able to fill BOI-MDW, GEG-MDW, GSP-MDW, and TUL-MDW nonstop flights during the summertime in the past.

WN also dropped SNA-MDW nonstop service due to WN losing slots at SNA, but WN is likely to re-add SNA-MDW nonstop service once WN acquires more slots at SNA.

I had also mentioned WN adding ELP-MDW nonstop service as a possibility with ELP being one of the top destinations that WN doesn't currently serve nonstop from MDW and with WN having a FF base in both the Chicago and El Paso markets to support ELP-MDW nonstop service. WN would also be able to offer 1-stop connecting service from ELP to a few additional destinations that it doesn't serve nonstop from DEN, DAL, AUS, or HOU through MDW if it adds ELP-MDW nonstop service.

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