Max Q
Topic Author
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Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 10:00 am

Continental had ‘Cal lite’ Delta had ‘Song’
and United had ‘Ted’ yet American never
went along with the low fare ‘airline within
an airline’ idea


Turns out they were right of course as all of those operations didn’t work out and were
shut down


But AA’s refusal to go along with this popular, yet misguided idea was notable,
wonder why that was ?
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ctrabs0114
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 11:55 am

Wasn't this around the time when AA was going through one of their financial dramas? Also, I seem to recall US also attempting an "airline within an airline" concept with MetroJet.

Meanwhile, AF ended their Joon "airline within an airline" concept and the jury seems to be out on WS's attempt at a similar scheme with Swoop (haven't kept up with that one).

They just never learn, apparently...
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trintocan
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 12:18 pm

AA were in serious financial difficulties at the time and were being restructured. They clearly decided that adding another operational entity was not the best thing to do at that point in time. To a wider point, these "airlines within airlines" are potentially very problematic. They merely end up diluting the market, image and product of the parent airline if not done carefully. History has many examples of this, such as BA's low-cost offshoot Go which while profitable was ultimately sold to EasyJet; AF's Joon, which is soon to disappear back into the its parent; the aforementioned Song by DL and Ted by UA which were subsequently merged back into their respective parents. AC's Rouge appears to be a bright exception to this rule though it works because it does not overlap routes with its parent and it, somewhat ironically, fully embraces the parent's brand rather than trying to deny it.

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MIflyer12
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 12:31 pm

trintocan wrote:
AA were in serious financial difficulties at the time and were being restructured.


Delta started Song in 2003. CO started Cal Lite in 1993. AA wasn't perpetually in financial distress. AA's Ch 11 filing came 11/29/11.

Anybody remember the short-lived AA ad tag line, 'A great low fare and a lot more airline?'
 
jmc1975
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 12:41 pm

They didn’t want to lose money on something where they would end up having to scrap the whole shoot-n-match
.......
 
trintocan
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 12:49 pm

MIflyer12 wrote:
trintocan wrote:
AA were in serious financial difficulties at the time and were being restructured.


Delta started Song in 2003. CO started Cal Lite in 1993. AA wasn't perpetually in financial distress. AA's Ch 11 filing came 11/29/11.

Anybody remember the short-lived AA ad tag line, 'A great low fare and a lot more airline?'


Thank you MIflyer12, I meant the post 9/11 period when AA sought bankruptcy protection. Continental Lite was indeed earlier - so much so that I know virtually nothing about it. Back in 1993 AA was growing from strength to strength with the MIA hub bringing a major wave of expansion for them.

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atrude777
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 1:06 pm

MIflyer12 wrote:
trintocan wrote:
AA were in serious financial difficulties at the time and were being restructured.


Delta started Song in 2003. CO started Cal Lite in 1993. AA wasn't perpetually in financial distress. AA's Ch 11 filing came 11/29/11.

Anybody remember the short-lived AA ad tag line, 'A great low fare and a lot more airline?'


And going further back you had Delta Express!

If I recall, Southwest was obviously the reason for those Airline-Within-Airline, who was the first?

CO Lite or Metro?

Followed by Delta Express and Shuttle by United?

Then Song in response to Jetblue, and Ted by United in response to Frontier in DEN I imagine?

It is indeed surprising that American did not ever issue one, and neither did Northwest Airlines. I believe of the airlines then Northwest and American never had those?

Alex
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jmmadrid
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 1:07 pm

Slightly off-topic, another "successful" example of an airline within an airline is IBERIA EXPRESS, that handles less business-heavy routes for her mother IBERIA and competes head to head with low costs. Cabin crew are paid less, among other differences.
 
washingtonflyer
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 1:13 pm

ctrabs0114 wrote:
Wasn't this around the time when AA was going through one of their financial dramas? Also, I seem to recall US also attempting an "airline within an airline" concept with MetroJet.



Ahh yes! Jethrojet for the win!
 
Miamiairport
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 1:17 pm

LAA never considered that route, and for good reason. Low cost divisions weren't all that really low cost when you considered the operational inefficiencies they caused. For example Song. If one of their 757s went out of service they were limited to substituting a single class Song 757. Also unlike mainline they couldn't easily move around a/c type based upon seasonal demand. Not to mention they were still using DL employees to staff the low cost unit. It was all poorly thought of and ill conceived.
 
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 1:18 pm

atrude777 wrote:
MIflyer12 wrote:
trintocan wrote:

AA were in serious financial difficulties at the time and were being restructured.


Delta started Song in 2003. CO started Cal Lite in 1993. AA wasn't perpetually in financial distress. AA's Ch 11 filing came 11/29/11.

Anybody remember the short-lived AA ad tag line, 'A great low fare and a lot more airline?'


And going further back you had Delta Express!

If I recall, Southwest was obviously the reason for those Airline-Within-Airline, who was the first?

CO Lite or Metro?

Followed by Delta Express and Shuttle by United?

Then Song in response to Jetblue, and Ted by United in response to Frontier in DEN I imagine?

It is indeed surprising that American did not ever issue one, and neither did Northwest Airlines. I believe of the airlines then Northwest and American never had those?

Alex


Well there was "Friendship Express" by UA in the early 80's and Continental West as well. Very short lived.

My thoughts on AA is that they were at the forefront of computerised revenue management and were among the first to turn the whole plane into basically 3 airlines in one: First, Economy and then the capacity controlled discount group. Let's not forget the infamous "B-scale" employee groups, which essentially made new hires the lower cost work force to make the capacity controlled discount seats work, at least for a while. No real need to do the whole "AA Minus" offshoot airline.
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superjeff
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 1:21 pm

atrude777 wrote:
MIflyer12 wrote:
trintocan wrote:
AA were in serious financial difficulties at the time and were being restructured.


Delta started Song in 2003. CO started Cal Lite in 1993. AA wasn't perpetually in financial distress. AA's Ch 11 filing came 11/29/11.

Anybody remember the short-lived AA ad tag line, 'A great low fare and a lot more airline?'


And going further back you had Delta Express!

If I recall, Southwest was obviously the reason for those Airline-Within-Airline, who was the first?

CO Lite or Metro?

I believe Continental Lite came first, still under Frank Lorenzo. I'm not sure if it was intended directly to compete with Southwest, although they did fly a few similar routes (i.e., IAH-DFW for CO as opposed to HOU-DAL for WN), but they had a "hub" at GSO and Southwest didn't fly anywhere near there at the time.

Metrojet, a bit later, was a direct response to Southwest's build up in BWI, and was a major flop, because it basically diluted the brand.

Followed by Delta Express and Shuttle by United?

Then Song in response to Jetblue, and Ted by United in response to Frontier in DEN I imagine?

It is indeed surprising that American did not ever issue one, and neither did Northwest Airlines. I believe of the airlines then Northwest and American never had those?

Alex
 
Ziyulu
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 1:33 pm

Is Air Japan an LCC for ANA?
 
Ziyulu
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 1:33 pm

I guess AA's low fare operation is now called Basic Economy!
 
trintocan
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 1:46 pm

jmmadrid wrote:
Slightly off-topic, another "successful" example of an airline within an airline is IBERIA EXPRESS, that handles less business-heavy routes for her mother IBERIA and competes head to head with low costs. Cabin crew are paid less, among other differences.


Again, as with Air Canada Rouge, Iberia Express works by keeping close branding ties with its parent and not competing head-to-head on routes. For AA, Ziyulu's comment above makes sense. By offering various fare levels including bargain-basement fares within the same airline they avoid having to do the complex brand engineering involved with setting up a stand-alone low cost unit.

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AA777223
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 2:05 pm

The Europeans seem to have better luck. There's Edelweiss of Swiss and Eurowings (and Condor?) of LH.
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TWFlyGuy
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 2:22 pm

Most airlines in the US that introduced sub-brands did so when they were in financial difficulty. Or at least experiencing significant new competition from a low cost competitor in a strategic market. UA introduced Shuttle by United on the West Coast when Southwest began their big push there. Similar for Delta Express in Florida and US's Metrojet in BWI. CAL Lite was more of a dart throwing exercise at a floundering company. During the 1990's when a lot of those efforts came along AA was still pretty strong and doing well competing against WN in Dallas & Chicago. As those efforts failed, I think they may have said they needed to crack the nut differently since no of those is working.
 
AWACSooner
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 2:27 pm

Still think Metrojet's scheme looked AWESOME...long live the flying tomato!
 
910A
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 2:33 pm

Someone forgot "Shuttle by United"..that was a concept that didn't make much sense..
 
TheEuphorian
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 2:33 pm

Ziyulu wrote:
Is Air Japan an LCC for ANA?

no
 
xdlx
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 2:39 pm

Much before Song and during same time of MetroJet was Delta Express
 
N983AN
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 2:46 pm

MIflyer12 wrote:
trintocan wrote:
AA were in serious financial difficulties at the time and were being restructured.


AA wasn't perpetually in financial distress. AA's Ch 11 filing came 11/29/11.


I guess the 2003 out of court restructuring following the idiotic acquisition of TWAs assets under Don Carty passed you by. The 2011 bankruptcy was the climax of a long, (nearly) lost decade of American under Gerard Arpey. AA had tried repeatedly to obtain scope relief from APA and restructure the TWU and APFA agreements to match those achieved by CO, DL, NW, UA, and US through the bankruptcy process to no avail. The unions were still bitter over the out of court restructuring calling for “restore and more” and management at the time believed the gap with competitors would narrow as their agreements became amendable, but ultimately the gap only widened and the Ch 11 filing was long over due.
 
trintocan
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 3:04 pm

AA777223 wrote:
The Europeans seem to have better luck. There's Edelweiss of Swiss and Eurowings (and Condor?) of LH.


Condor (DE) was a subsidiary of LH years ago. It is now owned by Thomas Cook.

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Dominion301
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 3:08 pm

AA777223 wrote:
The Europeans seem to have better luck. There's Edelweiss of Swiss and Eurowings (and Condor?) of LH.


Condor have been part of Thomas Cook for a long time...but still have a close interline relationship with LH.
 
B737900ER
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 3:10 pm

910A wrote:
Someone forgot "Shuttle by United"..that was a concept that didn't make much sense..

Shuttle by United wasn’t a low fare operation. It was United scheduling and marketing frequent flights between west coast cities to compete with WN

The whole airline within an airline made absolutely no sense to me. Ted and Song were made to compete with JetBlue, but still came with the legacy cost structure. You still had mainline pilots, FAs, mechanics, dispatchers, ramp, etc working regular mainline one flight, and Ted or song the next. You kept the high cost structure but lowered fares. No wonder they were forced into bankruptcy so quickly.
 
Flighty
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 3:18 pm

Without a commensurate labor deal, which AA wasn't going to get, those mini airlines were totally pointless. Let's see, you get diluted revenue (worse product) and a chunkier fleet that is harder to sub. All for the same high cost.

Song was a shot at JetBlue (TV in seats) while others were more Southwest-oriented. There was an effort to compete on product. The lesson they learned was, nobody really cares about the product anyway, they care about schedule and price.
 
UpNAWAy
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 3:25 pm

This concept is something I have never understood.
Either being a LCC is a good idea or not. Or there maybe things a LCC does that a Legacy likes and makes sense to incorporate, so why not just adopt those ideas? But to take that LCC concept and decide to start a competing and separate entity, just never ever seemed to be anything but insanity.
 
TWFlyGuy
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 3:45 pm

B737900ER wrote:
910A wrote:
Someone forgot "Shuttle by United"..that was a concept that didn't make much sense..

Shuttle by United wasn’t a low fare operation. It was United scheduling and marketing frequent flights between west coast cities to compete with WN

The whole airline within an airline made absolutely no sense to me. Ted and Song were made to compete with JetBlue, but still came with the legacy cost structure. You still had mainline pilots, FAs, mechanics, dispatchers, ramp, etc working regular mainline one flight, and Ted or song the next. You kept the high cost structure but lowered fares. No wonder they were forced into bankruptcy so quickly.


Two of the biggest expenses on a flight are the direct flight crew. In both cases the idea is that if you can pull a portion of the fleet out and give it its own P&L you can do some things to make it profitable. So, for example, that dedicated Song fleet got incrementally better utilization due to quicker turn times, etc. making the aircraft expense cheaper. By getting the lower tenure pilot & FA groups dedicated they got lower crew costs. At the end of the day though you can only grow that so much before you eat into higher cost crews and start losing some of the utilization efficiency. Add to that some of the fleet issues with subs notes in other responses and the fact that nobody knows your brand or what it stands for, etc. it doesn't work. For Delta, a lot of the product you saw on Song became what Delta is today. So there was some success in that sense as it told the company that pax are looking for value.
 
ozark1
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 3:48 pm

The old Frontier tried Frontier Horizon, which was non union. Made for a real tense situation with unionized FL. Don’t think it lasted long
 
Ziyulu
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 3:51 pm

Actually, I think what should happen is all US carriers should have a low-cost domestic operation. That way, their international brand would not be diluted. Think about it, the top ranking airlines in the world have a low-cost regional operation. Think Singapore vs. Silk, JAL vs. JAL Express, Cathay Pacific vs. Cathay Dragon. Our US airlines could become 5 star carriers.
 
drdisque
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 3:52 pm

Ted and United never competed, with a few exceptions (ie Ted briefly flew MDW-DEN in competition with ORD-DEN, Ted flew OAK-DEN in competition with SFO-DEN)

Ted was predicated on getting cost concessions from the unions in exchange for "growth", but considering this growth was just the repainting of UA mainline aircraft and not new airplanes for Ted, the unions weren't buying it.

eliminating F did reduce CASM a little bit and there were a few Ted routes where the Ted configuration was superior from a revenue standpoint to the mainline one (CUN was the prime example), due to the fact that there was very little paid F and decent Y yields. However, in the end, Ted aircraft ended up having about the same CASM as a mainline A320 due to the extra FA required.
 
itchief
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 3:53 pm

Ziyulu wrote:
I guess AA's low fare operation is now called Basic Economy!


This is the correct answer.
 
B737900ER
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 5:36 pm

TWFlyGuy wrote:
B737900ER wrote:
910A wrote:
Someone forgot "Shuttle by United"..that was a concept that didn't make much sense..

Shuttle by United wasn’t a low fare operation. It was United scheduling and marketing frequent flights between west coast cities to compete with WN

The whole airline within an airline made absolutely no sense to me. Ted and Song were made to compete with JetBlue, but still came with the legacy cost structure. You still had mainline pilots, FAs, mechanics, dispatchers, ramp, etc working regular mainline one flight, and Ted or song the next. You kept the high cost structure but lowered fares. No wonder they were forced into bankruptcy so quickly.


Two of the biggest expenses on a flight are the direct flight crew. In both cases the idea is that if you can pull a portion of the fleet out and give it its own P&L you can do some things to make it profitable. So, for example, that dedicated Song fleet got incrementally better utilization due to quicker turn times, etc. making the aircraft expense cheaper. By getting the lower tenure pilot & FA groups dedicated they got lower crew costs. At the end of the day though you can only grow that so much before you eat into higher cost crews and start losing some of the utilization efficiency. Add to that some of the fleet issues with subs notes in other responses and the fact that nobody knows your brand or what it stands for, etc. it doesn't work. For Delta, a lot of the product you saw on Song became what Delta is today. So there was some success in that sense as it told the company that pax are looking for value.

But they didn’t get any low tenured crew to work the flights. It was all the same. No split seniority list. You bid where your seniority took you. And that meant 20 year captains and 30 year FAs with 40 year mechanics working Ted flights. The only difference was the paint on the plane and the price of the ticket.
 
c933103
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 5:52 pm

Ziyulu wrote:
Is Air Japan an LCC for ANA?

That's more like a lower cost crew group offering same service according to my understanding
When no other countries around the world is going to militarily stop China and its subordinate fom abusing its citizens within its national boundary, it is unreasonable to expect those abuse can be countered with purely peaceful means.
 
FlyingElvii
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 5:58 pm

washingtonflyer wrote:
ctrabs0114 wrote:
Wasn't this around the time when AA was going through one of their financial dramas? Also, I seem to recall US also attempting an "airline within an airline" concept with MetroJet.



Ahh yes! Jethrojet for the win!

At the time, Southwest and America West were expanding east, Jet Blue was growing fast, New Frontier and National in Vegas was all the rage in the West.
Song , was a direct attempt to compete against Jet Blue and Carnival, who were eating their lunch in the northeast-Florida markets. Lots of startups like Air South, Vangaurd, Direct, etc.
 
Max Q
Topic Author
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 6:15 pm

Ziyulu wrote:
Actually, I think what should happen is all US carriers should have a low-cost domestic operation. That way, their international brand would not be diluted. Think about it, the top ranking airlines in the world have a low-cost regional operation. Think Singapore vs. Silk, JAL vs. JAL Express, Cathay Pacific vs. Cathay Dragon. Our US airlines could become 5 star carriers.



Unlike the operators you listed they just don’t need to


US carriers are in the happy position these days of being able to charge high fares and there’s not that much customers can do about it without considerable inconvenience


This is the direct result of the monopoly or vast majority positions the big three hold
at major airports around the country


You can still get lower fares at their basic
economy levels but for the most part these
legacy Airlines have such control over their
markets they don’t need too many of those


Running a separate LCC is unnecessary and would cannibalize the impressive profits that have been churned out since the massive consolidation of the legacy carriers in the last decade or so
The best contribution to safety is a competent Pilot.


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Bobloblaw
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 6:35 pm

MIflyer12 wrote:
trintocan wrote:
AA were in serious financial difficulties at the time and were being restructured.


Delta started Song in 2003. CO started Cal Lite in 1993. AA wasn't perpetually in financial distress. AA's Ch 11 filing came 11/29/11.

Anybody remember the short-lived AA ad tag line, 'A great low fare and a lot more airline?'

in fact serious financial difficulties were what prompted those other carriers to try a low cost unit within the airline.

Here is why: Delta and US were challenged by WN, FL, J7, B6 on their bread and butter Northeast to FL where as MIA was not experiencing that level of LCC intrusion.
United was under pressure from WN in CA, so it created Shuttle
CO was just looking for a cheaper alternative, CALite never made sense and Ted was the same thing,
 
TWFlyGuy
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 6:49 pm

B737900ER wrote:
TWFlyGuy wrote:
B737900ER wrote:
Shuttle by United wasn’t a low fare operation. It was United scheduling and marketing frequent flights between west coast cities to compete with WN

The whole airline within an airline made absolutely no sense to me. Ted and Song were made to compete with JetBlue, but still came with the legacy cost structure. You still had mainline pilots, FAs, mechanics, dispatchers, ramp, etc working regular mainline one flight, and Ted or song the next. You kept the high cost structure but lowered fares. No wonder they were forced into bankruptcy so quickly.


Two of the biggest expenses on a flight are the direct flight crew. In both cases the idea is that if you can pull a portion of the fleet out and give it its own P&L you can do some things to make it profitable. So, for example, that dedicated Song fleet got incrementally better utilization due to quicker turn times, etc. making the aircraft expense cheaper. By getting the lower tenure pilot & FA groups dedicated they got lower crew costs. At the end of the day though you can only grow that so much before you eat into higher cost crews and start losing some of the utilization efficiency. Add to that some of the fleet issues with subs notes in other responses and the fact that nobody knows your brand or what it stands for, etc. it doesn't work. For Delta, a lot of the product you saw on Song became what Delta is today. So there was some success in that sense as it told the company that pax are looking for value.

But they didn’t get any low tenured crew to work the flights. It was all the same. No split seniority list. You bid where your seniority took you. And that meant 20 year captains and 30 year FAs with 40 year mechanics working Ted flights. The only difference was the paint on the plane and the price of the ticket.


Ted generally did not do any of these things they should have done (not that it would have been a different result). Song did but still wasn't enough.
 
ScottB
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 7:07 pm

atrude777 wrote:
If I recall, Southwest was obviously the reason for those Airline-Within-Airline, who was the first?

CO Lite or Metro?

Followed by Delta Express and Shuttle by United?


Continental Lite came along MUCH earlier than Metrojet. In fact, CALite had been gone for a few years before US launched Metrojet in a desperate attempt to defend the BWI hub. But IMO CALite wasn't so much an attempt to fight off the LCCs as it was an attempt to be like the LCCs. The main CALite hub was GSO and there wasn't much of any LCC competition there; CO was more trying to capture traffic in the Southeast with low fares.

Shuttle by United was next and that was a direct response to WN's growth in intra-California markets. Delta Express followed and as others have pointed out was focused on maintaining share in markets between Florida and the Northeast U.S. Metrojet was the last of the four and started with a route map which overlaid most of WN's additions from BWI; they later added non-stops between BOS/LGA/BDL and Florida.

Miamiairport wrote:
Low cost divisions weren't all that really low cost when you considered the operational inefficiencies they caused. For example Song. If one of their 757s went out of service they were limited to substituting a single class Song 757.


Not true. DL would substitute in a mainline 757 for a Song aircraft if needed; they just had to iron out the seat assignment changes and deal with the resulting potential oversale (as the Song 757s had 199 seats, quite a few more than the mainline 757s). Song had some revenue advantages in that there was very little paid F demand to Florida, so if they were going to be selling all Y fares, they might as well be able to sell a couple dozen more seats.

Miamiairport wrote:
Not to mention they were still using DL employees to staff the low cost unit. It was all poorly thought of and ill conceived.


Song was using DL pilots but Song flight attendants (who had been recruited from the DL flight attendant ranks). If memory serves the flight attendant pay was similar but there were some cost savings with respect to work rules.

Flighty wrote:
Song was a shot at JetBlue (TV in seats) while others were more Southwest-oriented. There was an effort to compete on product. The lesson they learned was, nobody really cares about the product anyway, they care about schedule and price.


Actually, I'd say the opposite is true. Much of the Song experience -- leather seats, seat-back TVs, refreshed interiors, complimentary snack items, buy-on-board meals, zone boarding, etc. -- ended up being adopted as the DL mainline experience. Compared to flying in Y on DL, Song was hands-down a superior product.

B737900ER wrote:
The whole airline within an airline made absolutely no sense to me. Ted and Song were made to compete with JetBlue, but still came with the legacy cost structure. You still had mainline pilots, FAs, mechanics, dispatchers, ramp, etc working regular mainline one flight, and Ted or song the next.


Ted was more designed to compete with F9, but yeah the airline-within-an-airline products created muddled brand experiences with most of the high costs of their parent carriers.
 
Etheereal
Posts: 343
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 7:10 pm

Ziyulu wrote:
I guess AA's low fare operation is now called Basic Economy!

Alright, we can mark OP's question as solved now, boys.

Abandon thread.
JetBuddy wrote:
"737 slides off the runway" is the new "Florida man"..

:lol:
 
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PatrickZ80
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 8:08 pm

trintocan wrote:
AF's Joon, which is soon to disappear back into the its parent


But Joon isn't the real LCC within Air France-KLM. The real LCC of Air France-KLM is Transavia, which is performing pretty well.

The difference is that Transavia wasn't founded by Air France-KLM. It was a pre-existing airline that was later bought by KLM but kept as a seperate airline. This was done to seperate the goal of the two different airlines. KLM was the luxury business airline, the legacy carrier. It still is. Transavia was the holiday and charter airline, hauling tourists to their holiday destinations. That's still their main activity. Both airlines offer a different product and accordingly a different service level.

Fun thing is that Transavia hasn't always been an LCC. In fact, for a short while Transavia had an "airline within an airline" which they called BasiqAir. That was the LCC of Transavia. BasiqAir failed, but instead Air France-KLM decided to transform the whole of Transavia into an LCC. Before that, Transavia was a bit more luxury like movies shown on board and free snacks. The luxury was first removed on BasiqAir and later on the rest of Transavia.
 
Flighty
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 8:09 pm

ScottB wrote:
Actually, I'd say the opposite is true. Much of the Song experience -- leather seats, seat-back TVs, refreshed interiors, complimentary snack items, buy-on-board meals, zone boarding, etc. -- ended up being adopted as the DL mainline experience. Compared to flying in Y on DL, Song was hands-down a superior product.


Good point for Song. You can certainly draw a line from Old Delta, thru Song, toward New Delta. Culture, becoming stylish, the whole bit. Quite a success on that basis. You don't see that every day. On the other hand, Ted was mostly regarded as a pointless endeavor. A lot of customers liked Metrojet, for whatever reason. But it did not pencil out.
 
TWFlyGuy
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 8:29 pm

Flighty wrote:
ScottB wrote:
Actually, I'd say the opposite is true. Much of the Song experience -- leather seats, seat-back TVs, refreshed interiors, complimentary snack items, buy-on-board meals, zone boarding, etc. -- ended up being adopted as the DL mainline experience. Compared to flying in Y on DL, Song was hands-down a superior product.


Good point for Song. You can certainly draw a line from Old Delta, thru Song, toward New Delta. Culture, becoming stylish, the whole bit. Quite a success on that basis. You don't see that every day. On the other hand, Ted was mostly regarded as a pointless endeavor. A lot of customers liked Metrojet, for whatever reason. But it did not pencil out.


That's precisely what happened with Song. Prior to the bankruptcy, a corporate review ordered by the CEO, Grinstein, came to that conclusion. If they could make the company have a slightly better Y product, fashion up the brand if you will, they could improve the airline. I would say they have been successful and have done more to capitalize on that effort, and the benefits of ch 11, than AA & UA have.
 
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PatrickZ80
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 8:42 pm

Max Q wrote:
Running a separate LCC is unnecessary and would cannibalize the impressive profits that have been churned out since the massive consolidation of the legacy carriers in the last decade or so


Not entirely true. For example, look at the difference between KLM and Transavia. Transavia doesn't cannibalize KLM in any way since they're different products. Transavia mostly serves different destinations. There is some overlap, but not a lot. The destinations served by KLM are mostly business destinations, while Transavia serves the leisure destinations. Also the long haul market is entirely under the KLM brand, Transavia doesn't fly long haul.

Transavia is aimed very much at the Dutch local market. For that reason they got hubs spread throughout the country, not only Amsterdam but Rotterdam, Eindhoven and seasonally Groningen as well. Transavia by itself doesn't offer transfers, they only sell point-to-point flights. On a limited scale they feed for KLM out of Amsterdam, but that's not their main goal. KLM on the other hand is a network airline, the hub function of Amsterdam is important to them. It's the only airport they fly out of. They live of transfers.

Travel agencies (yes, they still exist) always try booking business travelers on KLM and leisure travelers on Transavia. By giving both airlines a different purpose, they don't cannibalize each other.
 
luckyone
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 8:43 pm

Ziyulu wrote:
Actually, I think what should happen is all US carriers should have a low-cost domestic operation. That way, their international brand would not be diluted. Think about it, the top ranking airlines in the world have a low-cost regional operation. Think Singapore vs. Silk, JAL vs. JAL Express, Cathay Pacific vs. Cathay Dragon. Our US airlines could become 5 star carriers.

Except Silk Air was never low cost, and is now being integrated into Singapore mainline. Silk Air was always the regional product, but never low cost. Scoot now fills the low cost role within the SQ group.

Cathay Dragon originally came to be as Dragon Air, initially an independent airline which later focused on routes to mainland China in the pre-handover days, the precise politics of the route authorities I am not well versed in. Unless I'm mistaken, Cathay's own aircraft didn't fly to the mainland from the late 1980s until around 2004-5. It's not a low cost carrier either. Brand separation, sure, but not low cost.

Another problem is this: US labor groups. It will be next to impossible for one airline to operate two different airlines at two different pay scales. I guess in theory it is, indeed, possible, but no one has figured out a way to make it actually happen.
 
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flyingclrs727
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 8:43 pm

It's better to lower costs throughout the airline and be able to have lower fare seats available in all their flights. A separate low cost division would have fewer destinations. Being able to price seats differently depending on advance purchase, time of day and day of week makes it possible to fill up already existing seats that otherwise might go empty.
 
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PatrickZ80
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 9:10 pm

luckyone wrote:
Another problem is this: US labor groups. It will be next to impossible for one airline to operate two different airlines at two different pay scales. I guess in theory it is, indeed, possible, but no one has figured out a way to make it actually happen.


That's another difference with Europe, where airlines did find a way to do this on a limited scale. Even in countries where the unions have a large influence, like France, it appeared to be possible. They agreed for Transavia France pilots to earn a lower wage than Air France pilots, however not too much lower and Transavia France is bound to a maximum size. It doesn't work unlimited, but it works.

That's one of the reason an airline within an airline works in Europe and doesn't work in America.
 
BoeingGuy
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 9:17 pm

itchief wrote:
Ziyulu wrote:
I guess AA's low fare operation is now called Basic Economy!


This is the correct answer.


I thought the correct answer is that it’s because it’s a dumb idea and has never been successful in the US.
 
Ziyulu
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 9:21 pm

luckyone wrote:
Ziyulu wrote:
Actually, I think what should happen is all US carriers should have a low-cost domestic operation. That way, their international brand would not be diluted. Think about it, the top ranking airlines in the world have a low-cost regional operation. Think Singapore vs. Silk, JAL vs. JAL Express, Cathay Pacific vs. Cathay Dragon. Our US airlines could become 5 star carriers.

Except Silk Air was never low cost, and is now being integrated into Singapore mainline. Silk Air was always the regional product, but never low cost. Scoot now fills the low cost role within the SQ group.

Cathay Dragon originally came to be as Dragon Air, initially an independent airline which later focused on routes to mainland China in the pre-handover days, the precise politics of the route authorities I am not well versed in. Unless I'm mistaken, Cathay's own aircraft didn't fly to the mainland from the late 1980s until around 2004-5. It's not a low cost carrier either. Brand separation, sure, but not low cost.

Another problem is this: US labor groups. It will be next to impossible for one airline to operate two different airlines at two different pay scales. I guess in theory it is, indeed, possible, but no one has figured out a way to make it actually happen.


The thing about Silk Air is that their service is not as good as Singapore, because they fly narrow-body planes. You can't have a premium experience on a short-haul flight.
 
trintocan
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 9:41 pm

PatrickZ80 wrote:
trintocan wrote:
AF's Joon, which is soon to disappear back into the its parent


But Joon isn't the real LCC within Air France-KLM. The real LCC of Air France-KLM is Transavia, which is performing pretty well.

The difference is that Transavia wasn't founded by Air France-KLM. It was a pre-existing airline that was later bought by KLM but kept as a seperate airline. This was done to seperate the goal of the two different airline.


The point you make here is key. Transavia (HV) were a separate airline with a clearly-defined identity before KL bought them. As such there was none of the difficult brand-establishment and -differentiation work which would have been necessary had KL started them from scratch. They are certainly a major success with flights to lots of holiday destinations across Europe.

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