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

Mon Jan 14, 2019 11:27 pm

BoeingGuy wrote:
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.


Do you think Basic Economy is a good idea or will be successful?
 
Miamiairport
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 11:43 pm

BE has been very successful and airlines are experiencing a high conversion to main cabin. Some people could care less where they sit. They stay lost in their phone the entire time anyway.
 
BoeingGuy
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Re: Why didn’t AA try a separate low fare operation ?

Mon Jan 14, 2019 11:48 pm

itchief wrote:
BoeingGuy wrote:
itchief wrote:

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.


Do you think Basic Economy is a good idea or will be successful?


Specifically I was referring to a separate low cost airline within an airline not working in the US.

I believe that Basic Economy is just another way of adding fees. Pretty soon it will be the same price of Regular Economy but now you have to pay extra for seat assignments and stuff. I guess from a beancounter standpoint it might be successful, but just another way of adding more fees for the same fare.
 
himarhernandez
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Re: Why didn’t AA try a separate low fare operation ?

Tue Jan 15, 2019 1:44 am

trintocan wrote:
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.

Trintocan.



Iberia Express seems to be doing quite well
 
Flighty
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Re: Why didn’t AA try a separate low fare operation ?

Tue Jan 15, 2019 2:40 am

BoeingGuy wrote:
itchief wrote:
BoeingGuy wrote:

I thought the correct answer is that it’s because it’s a dumb idea and has never been successful in the US.


Do you think Basic Economy is a good idea or will be successful?


Specifically I was referring to a separate low cost airline within an airline not working in the US.

I believe that Basic Economy is just another way of adding fees. Pretty soon it will be the same price of Regular Economy but now you have to pay extra for seat assignments and stuff. I guess from a beancounter standpoint it might be successful, but just another way of adding more fees for the same fare.


I see plenty of Basic Economy domestic fares in the $400-600 bracket now, on high demand days. That is an insult. They should bake in an assigned seat for any $500 ticket. Complete BS.

Edit: In fact, I have found some Basic Economy domestic RT on Delta for over **$1,200 RT** like SLC-MSP nonstop this week. Wow I didn't realize how stupid this is. What a huge FU to customers, didn't even realize this is possible. No bags, no assigned seat.
 
Ziyulu
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Re: Why didn’t AA try a separate low fare operation ?

Tue Jan 15, 2019 2:56 am

When are US carriers known for providing great service today? They are capable but choose not to.
 
crazyplane1234
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Re: Why didn’t AA try a separate low fare operation ?

Tue Jan 15, 2019 3:17 am

PatrickZ80 wrote:
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.


I assume that the same applies to QF/JQ in Australia?
 
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PatrickZ80
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Re: Why didn’t AA try a separate low fare operation ?

Tue Jan 15, 2019 7:17 am

himarhernandez wrote:
trintocan wrote:
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.

Trintocan.



Iberia Express seems to be doing quite well


True, but Iberia Express is not a true LCC. They're just a sub-airline of Iberia, lifting along on the Iberia brand. The true LCC of Iberia (or IAG for that matter) is Vueling.
 
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LAX772LR
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Re: Why didn’t AA try a separate low fare operation ?

Tue Jan 15, 2019 7:30 am

Surprised that no one's yet mentioned the actual answer.... which is that AA went a different route: the infamous "More Room Throughout Coach"

Image



Before the likes of Song and Ted even debuted, AA was loudly trumpeting that they would offer reduced density throughout the entirety of their mainline fleet, by taking out two rows of economy seating on each aircraft. It initially started in media. They then went on a marketing blitz, led most publicly by coach Pat Riley under the name "More Room in Coach, For Coach!":

Image

....meant to advertise how they were doing it differently, and that average fares would be within $5 or less of the competition while offering economy pax so much more room.




As one might expect, they lost their shirts doing this, because pax took one look at fares, and went with the cheaper alternative. 9/11 and the ensuing industry meltdown, didn't help.

MRTC was discontinued in 2003. AA was recovering from this experience at the time the likes of Song were launched. They didn't have the appetite to go down such a road as a result.
I myself, suspect a more prosaic motive... ~Thranduil
 
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RyanairGuru
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Re: Why didn’t AA try a separate low fare operation ?

Tue Jan 15, 2019 9:04 am

Ziyulu wrote:
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.


That doesn't make them an LCC!

As said, SilkAir, Cathay Dragon, Air Japan, even Joon aren't LCCs. The closest of that group is Joon, but really they were Air France with lower labor costs and a stupid brand to get it past the unions by trying to hoodwink people into thinking it wasn't just an attempt to outsource legacy mainline routes.

Jetstar, Scoot and Rouge are the only truly successful airlines-within-airlines that come to mind.

Transavia and Vueling were existing airlines that were bought out by a larger airline, but had separate AOC and existing labor agreements which meant that they were easier to get past the mainline unions.
Worked Hard, Flew Right
 
melpax
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Re: Why didn’t AA try a separate low fare operation ?

Tue Jan 15, 2019 11:47 am

crazyplane1234 wrote:
PatrickZ80 wrote:
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.


I assume that the same applies to QF/JQ in Australia?


JQ has it's own separate AOC, inherited when QF took over Impulse Airlines. QF used the Impulse AOC & it's fleet of 717's as the initial basis for JQ, which is run seperately from QF mainline, even to the extent of JQ being headquatered in Melbourne, while QF mainline is run from Sydney.
Essendon - Whatever it takes......
 
dtw2hyd
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Re: Why didn’t AA try a separate low fare operation ?

Tue Jan 15, 2019 12:03 pm

Generally, unions are the primary reason legacies are not able to have an LCC within the group or even a partnership with an LCC. I think SIA Group is the only exception.

Even if a legacy group manages to establish an LCC, mainline unions will make sure they are not successful.
 
BoeingGuy
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Re: Why didn’t AA try a separate low fare operation ?

Wed Jan 16, 2019 8:39 pm

LAX772LR wrote:
Surprised that no one's yet mentioned the actual answer.... which is that AA went a different route: the infamous "More Room Throughout Coach"

Image



Before the likes of Song and Ted even debuted, AA was loudly trumpeting that they would offer reduced density throughout the entirety of their mainline fleet, by taking out two rows of economy seating on each aircraft. It initially started in media. They then went on a marketing blitz, led most publicly by coach Pat Riley under the name "More Room in Coach, For Coach!":

Image

....meant to advertise how they were doing it differently, and that average fares would be within $5 or less of the competition while offering economy pax so much more room.




As one might expect, they lost their shirts doing this, because pax took one look at fares, and went with the cheaper alternative. 9/11 and the ensuing industry meltdown, didn't help.

MRTC was discontinued in 2003. AA was recovering from this experience at the time the likes of Song were launched. They didn't have the appetite to go down such a road as a result.


Why is this "infamous"? From a passenger standpoint, it was great. The MD-80s were really comfortable on the 2-side.

AA actually discontinued MRTC in two phases. First they converted the A300s and 757s back to normal seat pitch (LRTC). AA said those airplanes were used on more low cost leisure routes. Then of course, they later completely discontinued MRTC on all models.
 
SmithAir747
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Re: Why didn’t AA try a separate low fare operation ?

Wed Jan 16, 2019 8:47 pm

TWA had "Comfort Class"; their Y was less dense in configuration than others.

SmithAir747
I will praise thee; for I am fearfully and wonderfully made... (Psalm 139:14)
 
UpNAWAy
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Re: Why didn’t AA try a separate low fare operation ?

Wed Jan 16, 2019 9:07 pm

Flighty wrote:
BoeingGuy wrote:
itchief wrote:

Do you think Basic Economy is a good idea or will be successful?


Specifically I was referring to a separate low cost airline within an airline not working in the US.

I believe that Basic Economy is just another way of adding fees. Pretty soon it will be the same price of Regular Economy but now you have to pay extra for seat assignments and stuff. I guess from a beancounter standpoint it might be successful, but just another way of adding more fees for the same fare.


I see plenty of Basic Economy domestic fares in the $400-600 bracket now, on high demand days. That is an insult. They should bake in an assigned seat for any $500 ticket. Complete BS.

Edit: In fact, I have found some Basic Economy domestic RT on Delta for over **$1,200 RT** like SLC-MSP nonstop this week. Wow I didn't realize how stupid this is. What a huge FU to customers, didn't even realize this is possible. No bags, no assigned seat.



There was just a story a few days ago that airfares are for the last Quarter were the second lowest on record in the US. So while you may find some strange pricing here and there (they may be trying not to sell those tickets for a particular reason or the flight is full) overall fares are dirt cheap.
And AA now allows a free carry on in Basic Economy, they announced that changed a month or two ago.
 
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PatrickZ80
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Re: Why didn’t AA try a separate low fare operation ?

Wed Jan 16, 2019 9:21 pm

SmithAir747 wrote:
TWA had "Comfort Class"; their Y was less dense in configuration than others.

SmithAir747


That was a whole other era, when a good product still mattered. Nowadays the only thing that seems to matter is the lowest price and that simply can't be made that way.
 
BoeingGuy
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Re: Why didn’t AA try a separate low fare operation ?

Wed Jan 16, 2019 11:10 pm

PatrickZ80 wrote:
SmithAir747 wrote:
TWA had "Comfort Class"; their Y was less dense in configuration than others.

SmithAir747


That was a whole other era, when a good product still mattered. Nowadays the only thing that seems to matter is the lowest price and that simply can't be made that way.


You mean like Economy+ or Main Cabin Extra that many major US airlines offer now?
 
N649DL
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Re: Why didn’t AA try a separate low fare operation ?

Wed Jan 16, 2019 11:51 pm

They certainly had enough S80s at the time to do so, but perhaps they were hip enough to realize all of those LCCs from the majors weren't going to work out. Song and Ted both closed shop quickly and got integrated back to mainline with F cabins.

CO Lite was experimental and financially insolvent. MetroJet was gutted after 9/11 (IIRC) and was flown mainly on US 737-200s. No idea if it was working or not when they terminated it.
 
juliuswong
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Re: Why didn’t AA try a separate low fare operation ?

Thu Jan 17, 2019 2:08 am

Ziyulu wrote:
Is Air Japan an LCC for ANA?

Vanilla Air and Peach Aviation are the low cost arm for ANA. Vanilla Air is the re-branded name for AirAsia Japan Mark I, and is currently being integrated into Peach Aviation. Merger will complete in FY2019.

That being said ANA Holdings and JAL Group operates numerous sub-airlines targeting different markets and market demand.

For better illustration, you can refer to these images:
ANA Holdings: https://en.wikipedia.org/wiki/All_Nippo ... zation.svg
JAL Group: https://en.wikipedia.org/wiki/Japan_Air ... zation.svg
- Life is a journey, travel it well -
 
gwrudolph
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Re: Why didn’t AA try a separate low fare operation ?

Thu Jan 17, 2019 2:26 am

Max Q wrote:
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 ?


Honestly, I think it's because they were smart! I think they had the wisdom to know that a brand within a brand using the same planes, same resources, same cost structure did absolutely nothing to compete with your low-cost rivals. In the end, the others wasted a lot of time/money.
 
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aemoreira1981
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Re: Why didn’t AA try a separate low fare operation ?

Thu Jan 17, 2019 2:50 am

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


WK and LX don't overlap routes; WK handles the more leisurely routes and LX handles the high J routes

A333s: WK is J27-Y+56-Y232 for 315 seats; LX is F8-J45-Y183 for just 236 seats
A343s: WK is J22-Y+76-Y211 for 309 seats; LX is F8-J47-Y164 for just 219 seats.

(LX B77Ws have the same seat dimensions and seat products as the A333s in F, J, and Y, just with different seat counts.)

LH Group keeps LX and WK with distinct products and seat dimensions...similar to how Eurowings (LH Cityline) and LH Mainline wide-body A343s and A333s are distinct; EW/Cityline is low J while LH Mainline is higher J (the A343s and A333s at EW are 300-seat planes with a very small BIZclass, while Lufthansa J is much larger).

LH and DE (before DE was acquired by Thomas Cook) also had distinct products and didn't ply the same routes. While LEVEL (out of Spain) is on the IB AOC (for now), it is distinct as being out of BCN rather than MAD.

That said, within Europe, what really distinguishes legacy from LCC in terms of short-haul, aside from a few outliers like AY?

As for why you don't really see it in the USA...there is a desire in the USA to maintain a premium economy or first class on full-service or major regional airlines. It would take dropping domestic F, in my opinion, by all of the legacies.
 
eamondzhang
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Re: Why didn’t AA try a separate low fare operation ?

Thu Jan 17, 2019 3:00 am

Ziyulu wrote:
Is Air Japan an LCC for ANA?

c933103 wrote:
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

AJX is more of an airline to have the ability to hire foreign crews (especially pilots) and to base them in Japan. IIRC ANA doesn't have that ability.

In all honesty, the only airline that really managed a separate low fare operation successfully to date is Qantas/Jetstar combo. Even Eurowing can be doubtful at times. It won't make much difference if AA tried it.

Michael
 
OSL777FLYER
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Re: Why didn’t AA try a separate low fare operation ?

Thu Jan 17, 2019 3:15 am

SAS tried their luck, and failed with Snowflake. It did not last long. The problem for all of these that have been tried in the past is that union, wages and labor relations get in the way.

In the cases of those who have tried (and failed) have been that they've had to fly low-cost, but with crew with the same wages, benefits etc. as the main carrier. this is destined to fail.

Air Canada Rouge can be an exception as it seems that unions are in agreement for the moment.

In the case of Transavia, Edelweiss and Eurowings, these were all independently operated before. Transavia and Edelweiss used to be pure holiday carriers operating on their own. Now they fly the leisure routes of AF/KL and Swiss respectively.

In the case of Eurowings, they were actually formed quite a few years ago as an independent regional carrier and even flew on behalf of KLM. Then Lufthansa formed Germanwings, which then came under the Eurowings brand. This has not gone without its share of problems, but it seems to be getting better now.

It is a difficult puzzle to solve. Joon has probably cost the AF/KL group a LOT of cash, just to be disbanded. What we have to look at now, is this:

If you take away the premium cabins e.g. Y+,C and F, are really the economy of the so-called legacy carriers really that different from the LCC's?
 
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LAX772LR
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Re: Why didn’t AA try a separate low fare operation ?

Thu Jan 17, 2019 3:49 am

BoeingGuy wrote:
Why is this "infamous"?

Because it was perhaps the most predictably financially-devastating move ever done by a major network carrier, considering how often the overwhelming majority of Y pax have shown that they will not pay a premium for essentially anything other than less stops, versus cheaper equivalent competition.
I myself, suspect a more prosaic motive... ~Thranduil

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