Another US red flag?

[xUT]

except there is a clear difference in the way each of the network carriers compete..... and the results are quite obvious in their respective networks, particularly with respect market shares of competitors in former hubs/strength markets.

IMHO, there is no clear differentiation of how airlines compete. Airline A does something special (like applesauce in first class) and airline B offers applesauce but also offers a choice of Cinnamon or nutmeg. The differentiation (without including some die hard loyalists) is service and price point (for frequent flyers at least).

Ma and Pa Kettle will fly strictly on price. No loyalty whatsoever. That's why all airlines cram economy coach seats to the shortest pitch as is allowable by FAA requirements.

Whatever Airline A does will soon be parroted ( or enhanced ) by Airline B.

Nothing special to differentiate between airlines.

B) xUT

 

[xUT]

While I agree with what WT says, I can't argue with most of your points, as you could be correct. The only thing I will say is AA appears to be revising and pretty much revamping her whole fleet and trying to get back to distinguishing themselves as a service airline to grab higher value customers. With that being said no one REALLY knows what the other guys will do.....

Everyone knows what the other guys do.
If you don't, you die, and that is pretty much any business. I monitor my competitors closely.

The one thing I will disagree on is the SWA / nimble comment. Not sure what you do for the airlines, or if you are a customer, but I assumed every knew that the cost of having parts for multiple aircraft at multiple points in your system can be VERY expensive. I guess not everyone realizes how expensive it is to hold inventory and to have the capabilities to fix MULTIPLE aircraft, not to mention train flight crews for MULTIPLE aircraft type-rating, rather than just one as proven by SWA obsession with having a single type-rating 737 ( a decision Boeing regrets to this day). How nice was it for AA to have the 757/767? Cause the flight crews were interchangeable. Bottom line, if your entire fleet is one type rating, you can grab any crew for any flight.....nice, right?

So yes, SWA is more nimble, but that is her business model, and just like the "majors" business model has some downsides (less "nimble") so does SWA (she can't grab international revenue traffic like the majors).

Cheers,
777 / 767 / 757

I worked for UA for 23 years, retired and opened my own business.
I learned what not to do from the airline industry.

Take Care,
B) xUT

 

[xUT]

I stand corrected, for some strange reason I thought they had Pratts.

UA's 757/767/747 are powered by P&W.
B) xUT

 

[777 / 767 / 757 Love]

Everyone knows what the other guys do.
If you don't, you die, and that is pretty much any business. I monitor my competitors closely.



I worked for UA for 23 years, retired and opened my own business.
I learned what not to do from the airline industry.

Take Care,
B) xUT

23 years......and lived to tell about it.....LOL. Congrats on your second, and hopefully more profitable and less stressful life. But, the airline industry is defective for one reason and one reason only: it charges the same fares it did 20 years ago. RIDICULOUS.

Cheers,
777 / 767 / 757

 

[WorldTraveler]

xUT,

if the comparison between airlines is solely on the basis of service items such as food, seats, frequent flyer programs etc, then you might be somewhat right but there is still plenty of data to show that even within the same peer groups – such as network/legacy carriers – passengers perceive significant differences between service levels.
And it is precisely because it is the high value passengers, not Ma and Pa Kettle, that make or break an airline. Simplistically, labor has tried to argue for too long that passenger service and winning in the marketplace doesn’t matter – yet there are clearly carriers that have built their business models around winning in the marketplace and winning customers – and their employees are achieving those goals to the benefit of the company and the employees.

And countering 757etc’s point, fares in the US bottomed out a long time ago and are moving as revenue shifts between carriers and as costs are being passed along to customers. Yes, fares are lower than they were decades ago, but the bottom was reached years ago and the revenue movements that are taking place now will define the future of the industry.

And, as much as some people may not want to accept it, there are significant differences in how the network carriers have succeeded in the marketplace. It was very obvious before the last round of mergers that CO, DL, and NW had fared far better than AA, UA, and US among the network carriers in protecting their revenue and in growing in the marketplace, often at the expense of other network carriers. But CO, DL, and NW also did far better at protecting their networks from low fare carrier growth. The trends continue even though DL is the only one of those 3 legacy carriers standing (incorporating NW’s competitive characteristics that were quite similar to DL’s). UA is acting far more like the former UA than CO with the company being guided down by the belief that there is no money to be made in the domestic market, even though UA obtained 59% of its revenues from the domestic market in the most recent quarter. In comparison, DL was 61% domestic.

DOT 2[sup]nd[/sup] quarter 2012 data has just been released and it provides a number of insights that further confirm that AA, UA, US continue to lose share and revenue, particularly driven by the domestic market while DL continues to hold its ground against low fare carriers as well as take revenue from AA, UA, and US.

• Even factoring in the mergers of the past decade and the capacity that has been pulled by all network carriers, DL has increased its share of the total US market relative to AA, UA, and US.
• In the JFK transcon markets which are some of the largest markets in the country and markets which AA and UA have long dominated, AA has lost 10% market share while UA has lost 15% while pulling back in the market with its PS 757 strategy. DL has ADDED 10% market share and by next summer when AA’s 321 strategy that is similar to UA’s 757 strategy, DL will become the largest carrier in the JFK transcon markets.
• The reason why the JFK transcon markets are so important is because they are large markets but they are also heavily divided between carriers and are highly competitive with a strong presence of low fare carriers, who make up 25% or more of the capacity. In all of the major transcon markets, AA and UA have lost share AND revenue to low share carriers and to DL over the past decade – and the same picture applies throughout their domestic systems.
• DL’s share of the NYC market – all airports is over 23% compared to less than 26% for UA post merger – and these numbers don’t reflect the final phase of the DL-US slot swap.
• In BOS, B6 remains the top carrier both in terms of revenue and passengers but DL is the largest network carrier in both measurements. The big coastal markets are large and highly competitive and determine how well carriers will do in the US as a whole. DL is gaining more passengers and revenue in those markets as a group than AA, UA, and US.
• Less than 3 months after DL entered the LGA-MIA market, one of AA’s core markets, DL obtained 25% share – and DL is getting fares comparable to AA while moving that share. DL already has over 40% share of JFK-MIA, another key AA market.
• AA’s market share relative to DL took another hit during their operational problems and it hasn’t recovered yet.
• DL has increased its presence in all of US’ hubs – and most of DL’s new LGA flights to US hubs did not start until the 3[sup]rd[/sup] quarter and is not reflected in this data.
• DL has largely not focused its competitive efforts until the 2[sup]nd[/sup] quarter – many DL flights to UA hubs started in the 3[sup]rd[/sup] quarter as well.
• UA’s share of the DEN market is at the lowest level it has been since data has been made available. WN boards more passengers at DEN and continues to grow. UA’s share of the DEN hub is the lowest among any of the network carriers at a hub city.

And lest some want to argue that UA can just turn its focus to international markets, the evidence shows that UA’s international markets are not any more able to handle more capacity than is their domestic system. UA’s worst performance in the most recent quarter was in Latin America and Europe where AA and DL, respectively, are larger and are managing their capacity more effectively.

Given that everyone is trying to also grow their presence in the international market, the ability to win in the domestic market will make the difference for those carriers who compete in both market groups, as AA, DL, UA and US all do – and now increasingly WN will as well.

Labor, including people on this board, have argued that because labor continues to lose at airlines, the business models of those airlines is broken – and that because labor can’t win, neither can the companies or their employees.
The evidence clearly shows otherwise and the trends of AA, UA, and US losing market share to DL and low fare carriers is not changing.
All carriers DO NOT compete – or win – in the same way.

Applesauce with nutmeg or not.

BTW, UA now includes former CO who chose GE engines for its widebodies and RR for its 757s.

 

[jimntx]

Labor, including people on this board, have argued that because labor continues to lose at airlines, the business models of those airlines is broken – and that because labor can’t win, neither can the companies or their employees.
The evidence clearly shows otherwise and the trends of AA, UA, and US losing market share to DL and low fare carriers is not changing.
All carriers DO NOT compete – or win – in the same way.

True, WT, but DL management did not take from its employees and then use the money to pay themselves bonusses. DL management had other ideas that just keep cutting employee numbers and pay without doing anything else differently. DL management did not assume that the frequent flyer program would make the FF'ers captive, and so they could easily cut flights and amenities at will without push back from the FF'ers. (Refer to your items about DL growth out of NYC in transcon and MIA markets.)

And, I repeat. AMR management has so poisoned the well of employee relations that I see nothing they could do to regain the trust and suppport of the front line employees, and I doubt any company could survive for long with our current situation management vs. labor.

 

[WorldTraveler]

very well said, Jim, and also quite accurate.
DL approached BK just as CO did in BK 2 - an opportunity not only to cut costs and restructure finances but also to redesign the business to be viable for the future.
CO built its restructured business around building EWR and IAH as global hubs; DL shifted to global growth as well as focusing on competing in the top business markets like NYC. DL obviously set itself up for the NW merger which greatly expanded DL's domestic and int'l footprint.

To your point, DL also recognized like CO that you can't expect to survive post BK if you can't figure out how to keep adapting the business to the changing environment. That is why DL is now focusing on the refinery deal (a major effort to cut costs), improving the existing int'l fleet at relatively low cost while waiting for the final round of restructuring to play out in the rest of the industry, restructuring the domestic fleet via the RJ/717 swap, and continuing to grow in the NE, esp. in NYC.

With all due respect, no one else has come up w/ as dramatic of a plan to restructure the strategy as DL has done.

And to your point, employees cannot expect to benefit if the company cannot continue to find new sources of revenue.

Sadly, you are probably right regarding poisoned employee relations.... and DL is well aware of the horrid employee relations that exist in much of the network carrier segment of the industry and is using its relatively strong employee relations along with an aggressive internal growth strategy to continue to grow the airline.

What DL is doing now is not that much different from what CO did in the 10 or so years post BK 2 when CO was at the top of the industry and how WN has operated for years. Both airlines were well-run as businesses and were able to make huge strategic gains at the expense of competitors who were less nimble and had poorer labor relations.

When you consider that AA and US have largely taken the same restructuring model of deeply cutting labor costs with little demonstrated efforts to dramatically grow revenue or change the business model and it is very hard to see how either one will be a long-term leader in the industry, independently or jointly.

 

[Bob Owens]

True, WT, but DL management did not take from its employees and then use the money to pay themselves bonusses. DL management had other ideas that just keep cutting employee numbers and pay without doing anything else differently. DL management did not assume that the frequent flyer program would make the FF'ers captive, and so they could easily cut flights and amenities at will without push back from the FF'ers. (Refer to your items about DL growth out of NYC in transcon and MIA markets.)

And, I repeat. AMR management has so poisoned the well of employee relations that I see nothing they could do to regain the trust and suppport of the front line employees, and I doubt any company could survive for long with our current situation management vs. labor.

DL mechanics make more than we do as well, a lot more.

 

[777 / 767 / 757 Love]

very well said, Jim, and also quite accurate.
DL approached BK just as CO did in BK 2 - an opportunity not only to cut costs and restructure finances but also to redesign the business to be viable for the future.
CO built its restructured business around building EWR and IAH as global hubs; DL shifted to global growth as well as focusing on competing in the top business markets like NYC. DL obviously set itself up for the NW merger which greatly expanded DL's domestic and int'l footprint.

To your point, DL also recognized like CO that you can't expect to survive post BK if you can't figure out how to keep adapting the business to the changing environment. That is why DL is now focusing on the refinery deal (a major effort to cut costs), improving the existing int'l fleet at relatively low cost while waiting for the final round of restructuring to play out in the rest of the industry, restructuring the domestic fleet via the RJ/717 swap, and continuing to grow in the NE, esp. in NYC.

With all due respect, no one else has come up w/ as dramatic of a plan to restructure the strategy as DL has done.

And to your point, employees cannot expect to benefit if the company cannot continue to find new sources of revenue.

Sadly, you are probably right regarding poisoned employee relations.... and DL is well aware of the horrid employee relations that exist in much of the network carrier segment of the industry and is using its relatively strong employee relations along with an aggressive internal growth strategy to continue to grow the airline.

What DL is doing now is not that much different from what CO did in the 10 or so years post BK 2 when CO was at the top of the industry and how WN has operated for years. Both airlines were well-run as businesses and were able to make huge strategic gains at the expense of competitors who were less nimble and had poorer labor relations.

When you consider that AA and US have largely taken the same restructuring model of deeply cutting labor costs with little demonstrated efforts to dramatically grow revenue or change the business model and it is very hard to see how either one will be a long-term leader in the industry, independently or jointly.

All you do is come on here and talk about how great DL is......it's unhealthy how much in love you are with DL. Seriously, does it not make more sense to just hang out in the DL forum and spew your rhetoric there?

Cheers,
777 / 767 757

 

[WorldTraveler]

All you do is come on here and talk about how great DL is......it's unhealthy how much in love you are with DL. Seriously, does it not make more sense to just hang out in the DL forum and spew your rhetoric there?

Cheers,
777 / 767 757

I'm sorry if it sounds like rhetoric to you.....
how about you consider the fact that maybe not every airline is in continual fights with its employees, is able to think strategically far enough forward instead of having to react to every crisis (usually by cutting employee pay), and is able to do what companies are supposed to do in the free market system - make money.

If you find it offensive that I continue to mention companies that actually work, then you should probably find a private forum to participate in.
As long as this forum is open to the public and the topic remains what is wrong w/ so many airlines, I will provide the counterpoint about what works.

And, btw, I have repeatedly noted what WN and CO have done right w/ respect to their employees and their strategic thinking- but somehow you and others want to pretend that was never written and instead paint the conversation as a DL-only rally.

There are obviously some AA employees who recognize the validity of what I have to say - so I am not as far off the market as you would like to think I am.

 

[777 / 767 / 757 Love]

I'm sorry if it sounds like rhetoric to you.....
how about you consider the fact that maybe not every airline is in continual fights with its employees, is able to think strategically far enough forward instead of having to react to every crisis (usually by cutting employee pay), and is able to do what companies are supposed to do in the free market system - make money.

If you find it offensive that I continue to mention companies that actually work, then you should probably find a private forum to participate in.
As long as this forum is open to the public and the topic remains what is wrong w/ so many airlines, I will provide the counterpoint about what works.

And, btw, I have repeatedly noted what WN and CO have done right w/ respect to their employees and their strategic thinking- but somehow you and others want to pretend that was never written and instead paint the conversation as a DL-only rally.

There are obviously some AA employees who recognize the validity of what I have to say - so I am not as far off the market as you would like to think I am.

Who said you were far off? Who said anything about what you said? All I said was something I think many have echoed here: I have no issues with anti-AA comments, or anti-any other airline or even pro any other airline comments, what bothers me is that you find more ways to tie pro-DL comments into every one of your posts than a paid public relations spokesperson for DL. I mean, if you are not being paid by DL, you sure are getting ripped off for all of the PR you run for them.

When someone is so BLATANTLY one sided on issues, it just causes them to lose credibility. I have no idea your affiliation with DL, but I do believe one must exist.

At the end of the day, right now is a pretty good time for DL, but in all fairness, before about 2-3 years ago, they were an after thought to United and American (not saying much considering how screwed up AA has been for going on almost a decade now) and probably even southwest, so at the end of the day, beating the drum of an airline that has only being doing things well for 3-4 years just sounds like just a bunch of fluff.

Cheers,
777 / 767 / 757

 

[WorldTraveler]

To be clear, for those who haven't figured it out, I am retired from DL. A very large number of posts on this forum are from non-airline employees - or those who say they are not anyway - so the notion that a non-airline employee even such as yourself can't contribute anything of value or have loyalties is more than offensive, esp. on a forum that is open to the public.

DL has been out of BK for five and one-half years, only one month longer than NW. DL and NW both went into BK very clear about what they needed to do to survive post BK. Obviously, they both had designs on each other going into BK, used the BK process to prepare themselves for the merger, and have executed almost flawlessly since coming out of BK. probably most significantly, DL has managed to maintain its traditional labor-mgmt model which has produced far less labor discord than at other legacy airlines who have lost a huge amount of money and competitive strength due to mgmt-labor difficulties.

Those are just the inescapable facts of this industry - and that is the CURRENT reality of the legacy segment of the industry. Pretending it doesn't exist is simply naive. Pretending AA, UA, and US mgmt have to figure out how to survive in an industry where one of their competitors is not only strategically aggressive but also has developed a huge amount of employee loyalty that has translated into running a well above average airline would be to live in denial.

I have participated in this board for almost a decade and one of my key topics has been and will continue to be the shift in revenues that have taken place between the historic chosen airlines that had access to the top US markets in the country and the world during the early days of aviation and other airlines like DL as a legacy airline and the low fare carriers such as WN, who have created successful business models despite being shut out of the historically strong markets. Whether you and others want to deny it or not, AA and UA continue to struggle to maintain their presence in the most important markets in the world against more nimble and aggressive carriers, which does include DL.

The reality is that DL looked very closely at CO's turnaround after its 2nd BK and copied some of the same elements.... and then created some others based on the unique characteristics of DL. Unlike CO, DL has returned to its historic strengths of above average employee loyalty and strong financial leadership in the industry.

As much as you would like to pretend that no one notices what is going on at DL, you might want to notice that there are AA employees in this and other threads who have noticed what DL has done right, including w/ respect to its employees and seeking out new revenues which any person who is even halfway aware of market principles knows will make the difference in whether airline employees have the possibility of a solid future with a company or not.

I wish no one ill will and, having grown up in Texas, I have alot of AA employee friends. This ten year old restructuring has taken a toll on alot of people. But not everyone is content to pretend that the outside world doesn't exist and that there aren't solid models of how AA can - and most of us still hope - will emerge post BK.

It if for those people who aren't willing to wallow in the sorrow of their current situation and who want to once again work for an airline like what AA was in its heydays that I now post and will continue to post.

 

[Airlinelifer]

Who said you were far off? Who said anything about what you said? All I said was something I think many have echoed here: I have no issues with anti-AA comments, or anti-any other airline or even pro any other airline comments, what bothers me is that you find more ways to tie pro-DL comments into every one of your posts than a paid public relations spokesperson for DL. I mean, if you are not being paid by DL, you sure are getting ripped off for all of the PR you run for them.

When someone is so BLATANTLY one sided on issues, it just causes them to lose credibility. I have no idea your affiliation with DL, but I do believe one must exist.

At the end of the day, right now is a pretty good time for DL, but in all fairness, before about 2-3 years ago, they were an after thought to United and American (not saying much considering how screwed up AA has been for going on almost a decade now) and probably even southwest, so at the end of the day, beating the drum of an airline that has only being doing things well for 3-4 years just sounds like just a bunch of fluff.

Cheers,
777 / 767 / 757

I feel your pain Triple 7, but you only have to deal with WT on this message board, we ex NWA employees have to deal with DAL WT wannabe's on a daily basis. I personally like the optimism of the airline he use to work for, but HE SHOULD be posting it on the DAL board. I don't know if he does it on purpose to rub the other airline employees the wrong way or if he is actually tone deaf.

 

[wings396]

No action over on the DL boards since the 30th....
That sums it all up pretty well.

 

[yoyodyne]

No action over on the DL boards since the 30th....
That sums it all up pretty well.

Must tell you a lot about employee/employer relations.