Arpey''s Turnaround Plan Announced

[FWAAA]

----------------
On 5/21/2003 9:32:39 AM eolesen wrote:

----------------
On 5/21/2003 925 AM FWAAA wrote:

What, exactly, would cause these leisure travelers to choose AA??

----------------​

$

----------------​

Huh?? Is Arpey going to sell these seats for LESS than B6?? That''s a good one.

Is that his plan? Drive B6 out of business by cramming more seats into planes that serve B6 markets?

If so, time to bail now.

 

[funguy2]

Two comments:

1) This Turnaround Plan looks suspiciously like Bethune''s plan for CO a number of years ago. Same number of bullet points. Very similar topics. I would expect some words from Bethune, since his is apt to speak his mind very publicly about, well, everything.

2) Why is it that every major airline complains of too much capacity... saying specifically that 15% of the entire US domestic capacity needs to suddenly vanish (usually followed with a comment about UA being about 15% of domestic capacity)... Then, UA adds back 160 flights and AA removes MRTC, which essentially adds seats to the system?

I am sure its all about market share, but what good is market share to a bankrupt (or almost bankrupt) airline. The share isn''t worth it if its not profitable.

So fine... add more seats back onto some airplanes... It will reduce CASM. But they had better be able to fill the seats, otherwise its pointless. MRTC is a good way to use all your airplanes while decreasing system capcity and has an added marketing benefit. Removing MRTC means that airplanes will need to be removed from the system, like other carriers, in order to cut capacity. When the airplanes start to go, so do the employees.

 

[LaBradford22]

----------------

2) Why is it that every major airline complains of too much capacity... saying specifically that 15% of the entire US domestic capacity needs to suddenly vanish (usually followed with a comment about UA being about 15% of domestic capacity)... Then, UA adds back 160 flights and AA removes MRTC, which essentially adds seats to the system?

----------------​

The problem is that the airline business today is a big prisoner''s dilemma. For obvious reasons, all airlines are better off if everyone cuts capacity. However, due to the scale economies inherent in the business, and due to the necessity of maintaining market share, any one airline puts itself at a disadvantage by unilaterally cutting capacity while everyone else stands pat.

----------------

Removing MRTC means that airplanes will need to be removed from the system, like other carriers, in order to cut capacity.

----------------​

This is an interesting point. Even in 2000, when MRTC was done, there were grumblings from many airline CEOs (including Carty and Bethune) about overcapacity. I wonder if part of the logic behind MRTC was that other airlines would match it for competitive (i.e. cabin comfort) reasons, which would result in roughly a 5% or so reduction in industry capacity without any airplanes being parked. If that was part of the logic, it failed.

 

[IORFA]

mrman,

who are you talking about? WN doesn''t have food or free booze!

 

[Ch. 12]

----------------
On 5/21/2003 11:23:22 AM funguy2 wrote:


So fine... add more seats back onto some airplanes... It will reduce CASM. But they had better be able to fill the seats, otherwise its pointless. MRTC is a good way to use all your airplanes while decreasing system capcity and has an added marketing benefit. Removing MRTC means that airplanes will need to be removed from the system, like other carriers, in order to cut capacity. When the airplanes start to go, so do the employees.

----------------​

Adding back seats can be extremely advantageous if added to the right markets. An educated choice would be the leisure (non-dump fare) markets where flights have consistently been full. There has been an enourmous amount of lost revenue due to the fact that the leisure guy (brought to AA by price or spill and not by MRTC) can''t get onto the flight and is then turning to JetBlue/WN and creating a nice profit for them. Fare and flight time are the major factors to the leisure traveller.

As far as the argument that adding these seats will result in reducing the number of flights...so be it. I know that it is terrible and many more would be layed off, but in order to correct the situation, the excess capacity must be cut. Taking out seats doesn''t constitute an effective "reduction of capacity" because the largest costs are tied up per trip and not per seat. Eliminating seats only reduces the marginal seat costs and prevents extra revenue. With fewer seats, more frequencies (therefore more costs) have to be added to high demand markets and this results in greater pressure to fill the added frequencies at the expense of yield.

So unfortunately...yes, the industry needs to reduce frequency...not capacity per aircraft.

 

[KCFlyer]

----------------
On 5/21/2003 1200 PM IORFA wrote:

mrman,

who are you talking about? WN doesn''t have food or free booze!

----------------

WN automatically sends you a free ticket and drink coupons after 16 segments (8 if booked online), so it''s quite possible to have free booze. The "food", or more accuratly the snacks, on flights over 2 hours are much better than what is provided by other airlines on most flights of a similar duration. As new aircraft are delivered, and older aircraft go in for heavy maintenance, the seats are being replaced with leather.​

 

[FWAAA]

Well, as for removing capacity from the system, AA is doing its part: 14 762s, 28 MD-80s and 3 A-300s head for the desert this summer for a couple years to defer maintenance. Add the retirement of the F-100s and there''s lots of capacity removed (many more seats than the LRTC initiative will add).

 

[mrman]

As an AA Ex Plat flyer, I can tell you removing MRTC is a big mistake. This will force more customers to WN and NW /CO first. One will fly now more on WN with a leather seat and more pitch or free upgrade (no "stickers" needed on NW or CO). MRTC was the last thing that distiguished AA's coach product over WN. Now a coach passenger on WN will get more pitch, free booze, helpful employees, no change fees, and in many cases better food than AA. I personally don't think this is a good competitive move.

 

[IORFA]

The last time I was on them, they didn''t have leather seats either.

 

[Wild Onion]

Or upgrades, either.

 

[AAquila]

----------------
On 5/21/2003 959 AM eolesen wrote:

I don't agree that this is an admission of MRTC as a failure.
----------------
January 14, 1993 TWA inaugurates "Comfort Class" service, "the most comfortable way to fly," with extra leg room in the main cabin.

The rest is history.......maybe the new CEO, can read TWA's tea leaves and set a new course.

 

[mrman]

----------------
On 5/21/2003 1:05:54 PM Wild Onion wrote:

Or upgrades, either.

----------------​

Sorry about the confusion. I was referring to CO/NW pretty much not rationing upgrades with stickers. No process of earning upgrade stickers, upgrades are automated.

As for WN
Free booze after 8 RT's
More pitch
Food on flights longer than 2 hours get you a snack pack-nothing on AA
Just about all but the non- 200 series 737 have been updated with Leather/ more pitch
Flight attendants that offer drink service and then actually ask every passenger can I get you another drink. Rarely see FA sitting in the back reading magazines.
When was the last time you saw an AA FA help a little old lady put up her bag in overhead.

My point being AA's advantage over WN was defereniating their coach product. With MRTC gone, WN coach product is superior and gernerally cheaper.

 

[IORFA]

I also bet that WN hasn''t repeated over and over to their f/a''s that if they hurt themselves lifting bags that they aren''t covered by an IOD!! AA will NOT take responsibility for injuries incurred from lifting bags into the overhead and have said so over and over again. That is why it will be hard for anyone to find an AA f/a help too much in that department.

 

[AAmech]

----------------
On 5/21/2003 3:17:18 PM mrman wrote:

----------------
On 5/21/2003 1:05:54 PM Wild Onion wrote:

Or upgrades, either.

----------------​

Sorry about the confusion. I was referring to CO/NW pretty much not rationing upgrades with stickers. No process of earning upgrade stickers, upgrades are automated.

As for WN
Free booze after 8 RT''s
More pitch
Food on flights longer than 2 hours get you a snack pack-nothing on AA
Just about all but the non- 200 series 737 have been updated with Leather/ more pitch
Flight attendants that offer drink service and then actually ask every passenger can I get you another drink. Rarely see FA sitting in the back reading magazines.
When was the last time you saw an AA FA help a little old lady put up her bag in overhead.

My point being AA''s advantage over WN was defereniating their coach product. With MRTC gone, WN coach product is superior and gernerally cheaper.

----------------​

Looking at your comments about AA''s flight attendants makes me think you''ve never flown on an AA flight! I fly quite a bit and FA''s regularly ask to refill my drink or take away some trash on my tray table. I can''t say I''ve seen them lift anyone''s bag, but my mother is wheelchair bound and they are just fabulous about stopping by her seat multiple times thruout a flight to see if she needs anything or just to say hi! I''m sure there''s that bad 2%, but overall AA''s Fa''s are really good!

 

[Oliver Stone''s Apprentice]

----------------
On 5/21/2003 4:15:58 PM Bob Owens wrote:

Why are  they are flying them to Tulsa? Thats dumb. I can remember changing the pitch at two other carriers that I worked for on the line. One was for marketing, the other was for military charters. They could do this on an overnight and not lose the any trips.

----------------​

Because that''s where the extra seats and PSU''s are.

I suppose you could truck seats in/out of JFK or DFW to get this done, but then I''m sure someone else would be questioning why the company would spend money to ship seats when there are plenty of qualified mechanics available in TUL to do the work.

Also, if the winter schedules look like this past year, there will be enough idle time with the 757 fleet to be sending them in/out of TUL for a special visit without having to cancel anything.