Faulty Rj Business Plan

[Colby]

WOW what do you know....this is a little more posivitive attitude!!!

I will add in my little 2c worth......

Does anyone want to follow me on this theory??

Okay so everyone will agree that the RJs problably will take over a lot of the Domestic Routes...BUT, anyone else notice how much we keep adding Carribean and South American destinations...Also, Mexico.... Airbus I believe still do most of the Carribean...Boeing does Mexico etc. So, why not put the RJ in place of the 300 from PHL to CLE or DTW (2 cities that I norev to a lot) which always have 30-70 seats open!! Also, I believe someone had made mention of more Transatlantic Destinations....Of course those are saved for the "Wide Bodied" Aircraft.

Some of my friends work for Continental on the RJs and they fly to the same places I used to go on the 300-400...

Just a little something to think about !!!!

 

[Old PSA]

I have a great deal of trouble understanding how anyone can quote that the
EMB-170 will break even with a 50% load factor. Now I understand that these words have been spoken by senior US management, but isn't this the same group who have sliced and diced everyone in sight and still can't make money. It would seem that a great many factors influence the cost/revenue factors. So, are we using "Great Pie in the Sky" revenue model or the reality of todays revenues?

Of course this will probably follow other great US management sucesses, like MetroJet, Business Select, etc. No one in senior management will ever provide the hard facts. Everything must be "spun" to look like a great decision.

My take on the aircraft and US use of it. It will cost more than US will admit and revenue will be less than they projected. Hopefully for all of us , the costs will be less the the revenue.

One basic airline axiom applies: the smaller the aircraft, the lower the cost per flight but the higher the cost per seat on that flight.

 

[deelmakur]

Let me see if I get this right. They cut routes, and the lowfare guys come right in (and make money). They cut staff and salaries, walk away from leases (maybe even whole hubs), drive seat mile costs down, and still don't make money. Apparently believing the average American is shrinking, they start running commuter jets on 500 plus mile runs. largely between major cities, only they are operated by an Express operation whose on time and passenger handling stats are on a par with Aeroflot, and for good measure they run as many people as they can through a hub with crowded, undersized gate areas, concourses like bridal paths, and a work force that thinks passenger handling is a contact sport. They dump food service, and replace it with $10 deli sandwiches. Then, fearing getting stuck with unsold food, the vendor caters only 1 out of 4 passengers, insuring that anyone going hungry wll buy food in the terminal next time. Cutting capacity, the holy grail of filling more seats, instead manifests itself in fewer passengers. In defense of its decisions, the managment informs the help, via manifesto and internet, that it can't be wrong because it went to Harvard. This could result in the first known case of an institution of higher learning putting a bag over itself.

 

[OldpropGuy]

deelmakur,

That sums it up nicely!

It appears that things obvious to some aren't so clear to others!


This also brings up an old unknown quote:

"One must be careful not to confuse education with intelligence."

 

[Hope777]

So this will bring up the whole Hub-N-SPoke system. Airlines MAKING money are doing Point-To-Point Flying while we think we can run RJ's into Hubs and make money. Please lets get a Viable Business Plan and revenue will start to increase.

 

[ITRADE]

So this will bring up the whole Hub-N-SPoke system. Airlines MAKING money are doing Point-To-Point Flying while we think we can run RJ's into Hubs and make money. Please lets get a Viable Business Plan and revenue will start to increase.

You gotta remember, the point to point carriers are not flying to HGR, XNA, ERI, and PWM (i.e., small cities with small populations).

 

[Hope777]

ITrade, don't get me wrong we do need to have a Hub-N-Spoke system in place to serve the samller cities. My point is to make money, we need to do more point to point flying. Think about it...Air Tran does more point to point flying then we do. What is wrong with this picture? We have NEVER had a quality marketing department and as long as BBB is still around we never will. The other problem is that we compete with ourself. If I cant get that cheap fare connecting in CLT, there is always PIT or PHL. We rely to much on the Hub-N-Spoke system and compete directly with ourself and the other carriers.

 

[jimmyd]

The original premise that US Airways RJ's are competing against mainline jet competition is off base. The November scheds shows that US Airways provides regional jet service in 134 nonstop markets. Of those markets, 94 have no direct nonstop competition, 25 have regional jet competition, 1 has prop competition, while only 14 have mainline jet competition. The 14 markets with mainline jet competition are mostly other hub carrier markets, such as ATL-PHL, CVG-PHL, etc.

 

[USFlyer]

ITrade, don't get me wrong we do need to have a Hub-N-Spoke system in place to serve the samller cities. My point is to make money, we need to do more point to point flying. Think about it...Air Tran does more point to point flying then we do. What is wrong with this picture? We have NEVER had a quality marketing department and as long as BBB is still around we never will. The other problem is that we compete with ourself. If I cant get that cheap fare connecting in CLT, there is always PIT or PHL. We rely to much on the Hub-N-Spoke system and compete directly with ourself and the other carriers.

More point to point flying for US has one fatal flaw: You will steal traffic away from the hubs (most notably PIT), making them even less profitable. Quite honestly, I agree US should be more of a point to point carrier, with significant service in BOS, LGA, PHL, DCA and from other second tier cities as demand warrants (like SYR, BUF, CMH, PIT, BWI, MCO, RDU, etc. to key destinations). CLT as a hub seems to work, so I would keep that one. But, this also implies PIT as a hub would be gone, US would probably have too many mainline aircraft, less employees needed due to faster turnaround times/better efficiencies, etc. It's a tough call. Also, among these key destinations would be flights to feed UA's west coast network, whether that be flights such as MCO-ORD, MCO-DEN, BWI-ORD, BWI-SEA, etc. If US tried this now, though, BWI-SEA (to pick one example) would steal traffic away from PIT, thus making PIT-SEA even less profitable.

All of this, by the way, is why I still think a merger with UA or a deeper relationship with them is necessary (such as an equity interest). Just think of the implications of having UA's existing network combined with a more point to point focused US network in the east (along with US's transatlantic and Caribbean presence).

 

[Rob]

Colby, what 300 from PHL to CLE or DTW? Those routes have been rj's for a while now.

The trouble with the point-to-point flying is about to appear in DCA. AirTran is about to kill Florida yields. The same will happen in LGA or any other high fare market. US can only do well on monopoly routes out of DCA/LGA and the monopoly routes aren't big ones.

 

[Colby]

Rob,

I stand corrected....I couldn't think of an example right off.... I'm saying that WHEN it was 300/400s there were always at least 70 open seats.... Remember it has been a few months since I've worked...I'm sure any of the cities that I try to mention have already went to RJs....

 

[tadjr]

The trouble with the point-to-point flying is about to appear in DCA. AirTran is about to kill Florida yields. The same will happen in LGA or any other high fare market.

The company keeps saying the business flyer isnt there anyway, so how can us losing the "business fare traveler" that isnt there hurt yield anymore than it currently is being hurt by no one being there to begin with? Comprende? :blink:
They need to seriously think about dropping the high end business fares that arent being used (by the companys admission that the business traveler isnt buying them to begin with), and more closely aligning them with the LCC fares excluding the basement cheap fares. You can also better control the capacity by offering the lower fares, but in fewer numbers. If you want the businessmen to continue to fly US and not head to Airtran, someone better get their head out of the sand and admit that there is a problem with the fares and do something now. I dont know why the company continues to say "it wont work" with a new fare structure when they continue to prove that the current fare structure doesnt work either. I bet someones parents are glad they spent all that money on fancy schooling.

 

[USFlyer]

The company keeps saying the business flyer isnt there anyway, so how can us losing the "business fare traveler" that isnt there hurt yield anymore than it currently is being hurt by no one being there to begin with? Comprende? :blink:
They need to seriously think about dropping the high end business fares that arent being used (by the companys admission that the business traveler isnt buying them to begin with), and more closely aligning them with the LCC fares excluding the basement cheap fares. You can also better control the capacity by offering the lower fares, but in fewer numbers. If you want the businessmen to continue to fly US and not head to Airtran, someone better get their head out of the sand and admit that there is a problem with the fares and do something now. I dont know why the company continues to say "it wont work" with a new fare structure when they continue to prove that the current fare structure doesnt work either. I bet someones parents are glad they spent all that money on fancy schooling.

The company says it won't work because of this: Suppose I need to go from point x to point y at the last minute, no questions asked. The only nonstop and/or connecting service that makes sense is on U. If the fare structure is changed, U would lose several hundred dollars of revenue. The only way U would not lose several hundred dollars of revenue is to stimulate more traffic. Problem is, there isn't really much traffic to stimulate in a lot of U's "going nowhere to nowhere" routes. Or, the traffic has changed such that many prefer to drive and/or take Amtrak.

Also, U has many corporate contracts. Those last minute fares for many of us are reduced 30-40 percent. Also, U is competitive where other carriers operate service. DCA-SEA comes to mind. Last minute fares are quite reasonable on this route. But, frequently I need to go to SEA because "system x is broken". Cost is no object. Even if the fare were double, I'd still have to go and still pay.

 

[cavalier]

You're emotions have overcome the accounting. Congratulations. Rah rah.

YEP and this result lays squarely on the shoulders of a corrupt, dishonest, deceptive, arrogant and immature CEO who has done nothing to bring this company together and has shown no leadership abilities, period. He has only caused employee morale to sink to levels that left unchecked will be the demise of this company. You can not beat people down day in and day out expecting anything but negative results. The only way this company can survive is to replace this tyrannical management team with someone willing to work with its labor force rather than causing daily dissension. Cutting jobs, wages, benefits, enforcing unrealistic work rules at their whim against signed and legal contracts and at the same time setting themselves up to collect millions will NOT result in a successful company. This CEO and his gang must GO just like United kicked out their last CEO. He is not performing and the sooner the BOD realizes this fact and replaces him and his team the better the chances of our very survival.

 

[Dilligas]

YEP and this result lays squarely on the shoulders of a corrupt, dishonest, deceptive, arrogant and immature CEO who has done nothing to bring this company together and has shown no leadership abilities, period.

<snip>

Cavalier,

You absolutely nailed that one... out of the park and across the street.

That sums it up very concisely. Well done.