Dog Wonder
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Did it rise in the East?Glenn Quagmire said:
New American Discount Carrier?
- Thread starter Jester
- Start date
WorldTraveler
Corn Field
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top in what? distorting the truth.
perhaps you can find a thread where I ever said that DL was ok to lose a penny.
The issue here is that AA has to figure out how to deal with low fare competitors.
DL has a working strategy as evidenced by the lowest RASM decline or largest gain among the big 3 in the past few years.
Dog Wonder
Veteran
Low cost carriers are about CASM.
jimntx said:Which tells me that a lot of people are choosing by price, period. I have a couple of friends who flew Spirit one time and swore they would stay home in the future if Spirit was their only choice. The flight attendant was yelling at customers to obey the seat belt sign. (Though, lord knows I wouldn't mind doing that myself at times. On my last trip, the captain told the f/as to remain seated on a DFW-AUS leg due to turbulence. Despite his announcement that everyone was to remain seated, they were up in no time wandering the aisles like the Israelites in the desert.)
Seems like the ultra low cost carriers are attracting the Wal-Mart crowd. The Clampetts are always attracted by the word cheap.
WorldTraveler
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ALL airlines have to be worried about CASM.
When AA execs themselves say that 70% of AA's passengers are not loyal to AA and haven't flown them in the past year and they bring 50% of AA's revenue, cost MUST matter to all airlines.
The mindset that is frequently displayed here that "we only have to worry about the premium passengers" is clearly false.
EVERY passenger must be pursued and the challenge must be to establish a high level of quality and good revenue management that allows being fare competitive with whoever offers low fares but not dilute the quality of product that a legacy carrier CAN offer.
Let's see where AA goes with all of this but this move in being more aggressive with low fare carriers is necessary.
WorldTraveler
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some interesting quotes and insight about the subject
Spirit is small, but disruptive
If you measure our overlap as our domestic ASMs that have nonstop competition from someone, 28% of our domestic ASMs have nonstop competition with Spirit. That is much larger than our domestic overlap with Delta (NYSE
AL) and United.
-- Scott Kirby
While American Airlines believes that it's necessary to match Spirit Airlines' fares to avoid losing customers in droves, it wants to minimize the impact of that strategy on its unit revenue. In 2016, it plans to introduce a new, separate fare type that is custom-designed for competing with ultra-low cost carriers.
The company didn't provide any details on what that would look like. However, Delta Air Lines has adopted a similar strategy in recent years with its "Basic Economy" fares.
These "Spirit-match" fares allow Delta to keep price-sensitive customers in the fold. However, due to the onerous restrictions, 65% of customers presented with a "Basic Economy" fare choose to pay more for a fare that includes seat assignments, bolstering Delta's unit revenue. American Airlines will try to achieve the same effect with its new fare type.
But we are going to go to a product that has different attributes ... if you buy ultra low-cost carrier competitive fare...
-- Scott Kirby
We've done it to ourselves ... as we focused, really, on having a successful reservation systems integration. And now being able to turn our full attention in those groups to optimizing revenue, I believe, will lead to relative outperformance.
-- Scott Kirby
http://www.fool.com/investing/general/2015/10/30/5-things-american-airlines-group-inc-wants-you-to.aspx?source=eogyholnk0000001&utm_source=yahoo&utm_medium=feed&utm_campaign=article
Spirit is small, but disruptive
If you measure our overlap as our domestic ASMs that have nonstop competition from someone, 28% of our domestic ASMs have nonstop competition with Spirit. That is much larger than our domestic overlap with Delta (NYSE
AL) and United.-- Scott Kirby
While American Airlines believes that it's necessary to match Spirit Airlines' fares to avoid losing customers in droves, it wants to minimize the impact of that strategy on its unit revenue. In 2016, it plans to introduce a new, separate fare type that is custom-designed for competing with ultra-low cost carriers.
The company didn't provide any details on what that would look like. However, Delta Air Lines has adopted a similar strategy in recent years with its "Basic Economy" fares.
These "Spirit-match" fares allow Delta to keep price-sensitive customers in the fold. However, due to the onerous restrictions, 65% of customers presented with a "Basic Economy" fare choose to pay more for a fare that includes seat assignments, bolstering Delta's unit revenue. American Airlines will try to achieve the same effect with its new fare type.
But we are going to go to a product that has different attributes ... if you buy ultra low-cost carrier competitive fare...
-- Scott Kirby
We've done it to ourselves ... as we focused, really, on having a successful reservation systems integration. And now being able to turn our full attention in those groups to optimizing revenue, I believe, will lead to relative outperformance.
-- Scott Kirby
http://www.fool.com/investing/general/2015/10/30/5-things-american-airlines-group-inc-wants-you-to.aspx?source=eogyholnk0000001&utm_source=yahoo&utm_medium=feed&utm_campaign=article
Dont call me Shirley
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- Aug 20, 2002
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If AC can pull it off, it will be a first. And don't forget UA's Ted operation.Crash Pad DCA said:
SK tried to do it with Snowflake; it didn't work.
BTW, am the only one who find the use of Metrojet by that Russian carrier a bit odd (and sad). Trademarks dont last long if unused.
WorldTraveler
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AC rouge is not the same thing as the carrier within a carrier concept that the US carriers operated or what AA would need.... AA's problems are to/from its own hubs which makes Ted the closest example.
further, indications are that AA is NOT going with a carrier within a carrier model but instead will (and are) more aggressively matching LCC fares.
problem is that AA's LFs are already well above levels where they will spill traffic by lowering fares which is why Wall Street is very concerned that AA's increased fare aggressiveness will result in reduced profits.
They might be able to revenue manage their way into higher yields but if that was the case, why aren't they doing it already?
further, indications are that AA is NOT going with a carrier within a carrier model but instead will (and are) more aggressively matching LCC fares.
problem is that AA's LFs are already well above levels where they will spill traffic by lowering fares which is why Wall Street is very concerned that AA's increased fare aggressiveness will result in reduced profits.
They might be able to revenue manage their way into higher yields but if that was the case, why aren't they doing it already?
