Outstanding Comparison To Southwest

[GadgetFreak]

mweiss, you make a very good point about the premium prices US has been charging. I think it is because of their high number of captive hubs. That is clearly vanishing in PHL now. You point out that the US product isnt 20% better than AA or UA. That is a rather large understatement. I have flown a lot on US, AA and UA in the last year. With the exception of the CP line (which obviously effects a very small number of people), I would say the US product is considerably inferior to AA and UA across the board. The comparison in first class is most noticeable but AA coach in particular is much more pleasant the US coach. Also, thusfar, neither UA nor AA has put me on a DASH 8. I saw far too many of those on US. Also, the others dont make me fly through PHL, although you could argue that flying one of those awful little UA planes from JFK to get a connection at IAD is about the same.

 

[Phoenix]

Buy more of what you're selling? Have you noticed that US Airways is extracting the highest RASM of any airline, by far? Let's not compare US to WN, let's compare US to AA and UA! US is commanding a 25% premium over AA and a 32% premium over UA!

OK, maybe that's not fair, because of the stage-length factor, so let's compensate for that. I'll push US down the stage-length line to match AA, then UA, and let's see what happens there.

That brings US down to a 20% premium over AA, and 26% over UA. Much better. <_< Let's face it, US's product is not 20+% better than its legacy competitors. Comparable, at best, and not when one compares, say, the FC offerings.

No, I'd say US has maximized revenue in a way unmatched by anyone else. You should be proud of that, I guess. But it's ludicrous to pretend that your customers aren't paying enough for your services.

You either failed Logic 101 or you are intentionally misleading.

You start out with the question Buy more of what you're selling? which of course was my point. And then you went on a tirade about how USAir is selling each ticket for 20%+ more than the other carriers and should not in any way expect to be able to demand more for a ticket than they are already getting because their product is not any better than their competitors.

Do you get it yet? Selling each ticket for more money is not what I said. I said SELL more not CHARGE more.

If you flew the line everyday (and you were familiar with the contracts that have been amended several times since 911 to give Mgt a blank check in scheduling) then you would be able to see the squandering of opportunities to increase the utilization of airplanes.

Planes sitting on the ground PSG for a larger percentage of the day, as compared to our competitors is not a category we should excel in.

Profit = RASM-CASM-PSG

 

[mweiss]

Phoenix, there are a couple of things to consider in response to your comments.

First, reducing PSG is a cost reduction. That cost reduction can be used to increase production (i.e., fly more) or to maintain production at a lower cost (i.e., keep the same number of flights as today, but with less equipment and fewer people).

Second, since your solution is to sell a larger number of tickets, I'm curious where you think the customers who will buy these tickets will come from? In other words, on which routes would you increase frequency? Or which routes would you start serving?

I ask this because US is already skimming la creme de la creme, so any additional customers will necessarily come at a lower RASM. Now, if you manage to drop CASM at a faster rate than you're dropping RASM, then you'll be fine. If not, then you'll be selling at a loss and trying to make it up in volume.

 

[Phoenix]

Phoenix, there are a couple of things to consider in response to your comments.

First, reducing PSG is a cost reduction. That cost reduction can be used to increase production (i.e., fly more) or to maintain production at a lower cost (i.e., keep the same number of flights as today, but with less equipment and fewer people).

Second, since your solution is to sell a larger number of tickets, I'm curious where you think the customers who will buy these tickets will come from? In other words, on which routes would you increase frequency? Or which routes would you start serving?

I ask this because US is already skimming la creme de la creme, so any additional customers will necessarily come at a lower RASM. Now, if you manage to drop CASM at a faster rate than you're dropping RASM, then you'll be fine. If not, then you'll be selling at a loss and trying to make it up in volume.

Reducing PSG ie. increasing PAFG (planes away from gate) will result in increased revenue.

As you wisely point out, the increased RASM may be less than the current RASM. But of course the CASM will also go down because some costs are fixed and do not increase with increased utilization of the planes.

The load factors are extremely high. Oversold flights are very common. More tickets would be purchased if they were available.

It is a simple plan and it works. SouthWest is kicking everyone’s posterior .

SouthWest is not preaching fear and gloom for the extortion of their employees. But then it appears they are interested in running an airline and providing a solid product to their customers rather than converting a Mainline into an express network of 15 different slave labor camps in order to sell virtual "Mainline" tickets to their customers at a steep premium.

SouthWest spends its efforts on devising convincing sermons to new customers, while USAir Mgt spends all its money on devising convincing sermons to employees.

They are both preaching to get money. Unfortunately one is a short term and unsustainable carrier.

 

[mweiss]

It ain't PAFG, it's PIA (planes in the air). Waiting in queue on a taxiway or the ramp isn't making money. But I think we're quibbling over details there.

As I said, the ultimate question is whether or not CASM will drop more quickly than RASM. Neither of us know the answers, in part because we do not know what the current fare mix looks like.

FWIW, US's average ticket price in 2003 was $166.

 

[Phoenix]

It ain't PAFG, it's PIA (planes in the air). Waiting in queue on a taxiway or the ramp isn't making money. But I think we're quibbling over details there.

As I said, the ultimate question is whether or not CASM will drop more quickly than RASM. Neither of us know the answers, in part because we do not know what the current fare mix looks like.

FWIW, US's average ticket price in 2003 was $166.

I agree PIA is more accurate. I initially wrote PIA but chose to use PAFG because I like an acronym with four letters.

PIFA would have been an even better acronym because it is a four letter acronym that contains a “four letterâ€￾ word!!

 

[mweiss]

LOFL!

 

[Phoenix]

LOFL!

 

[GeezLouis]

This article is going to really piss Usflyboi and Usa320pilot off!

Seriously, this is something taught in every High School Economics class. For a business, any business, to go from losing money to making money; there are only two things you can do. (1) Either cut cost, ie. Dave's favorite option, or (2)Increase revenue. The second option was barely considered under Siegel's tenure!

Sure USAir business model is inefficient. This is due to years of poor management. So along with cutting costs (and not labor costs), USAir needs to figure out how to create more revenue. There are 100's, maybe 1000's of things this company can do to make money, while leaving workers pay levels alone!

Stop with the "Concessions are our only hope BS!"