Required Reading
- Thread starter MerlinMagician
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BoeingBoy
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- Nov 9, 2003
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- #47
"Above all else, WN does more with fewer people."
mweiss, I'm not picking on you because I think you'll agree. WN does more with less people to a large degree because of the business model. U has a less efficient business model (less efficient than some legacies have become), which means it takes more people to do the same or less. Heaven forbid that we should streamline the business model. It's too easy to keep coming to the concession well.
While I'm on the subject, it would be refreshing if we could finally just pick one LCC to compare to. WN has a lower "headcount" than either JB or AWA, so we're compared to them in that metric, but their pay and workrules are about the same or better than ours. JB has the least offensive "work rules" and lowest seniority, but with the "overtime" pay, their compensation can be better than AWA, so they're the yardstick in those metrics but not pay. AWA has lower pay, but most of their workrules are better than JB, so they become the compensation yardstick. That seems to the the definition of a "LCC type contract".
Maybe we could turn this on it's head. How about WN pay and workrules with JB overtime provisions - wouldn't that be an "LCC type contract"?
Jim
mweiss, I'm not picking on you because I think you'll agree. WN does more with less people to a large degree because of the business model. U has a less efficient business model (less efficient than some legacies have become), which means it takes more people to do the same or less. Heaven forbid that we should streamline the business model. It's too easy to keep coming to the concession well.
While I'm on the subject, it would be refreshing if we could finally just pick one LCC to compare to. WN has a lower "headcount" than either JB or AWA, so we're compared to them in that metric, but their pay and workrules are about the same or better than ours. JB has the least offensive "work rules" and lowest seniority, but with the "overtime" pay, their compensation can be better than AWA, so they're the yardstick in those metrics but not pay. AWA has lower pay, but most of their workrules are better than JB, so they become the compensation yardstick. That seems to the the definition of a "LCC type contract".
Maybe we could turn this on it's head. How about WN pay and workrules with JB overtime provisions - wouldn't that be an "LCC type contract"?
Jim
While I don't condone the cherry-picking model that US execs have been pushing for, I believe it's worth digging into this particular topic a bit further.
One option is the WN model. Pay well, have more restrictive work rules, but have fewer people.
Another option is the HP/B6 model. Pay badly, have less restrictive work rules, but have more people than WN.
Those two models have essentially the same unit costs.
Of course, one could try a third model of pay badly, have less restrictive work rules, and have as few people as WN. That model would have lower unit costs than either the WN or HP/B6 models. On a head-to-head competition with any other LCC, such a model would win...provided that it's possible to implement at all.
One option is the WN model. Pay well, have more restrictive work rules, but have fewer people.
Another option is the HP/B6 model. Pay badly, have less restrictive work rules, but have more people than WN.
Those two models have essentially the same unit costs.
Of course, one could try a third model of pay badly, have less restrictive work rules, and have as few people as WN. That model would have lower unit costs than either the WN or HP/B6 models. On a head-to-head competition with any other LCC, such a model would win...provided that it's possible to implement at all.
WestCoastGuy
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- Jun 27, 2004
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Having spoken to several folks over at WN concerning their buyout off from the company, very few are taking it. They all seem fairly happy and satisfied with their jobs and have very little desire to leave. From what Im told, only a few very senior WN people that are nearing retirement age applied for the buyout. Will be interesting to see if that is offered to US how many will accept.
ELP_WN_Psgr
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- Nov 29, 2003
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- 0
Weiss: I don't think you can have all three. It's sort of like a triangle.
Label each vertex. One is "cheap", one is "good, "one is "fast".
You can generally (if you are real good at manipulating things) manage to get 2 of the 3.
Seldom can anyone get all three.
USAirways' problem is they are squandering valuable time trying to get all three when what they should be doing is modifying the business model.
I am generally pretty anti-labor-union, but this time I have to admit they have some pretty astute arguments in their favor. They have given in, and management failed to do anything productive with those concessions. Instead of a wholesale revamping of their fare structure and the way they do business, they are whining for more concessions.
If the management at USAirways had any cojones at all, they would be in there with the butcher knife and meat ax totally restructuring the airline. Promises to do same after the next round of concessions fall on deaf ears, and rightfully so.
You know the worst thing they have done? They (mgmt) has shrunk the airline to incredible levels by handing over routes and flights to express partners.
The argument is the demand for airplane seats is too low for us to fill a 126 seat airplane, so we will let Mesa fill a 70 seat airplane.
Well, did anybody ever stop to think that if you cut your fares back to a less insane level, there might be more demand? And if there is more demand, you add flights. Which means you utilize your airplanes better. Which lowers your cost. Increased flights and passengers also means more employees, which means you can quit furloughing and start bringing back employees, which means you have some junior people around, which means lower labor costs.
The bean counters of this world will kill us all, given enough time. The drastic thing to do would be to chop fares and stimulate demand, then work to fill the demand. It would be gutsy. It might also convince some (justifiably) skeptical employees that management wants to save this airline rather than configure it for sale to America West.
Label each vertex. One is "cheap", one is "good, "one is "fast".
You can generally (if you are real good at manipulating things) manage to get 2 of the 3.
Seldom can anyone get all three.
USAirways' problem is they are squandering valuable time trying to get all three when what they should be doing is modifying the business model.
I am generally pretty anti-labor-union, but this time I have to admit they have some pretty astute arguments in their favor. They have given in, and management failed to do anything productive with those concessions. Instead of a wholesale revamping of their fare structure and the way they do business, they are whining for more concessions.
If the management at USAirways had any cojones at all, they would be in there with the butcher knife and meat ax totally restructuring the airline. Promises to do same after the next round of concessions fall on deaf ears, and rightfully so.
You know the worst thing they have done? They (mgmt) has shrunk the airline to incredible levels by handing over routes and flights to express partners.
The argument is the demand for airplane seats is too low for us to fill a 126 seat airplane, so we will let Mesa fill a 70 seat airplane.
Well, did anybody ever stop to think that if you cut your fares back to a less insane level, there might be more demand? And if there is more demand, you add flights. Which means you utilize your airplanes better. Which lowers your cost. Increased flights and passengers also means more employees, which means you can quit furloughing and start bringing back employees, which means you have some junior people around, which means lower labor costs.
The bean counters of this world will kill us all, given enough time. The drastic thing to do would be to chop fares and stimulate demand, then work to fill the demand. It would be gutsy. It might also convince some (justifiably) skeptical employees that management wants to save this airline rather than configure it for sale to America West.
BoeingBoy
Veteran
- Nov 9, 2003
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- #51
Well said, ELP - at least from my perspective.
And mweiss,
"Of course, one could try a third model of pay badly, have less restrictive work rules, and have as few people as WN......"
It looks like we'll see soon if the attempt at that model will work. It sure seems like that's what management is shooting for.
Jim
And mweiss,
"Of course, one could try a third model of pay badly, have less restrictive work rules, and have as few people as WN......"
It looks like we'll see soon if the attempt at that model will work. It sure seems like that's what management is shooting for.
Jim
whatkindoffreshhell
Veteran
Snapbacks, defined pension benefit, no-cost healthcare coverage, industry-leading wages, $2000 fares between EastBumfrick & WestBumfrick--- all of these are terms from a bygone era.PITbull said:
All this crap about $1.2 bil in concessions -- obviously that amount was enough.
And don't kid anyone -- if any of you weren't tied to the seniority system you'd have been gone long time ago.
Don't you folks ever get tired of whining?
Be bold and try something new today.
One of the important efficiencies in Southwest's system, as compared to US Airways', is the point-to-point nature of the operation and the fact that the broad majority of their passengers fly non-stop or direct, rather than connecting as they do at US Airways. That's an important element of the proposed transformation plan if UAIR management ever decides to work on implementing it instead of focusing on concessions; non-stop and direct flights are higher-yield due to greater passenger appeal AND less expensive to provide! Connecting hubs allow an airline to provide a somewhat more attractive product, since passengers have a vastly more appealing selection of city pairs, BUT there are also limits to what passengers will pay for additional convenience before choosing an alternate product or simply not traveling at all. However, the connecting product will still be inferior to the LCC's point-to-point product in spoke markets.
I agree that US Airways is behind the times in its attempt to play catch-up with RJ's. The fact is that RJ's were largely used to reduce capacity on many former mainline routes in order to increase average yields, or in Delta Connection's case, to steal passengers from a less appealing US Airways Express product (CVG has been siphoning connecting traffic from PIT for years). Going forward, however, high-CASM RJ's will be less and less useful as LCC's continue to expand, though they may find a place carrying largely point-to-point traffic at moderate yields; this is basically Independence Air's business plan.
Fixing US Airways is going to require some pretty dramatic changes to the route structure and the way the airline schedules, not to mention restructuring the fares. I believe that it would be a mistake to abandon PIT before trying to offer GoFares in most, if not all, PIT non-stop markets. Reduce the emphasis on connections and get more people to fly to and from PIT. US Airways would make more money by flying two passengers from PIT at more modest fares than it does by trying to connect a single passenger through PIT at a fare level set by LCC's. And with rationalized fares, PIT would be very unattractive to LCC's considering service there. Southwest probably would have stayed out of PHL if US Airways had chosen to restructure fares a year ago.
I agree that US Airways is behind the times in its attempt to play catch-up with RJ's. The fact is that RJ's were largely used to reduce capacity on many former mainline routes in order to increase average yields, or in Delta Connection's case, to steal passengers from a less appealing US Airways Express product (CVG has been siphoning connecting traffic from PIT for years). Going forward, however, high-CASM RJ's will be less and less useful as LCC's continue to expand, though they may find a place carrying largely point-to-point traffic at moderate yields; this is basically Independence Air's business plan.
Fixing US Airways is going to require some pretty dramatic changes to the route structure and the way the airline schedules, not to mention restructuring the fares. I believe that it would be a mistake to abandon PIT before trying to offer GoFares in most, if not all, PIT non-stop markets. Reduce the emphasis on connections and get more people to fly to and from PIT. US Airways would make more money by flying two passengers from PIT at more modest fares than it does by trying to connect a single passenger through PIT at a fare level set by LCC's. And with rationalized fares, PIT would be very unattractive to LCC's considering service there. Southwest probably would have stayed out of PHL if US Airways had chosen to restructure fares a year ago.
And that is precisely the factor missed so often in the hub and spoke model of flying.sfb said:
The first perception about hubs was that they made pretty much any two cities in the country connect. This is why EA moved into MCI, despite the poor O&D.
The second perception was that they allowed a city with decent O&D to have nonstops to virtually anywhere, with some of the excess capacity filled by connecting passengers. The nonstops would pay very high fares because of the monopolistic nature of the market, while the connecting passengers would pay closer to real market rates. The problem with this plan is precisly what you outlined, that you're really only collecting half of the market rate for the trip on each segment (or a quarter if you're looking RT).
Nonstops benefit both airline and passenger, when implemented correctly, in a large number of markets.
