Rj Concept Is Doomed.
- Thread starter cavalier
- Start date
You have fallen into the trap...the company wants people to think like this. Its BS that the emb170 is being flown at MDA. All airplanes should be flown at the mainline level and until this mentality is reached the industry will continue to become like walmart.ITRADE said:
The WalMarting of the U.S. domestic airline industry startedforeright said:
before 9-11. While WN and B6 have certainly taken advantage
of the economic downturn since 9-11 by providing low fares to
business travelers with less restrictions, the legacy carriers actually
started the downturn by having too much capacity in the system
and giving seats away to Priceline and the rest at ridiculously
low prices. Then they cut out travel agency commissions that
kept a large amount of mid-range fares being sold with vacation
and company travel accounts. The legacy carriers lost control
of pricing before 9-11 and the low cost carriers recognized an
advantage and they exploited the advantage. Now, most people
who purchase tickets are conditioned to only accept a low fare
and now the legacy carriers have to match the low fares in order
to keep their planes full and ward off market share erosion from
the low cost carriers. The same thing happened in the mid-1990's
with retail clothing stores such as Kaufmann's (US), Belk (DL), and
Marshall Fields (UA). Why would a customer pay full price for a nice
pair of Levi's or khakis at Kaufmann's when they can buy the same
thing at Kohl's (B6), Target (FL), or Walmart (WN) for a much
lower price? The premium retail industry has found that change is
difficult but they have managed to compete with WalMart and the rest
by lowering their service levels and hiring younger and less
expensive labor. The airline industry is in the midst of a permanent
change and either US will adapt, or they will surely fail and a large
number of people will be unemployed.
You and Itrade both are a real piece of work.... that was meant to be nice.usfliboi said:
Itrade and you are why I was thrown off before and it won't happen again. Itrade stirs the crap and watches it boil, he is that type of person, flyboy is a yes man and will bent in circles if told to do so.
I stick to my original post/topic and LUV is my proof that the management teams running this airline past and present will never get it, old school old thoughts with no vision.
The Fab Five will live long beyond this mess of an airline in constant turmoil and you flyboy with no spirit of your own will wither and die without some help.
The question at hand: Is the RJ strategy doomed to failure
I would have to answer yes, especially after listening to the conference call. Clearly, the RJ orders are needed in order to win back traffic from DAL and CAL with large RJ deployments. Anywhere where a passenger has an RJ or mainline choice on another airline, but limited RJs on US Airways, US Airways is in a losing position.
However, US Airways management clearly understands, according to the conference call, that yield and total revenue (absent growth) will decline into the future. That means RASM will declines. Furthermore, they understand that RJ's have higher CASM. Given than they are currently producing losses, that means CASM is higher than RASM. Given the trends indicated, CASM will get higher and RASM will get lower, that means losses will become greater.
The only way the RJ strategy makes sense, is if load factors are at 50% or worse. So for example, flying a 120-seat A319 with 60 pax indicates this might be a place for a 70-seat RJ (60 pax/70 seats = 86% load factor). However, given that US Airways system load factor for Q1 was 70%, I assume that there are not many examples of routinely half-empty flights. Therefore, deploying more RJs at the expense of mainline aircraft will only increase costs and decrease total revenue (although RASM may increase moderately, if revenue managed correctly, but not enough to cover increased CASM).
So, some of the examples of Large RJ deployment that I have read on other threads of this forum have me concerned... PHL-IAH, PHL-MCI, PHL-ATL... These are examples of flights where I think the Large RJs will be uncompetitive. US Airways CASM in these markets will be too high, and passengers will prefer other airline's mainline aircraft to US Airways RJ's, thus reducing demand.
SpinDoc:
You make a strong argument. And well said. I cannot find a way to disagree. In fact, to take your analogy a bit further... There are some high-end retailers that thrive in this environment by providing a perceived superior product in return for a higher price like Neiman Marcus (CO) and Nordstrom (AA). These stores don't need to run sales because they have devoted customers willing to pay more for the additional service. However, Kaufmann's (US), Belk (DL), and Marshall Field's (UA) must continue to discount their merchandise in order to make sales, as the normal price is considered too high by the low-end shoppers and service is considered too poor from the high-end shoppers. These middle ground retailers have had ups and downs, but the long-term success seems to be with the companies positioned at the high-end and low-end niche's. Much like in retailing, there seems to be a shake-out occuring in the middle.
I would have to answer yes, especially after listening to the conference call. Clearly, the RJ orders are needed in order to win back traffic from DAL and CAL with large RJ deployments. Anywhere where a passenger has an RJ or mainline choice on another airline, but limited RJs on US Airways, US Airways is in a losing position.
However, US Airways management clearly understands, according to the conference call, that yield and total revenue (absent growth) will decline into the future. That means RASM will declines. Furthermore, they understand that RJ's have higher CASM. Given than they are currently producing losses, that means CASM is higher than RASM. Given the trends indicated, CASM will get higher and RASM will get lower, that means losses will become greater.
The only way the RJ strategy makes sense, is if load factors are at 50% or worse. So for example, flying a 120-seat A319 with 60 pax indicates this might be a place for a 70-seat RJ (60 pax/70 seats = 86% load factor). However, given that US Airways system load factor for Q1 was 70%, I assume that there are not many examples of routinely half-empty flights. Therefore, deploying more RJs at the expense of mainline aircraft will only increase costs and decrease total revenue (although RASM may increase moderately, if revenue managed correctly, but not enough to cover increased CASM).
So, some of the examples of Large RJ deployment that I have read on other threads of this forum have me concerned... PHL-IAH, PHL-MCI, PHL-ATL... These are examples of flights where I think the Large RJs will be uncompetitive. US Airways CASM in these markets will be too high, and passengers will prefer other airline's mainline aircraft to US Airways RJ's, thus reducing demand.
SpinDoc:
You make a strong argument. And well said. I cannot find a way to disagree. In fact, to take your analogy a bit further... There are some high-end retailers that thrive in this environment by providing a perceived superior product in return for a higher price like Neiman Marcus (CO) and Nordstrom (AA). These stores don't need to run sales because they have devoted customers willing to pay more for the additional service. However, Kaufmann's (US), Belk (DL), and Marshall Field's (UA) must continue to discount their merchandise in order to make sales, as the normal price is considered too high by the low-end shoppers and service is considered too poor from the high-end shoppers. These middle ground retailers have had ups and downs, but the long-term success seems to be with the companies positioned at the high-end and low-end niche's. Much like in retailing, there seems to be a shake-out occuring in the middle.
Cavalier:
You almost sound tickled to death with the down-grading news and the fact this could destroy US Airways future.
Forget the EMB-170s for a moment and think of the opportunities that the 50 seat ERY-145 and CRJ-500s can offer. Mini RJ, point-to-point hubs from markets like BUF, SYR, ABL, RIC, ORF, just to name a few of the smaller small-hub and larger non-hub airports. You put 40 revenue passengers paying point-to-point between ABL and RDU on a 50-seat RJ you can make a profit. You put 40 revenues passengers paying point-to-point between ABL and RDU on a A319 you will certain loss money.
And we haven't even mentioned the lessening of congestion at the PHL and CLT hubs using this hub by-pass type of longer-haul, lower passegner market operation.
You almost sound tickled to death with the down-grading news and the fact this could destroy US Airways future.
Forget the EMB-170s for a moment and think of the opportunities that the 50 seat ERY-145 and CRJ-500s can offer. Mini RJ, point-to-point hubs from markets like BUF, SYR, ABL, RIC, ORF, just to name a few of the smaller small-hub and larger non-hub airports. You put 40 revenue passengers paying point-to-point between ABL and RDU on a 50-seat RJ you can make a profit. You put 40 revenues passengers paying point-to-point between ABL and RDU on a A319 you will certain loss money.
And we haven't even mentioned the lessening of congestion at the PHL and CLT hubs using this hub by-pass type of longer-haul, lower passegner market operation.
oldiebutgoody
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I believe that there will always be a place for smaller aircraft in any airline system, just NOT the huge quantity UAIR is pursuing. What UAIR needs, and he analysts have been hammering on, is a route network. UAIR severely damaged it's route network when it radically downsized after 9/11. While commuter feed is important, it's also important to understand just how hub-and-spoke carriers like UAIR evolved. They were, in the past, HUGE MONEYMAKERS. That's why they got where they WERE. They developed route networks that used larger aircraft into smaller cities, which allowed for a revenue premium, delivered these folks to the hub, placed them on long-haul flights where they also enjoyed a revenue premium since they went right to the major airports, unlike SW and other LCCs. UAIR management took their eye off the ball, only looking at the cost side of the equation, and not looking at the reasons for the revenue premiums. Even SW is migrating into more of a hub-and-spoke carrier, because their management is sharp enough to see where these revenue premiums are and need to capture them before the idiotic legacy carriers "accidentally" stumble back onto them. There is no doubt that adding more non hub flying will make revenue more predictable, it also detracts from any revenue premium for going to the smaller, local airports. It is also my opinion that the main reason (besides the ability to demand sub-mainline pay) to keep MAA as a separate entity is so that it can eventually be sold, maybe to Siegel's old buddy, Ornstein.
Read funguy2 and the points he makes, then lecture me with your nonsense.FM2436 said:
I am not happy this airline is failing; don't put words in my mouth.
This RJ stuff is so far behind the curve it's a complete joke at this point and yet they hold on for dear life with wet greasy hands to the RJ concept only assuring our demise.
As per Dave Siegel’s words BEFORE he was even at U, quote: RJ's are a union breaker, a means to break the very strong unions. THAT is what RJ's are, nothing more. Isn’t it funny how trying to break the unions only broke the entire company instead? Good ole corporate America at its best hour showing its greed, lies and deception headed by a man still taking money from U under the guise of personnel department which is quite a difference from the same department at LUV!
PORTION DELETED to me and don't kid yourself thinking that I am alone with these thoughts and convictions and just a very small minority on the Internet. WE ALL KNOW THE SCORE. NO MORE GIVE BACKS, do what you have to do.
RowUnderDCA
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I don't think the CRJ700 is all that. It and the 200 are uncomfortable. The ERJ is more comfortable and the 170/190's must be more comfortable, significantly. I would not put the 170 product in the 'rj' category. It really seems more like today's version of PI/Empire's f-28sSVQLBA said:
