To ï¬￾nd proï¬￾t, carrier plans to lose more Vegas flights

[nycbusdriver]

You need to understand something- We have not had any kind of reputable , smart, think-outside-the-box management for about 20 of the 25 years I've been here. And the saga continues.......

They can't even think INSIDE-the-box.

 

[jimntx]

What has SWA done in LAS? Have they decreased at all? Remained the same? Increased with USAirways pullout?

I don't know about increase or decrease to their flight schedule, but according to a friend of mine in Dallas who is a trainer with SWA, the f/a base at LAS has increased from 500 to 1500 in the past year or so. In fact, for awhile at least LAS became the new BWI--all new hires went to LAS.

 

[BoeingBoy]

Here ya go...

US mainline CASM - full year 2008:
Aircraft fuel and related taxes 4.88
Loss (gain) on fuel hedging instruments, net 0.48
Salaries and related costs 3.01
Aircraft rent 0.98
Aircraft maintenance 1.05
Other rent and landing fees 0.76
Selling expenses 0.59
Special items, net 0.10
Depreciation and amortization 0.29
Goodwill impairment 0.84
Other 1.68
Total mainline CASM 14.66

WN CASM - full year 2008:
Salaries, wages, and benefits 3.23
Fuel and oil 3.60
Maintenance materials and repairs .70
Aircraft rentals .15
Landing fees and other rentals .64
Depreciation and amortization .58
Other 1.34
Total CASM 10.24

Salaries/related costs: 0.21 advantage US
Fuel: 1.22 advantage WN (WN includes hedging gains/losses in fuel cost)
Fuel (incl hedging losses in US' fuel cost): 1.70 advantage WN
Maintenance: 0.35 advantage WN
Aircraft Rent: 0.83 advantage WN (the benefit of owning many of their planes)
Landing fees/other rent: 0.12 advantage WN (no bigger airplanes and efficient use of airport space
Depreciation/amortization: 0.29 advantage US (although it's not a cash charge)
Other: 0.34 advantage WN

The following categories are broken out by US and not by WN

Selling expenses: 0.59 (may be included in salaries/related costs by WN)
Special Items: 0.10
Goodwill impairment: 0.84 (WN wouldn't have this line item)

Of course, the above doesn't include the effect of US Express CASM which isn't included reported. However, Express lost money despite taking in over 19 cents/available seat mile so Express CASM would have been higher than that.

Jim

 

[hp_fa]

There is also an issue with the concept of shrinking to profitability when, right or wrong, heavily unionized airlines try to shrink and find that they either must layoff their least paid junior employees or offer compensation for a higher paid employee to voluntarily leave. As far as crew costs go, they go up on an average basis while trying to shrink. The more you shrink, the higher your average cost per employee in any group covered by a union contract.

Now, before the union folks get all upset at what I said, I believe that airline management throughout the country has brought this on itself. Had they not constantly tried to squeeze more from their workforces, not creatively try to get around contracts they negotiated and other such things that unions probably wouldn't be necessary. However, they brought this issue on themselves and now find themselves shrinking to higher average costs.

 

[BoeingBoy]

Doesn't night flying (out of LAS, for example) actually INCREASE fleet utilization?

Yes, and therefore lowers CASM - the only additional cost is the incremental cost of operating the flights but it allows fixed costs to be spread over more ASM's. That's why it was worth it for HP to have the night hub in LAS despite the generally low yield nature of that traffic.

Jim

 

[SolidCactus]

LAS must be working for WN... I was just looking at the McCarran website and just looking at the departures board, Tuesday at 8 PM, for flights departing after 8PM on, there are 59 WN flights, and 19 US flights.

 

[hp_fa]

But hey I'm just an dumb arsed customer not worthy of a response to an e-mail from Scott Kirby.

Bob, you are a walking talking bundle of contradictions. You fight US Airways yet you still fly them. Maybe if you stopped you stopped flying US Airways Kirby might answer you. However, for now, he probably has decided that you are seemingly a paper tiger because of all your contradictions. I'm not trying to be cruel, just trying to make sense of all of the statements and posturing.

 

[700UW]

Hey HPFA,

WN is the highest percentage of unionization in the industry and are the highest paid.

 

[nycbusdriver]

Hey HPFA,

WN is the highest percentage of unionization in the industry and are the highest paid.

...and Herb Kelleher is on record stating that he preferred his employees to be unionized as it makes employee relations easier. You see, when the boss is going to respect his employees and treat them as valuable assets, a union is not a threat to management. Rather, it becomes more of a partner.

 

[WCT]

This is Plane Ridiculous!! When Franke was in charge of HP, his whole stradegy was VEGAS! The only place that kept America West running was VEGAS BABY!! Makes no sense now does it Parker??! You could of kept the night runs and Fuel prices went skyrocket, so guess what, You Retreated!!!! FOOL!! Want to keep RASM low?? HELLO????!!!!! Whatever! :blink:

Now I guess you will RUIN PHOENIX TOO, RIGHT!?????? Not much here, but yes Southwest will gladly take IT!! Don't make more mistakes that US Air did long ago, and ruin the West operation!!! :down: :down: :down:
Are we grasping for straws now?? What the heck did America West bring to the table Mr. Parker, beside synergy??? Your true colors are showing!!
Were we not suppose to be the Biggest Low Cost Carrier in the World, ala, LCC???!!!!!!!!! LOL :angry:

 

[jerseyfinn]

I'm no airline management professional but can we break down some costs? Why is US's so high? It sure as HELL isn't the employees. . . . .

"Speak again, lest it mar your fortunes" -- King Lear, act I scene 1

This WSJ article (7 april 2009 ) points to labor costs as being one of many anchors which keeps all of the majors in the red.

Just in case the link does not work, a few quotes:

Bankruptcies, restructurings, pay cuts and radical changes in airplane fleets and schedules were supposed to lower costs at older airlines so they could afford to match the cheap fares offered by upstart low-cost carriers. It hasn't turned out that way. The "cost gap" between so-called legacy airlines that have been around for decades and younger low-fare carriers has remained, according to new analysis from consultancy Oliver Wyman. In the long term, this could make it harder for older airlines to match very low fares.

US is not the only carrier facing tough times, as the industry-wide trend is that discounter carriers still make money even in this economy ( though just barely ) while the hub & spoke guys are in the red and likely can not match the discounters at their game due to persistently higher CASMs -- and in this instance I do not refer to US alone.

That said, Mr. Parker is quoted thusly in the WSJ article.

"It's largely the cost of an older airline," says Douglas Parker, chief executive of US Airways Group Inc., whose company is the combination of a legacy airline, US Airways, and a start-up, America West Airlines. On the "east side" of the company -- the original US Airways -- every pilot is at the top of the pay scale.

"That's not the case at JetBlue or AirTran or Southwest," Mr. Parker says. "Even if the scale is the same, the cockpit costs are different."

The point here is not that east pilots are the cause of the problem, but that legacy carriers do indeed have higher wage costs, especially airlines with senior workforces that are at the top of their pay scales. Now I'm not begrudging those wages ( and certainly there have been give backs in wages and benefits as airlines shrink, reorganize, and cut capacity and other costs ). But that's the nature of the aviation game today. The article also cites the effect of the recession which cuts the numbers of (lucrative) business travelers and hence revenue while the majors try to compete with the WNs of the world for pax.

Another observation made in the article:

In 2003, as airlines were beginning their massive restructurings, Oliver Wyman found low-cost airlines had a "cost gap" advantage over legacy airlines of 2.7 cents per seat mile. Last year, the gap was 3.8 cents per seat mile. In percentage terms, the gap has remained roughly the same over the past six years -- legacy airline costs have been, on average, 23% to 27% higher than low-cost airlines per seat mile.

The article also notes that some cost gap disparities are unavoidable. For example, International routes which are more profitable, are also much more costly to operate. Judging by Spring numbers published recently by many legacy carriers, international travel is way down, especially in business class. Once again, no surprise that the money is not flowing into the big carriers' coffers.

Bottom line is that discounters have advantages for a myriad of reasons, good economy or bad:

The key to keep costs low, he says, is growth -- another area where the low-cost carriers have an edge. Airlines that grow add new airplanes that don't yet have lots of maintenance costs or reliability issues. Growing airlines hire employees at the bottom of wage scales. Conversely, airlines that are shrinking have a harder time reducing unit costs. They may ground airplanes but still have to keep up payments on them. They may be paying leases on airport gates and counter space they no longer use. Management expenses may be spread over fewer passengers, raising the company's costs per passenger.

Looks to me as if the US moves in LAS and elsewhere are predicated upon these realities. Same goes for all of the majors.

So the bottom line is that US and all of the big carriers are in for a rough ride. Tempe's attempt to straddle the fence between legacy and LCC was a good idea in my opinion. That said, you can't disavow your genes, and in this instance I'm talking about aviation genes. You might want to be a dog -- ' woof woof'; but if you're a duck, you're gonna waddle and quack no matter what you do.

US is what it is. The better question to ask if Tempe can keep the airline afloat and competitive. From my own point of view, the product is greatly improved -- at least in terms of on-time flights and with baggage. But it is still lacking in terms of quality, value, and most important, in terms of the airline clearly communicating with its elites and make them feel as if Tempe cares about them. Elites are not gonna make or break US. But they do indeed bring significant revenue to an airline.

If I were you guys, I'd worry less about torpedoing your own ship and instead hope that DL, CO, or AA hit a few mines of their own.

Barry

 

[ussnark]

If night flying were more than just "marginally" profitable is there any doubt WN would be doing it? The fact is pre-merger AWE had a CASM at around 8.5 (roughly equal to WN) so could eak out a small profit with a night flight system out of LAS. Post merger AWE has a CASM of around 14 and we can no longer viably compete in many markets (including LAS) due to the increased costs brought on by integrating the east into our system.

If you want to understand the CASM "increase" you need to first factor out all the "projects" and just plain boneheaded management moves that have increased costs: the unsuccessful run at DAL, the completely bungled computer "changeover", etc. and so on. If you want to say that AWE "bought" US, then AWE must then also take responsibility for the CASM "increase".

 

[UPNAWAY]

One thing that is not easy to pull out of this cost is worker productivity. I guarantee that SW gets more work out of their employees on a per person basis then US does. And that has almost everything to do with attitude. Nothing is going to change those attitudes. Not pointing blame just stating a fact and SW is unique (among airlines) in the happy productive employee required. US employees are much closer to all the other big airline work groups in terms of attitude. I still think a massive buy out is the only long term hope of changing things followed by a big influx of younger workers.

 

[EastUS]

I still think a massive buy out is the only long term hope of changing things followed by a big influx of younger workers.

..And here we have it folks! = "It's those dang employees and their bad attitudes!" again/ALWAYS..as opposed to, say....even perhaps?..EVER even considering the wholesale ineptness of a greed-soaked management that makes things to be as they are. I can clearly see that the only "solution" for that's to replace everyone with the least bit of experience with newly hired, Koolaide-vulnerable (at least..for awhile) people...and.."All would be Well" You guys just, flat-out, crack me up

Here's a blasphemous and radical suggestion = Why not replace utterly failed, completely clueless and obsessively greedy"management" (the highest compensated around) with the sorts that Southwest manages to find instead? Seriously; Instead of imagining replacing virtually the entire workforce; don't you think that might be worth a try first?

Anytime there's any wholesale change in management; hope springs forth in employee groups. Sadly; what any given group in "management" does with that's clearly up to them.....

 

[ussnark]

One thing that is not easy to pull out of this cost is worker productivity. I guarantee that SW gets more work out of their employees on a per person basis then US does. And that has almost everything to do with attitude.

Indeed, were US management to view their employees as assets rather than liabilities, they would actually use their employees in an efficient manner. Apparently employees do not cost enough to warrant management resources to make employees efficient. sigh.