Waterloo v2 ; JB Backs off in LGB

[Speedbird]

Rhino & G4G5:

I think there many good valid points being brought up in this thread and I understand your counters to my statements.

Enilria would probably interject at this point to ask his question again what will happen to the five unused slots abandoned by jetBlue.

I think Diesel8's post probably answers that question for now. As more information comes to the surface then perhaps we'll see how much goodwill B6 actually has.

My points about LUV vs jetBlue are not to disrespect LUV's efforts and phenomenal track record, but to only highlight how much B6 has been able to achieve in a short period.

Just in the area of ASM's alone, jetBlue is able to generate the same number as LUV with only three airplanes to their four (systemwide). When one considers how expensive each aircraft is to an airline operation, that is a significant achievement on the part of jetBlue against an airline that is at the top of its game.

 

[Speedbird]

Flew one of IOE rides with him last year. He's a first-class guy and a great asset to our pilot community at jetBlue. I didn't know he was an old Air South guy...always thought he spent time at LUV before making the leap.

 

[Rhino]

Speedbird,

Just in the area of ASM's alone, jetBlue is able to generate the same number as LUV with only three airplanes to their four (systemwide). When one considers how expensive each aircraft is to an airline operation, that is a significant achievement on the part of jetBlue against an airline that is at the top of its game

That's part of the story (costs). Red Rock can say the same thing.

Clearly, operating out of an historically high-yield market, being well-capitalized (lease rates), and a very innovative approach to operating an airline are equal reasons to explain JB's success to date.

Say hello to Proffit. His old Air South buds wish him and you well.

 

[Rhino]

Air South chief pilot, then WN briefly. Didn't want to wait 5 years to upgrade, so went JB.

 

[Jeff G]

I don't think Paul could afford to wait 5 years, since he'd have to retire first. He now runs the sim program in Miami, and does a great job.

 

[Jeff G]

The way I figure it, JetBlue now has 18 slots permanently covered by the proposed schedule, at least from November on:

5 JFK
1 SLC
2 IAD
7 OAK
3 LAS
5 ???

Those remaining five are still JBLU's until 6/03, AMR's protestations to the contrary. I think it's a safe bet that they'll all be covered in the next nine months. I would guess we'll see 2 to FLL, 2 to ORD, and the last to either DEN or SEA, but that's just a WAG. It's entirely possible we'll see further draw downs on OAK or LAS to make room for more future long hauls than just these five. More to JFK? MCO? IAD?

As far as whether this is a black eye for JBLU, sure, that seems fair. It's a setback, and no doubt of it. Neeleman, Barger, etc. aren't supermen and don't claim to be master manipulators who move politicians and airplanes like chess pieces. But, I don't think Carty is a genius mastermind either. He and his legal team are certainly very good at strongarming small carriers, and they've had lots of practice. But to characterize this setback as total victory for AMR (or LUV for that matter) is pretty lame. JetBlue is still very much alive in LGB and AMR is very likely losing their shirts there. I'm not sure that's a victory I'd be too proud of. LUV is making money regardless, and knows it's never been about a JBLU vs. LUV war.

Meanwhile, if, as G4G5 has stated, the whole point was to distract JB from JFK, that certainly hasn't worked. How many resources did it take to run short hauls up and down the coast? And has it slowed down JB back east more than for the initial buildup? It's pretty evident that all of the new LGB flying only consumed three aircraft at most, and with the November cutback, one of those is going to go back east to spank Delta all winter in Florida (or AMR in San Juan, which is amazingly profitable). The big buildup at LGB is over and won't happen again. Only incremental improvements from here on out, so I guess Carty and his legal wizards will have to dream up some other distraction to keep JB from making the JFK terminal 9 Taj irrelevant for domestic ops. Certainly he needs some entertainment since running AMR profitably must seem a lost cause for quite some time. JMHO, of course.

 

[enilria]

[blockquote]
How many resources did it take to run short hauls up and down the coast? And has it slowed down JB back east more than for the initial buildup?
----------------
[/blockquote]

I would say quite a few resources.

They had to secure facilities at LGB/OAK/LAS, hire people to handle these flights (some of which will already be getting laid off as a result of the cutbacks), install data lines at Las Vegas to communicate to their reservations system, arrange maintenance for the airplanes operating on the west coast (using JFK would be a huge dependability risk), visit the corporations in all three cities and try to lock in whatever contracts they can...

The list goes on. I assume they are crewing all of this out of JFK, but if they aren't then they could be opening a crew domicile which requires some overhead as well. Also, since this is all on the left coast it means a day's travel each way for all the management personnel working on these projects.

That's a lot of distraction ! If they didn't do all those things they wouldn't have much chance of success (the crew base can probably wait until next year, but if they have any crew sick calls they'll have to fly a crew out from JFK which will delay the flights 5 hours).

 

[enilria]

[blockquote]
If you have a problem figuring out how to do that, then maybe I can share with you my findings. Nevertheless, IT DOESN'T CHANGE THE FACTS: jetBlue is a lower cost, more efficient operator of the very business model that LUV created.
[/blockquote]

Actually if you correct JB's costs for their unusual handling of aircraft maintenance you will find they are very close in cost to Southwest. In terms of RASM, if you were able to get the data to compare SW and JB in a competing market like LGB-OAK versus ONT/BUR-OAK I would bet money that SW has higher RASM and higher profits than JB.

[blockquote]
Meanwhile, AMR is getting its head handed to them when it comes to direct competition against low-fare carriers, like jetBlue.

But it is an unfair comparison since AMR is a big network carrier that serves all markets, and jetBlue only picks and chooses which markets it will fly in (based on a formula which favors a profitable ROI).
[/blockquote]

It is agreed that AMR's costs are uncompetitive and that they are losing money, but given that they can't fix those problems any time soon they are creating problems for JB which is a good strategy. Look what they did to Legend. They forced them to squander their capital to build a parking garage and terminal which left them cash depleted when AMR finally sat on them.

This is why the DOJ is going after American again. Until this behavior is declared illegal, AMR is the master of using it.

 

[Jeff G]

[blockquote]
----------------
On 9/24/2002 1:56:07 PM enilria wrote:

I would say quite a few resources.

They had to secure facilities at LGB/OAK/LAS, hire people to handle these flights (some of which will already be getting laid off as a result of the cutbacks), install data lines at Las Vegas to communicate to their reservations system, arrange maintenance for the airplanes operating on the west coast (using JFK would be a huge dependability risk), visit the corporations in all three cities and try to lock in whatever contracts they can...

The list goes on. I assume they are crewing all of this out of JFK, but if they aren't then they could be opening a crew domicile which requires some overhead as well. Also, since this is all on the "left coast" it means a day's travel each way for all the management personnel working on these projects.

That's a lot of distraction ! If they didn't do all those things they wouldn't have much chance of success (the crew base can probably wait until next year, but if they have any crew sick calls they'll have to fly a crew out from JFK which will delay the flights 5 hours).
----------------
[/blockquote]

But enilria, most of those are station startup costs. Only one station is being started: LAS. With one flight or six in LAS, the cost is the same. This is an airline that has several stations with one daily flight, making money. Whether startup costs are paid now or paid early next year, what difference does it make? It's a one time sunk cost. That's a real stretch for you to say that LGB has bogged down the airline. The slots are going to be filled by June next year anyway, one way or the other. The timing is being tweaked. The airline is not abandoning anything or throwing away sunk costs. Flights reduced from 9 to 7? From 6 to 3? This is a major distraction?

LGB is opening as a maintenance base. That was going to happen anyway.

There will be no layoffs. Where did you get that from? Whether there are 23 flights or 18 in LGB, the personnel required is the same. The OAK situation is the same as LGB. LAS service personnel are contractors.

These flights are crewed from JFK. Reserve personnel will be on site in LGB as a part of scheduled pairings, so you won't need replacement from JFK. It's like this: fly JFK-LGB, sit reserve a day or two, fly LGB-JFK. You can bid that trip and everything, and there are a number of crew who live in LA and will sit at home and be paid. Wow! Such a drain on the company.

LGB has its own director on site. He has authority to manage the station and everything. No regular transcons to run the project. Heard of email and fax?

You seem to be really reaching here. Name some major costs that are being spent that wouldn't have been on any new station or developing any focus city. Name a resource that is being squandered. The only way to avoid the costs you mentioned would be to not bother with LGB at all. It has nothing to do with how flights are scheduled. You apparently have a problem with LGB as a focus city to begin with, but don't confuse that strategic move with a tactical schedule change.

The only major consumable resource affected with this change is aircraft availability. And sending the lone freed up aircraft back east is hardly a poor solution. You'll have to do better than that.

 

[Get Over It Already]

[blockquote]
This is why the DOJ is going after American again. Until this behavior is declared illegal, AMR is the master of using it.
[/blockquote]

No, the DOJ is requesting the 10th Circuit Court to overturn an earlier ruling by a federal judge that AMR was within the bounds of legal competition to match prices set by their competition.

Price matching is not predatory. Price undercutting is.

 

[Rhino]

Which stations have only one daily flight?

 

[Jeff G]

[blockquote]
----------------
On 9/24/2002 10:28:59 PM Rhino wrote:

Which stations have only one daily flight?
----------------
[/blockquote]

SEA, ONT, DEN, MSY (used to be 2x daily), and SLC (until LGB-SLC starts next month).

All except MSY were opened for redeye service at least a year ago and still only have one flight. OAK was originally opened with only one redeye flight also.

 

[Rhino]

Interesting. SWA never opens a station with less than 8 flights, in part because of the start-up/staffing costs you mentioned. I assume that these cities have a skeletal staff and use contract employees for servicing/loading baggage.

 

[Jeff G]

That would be a safe assumption. The only JBLU employees are the ticketing and gate staff. Catering, maintenance, and below-the-wing staff are typically contracted out. IOW, only the staff that the customer interacts with and require strict control over brand image are actually JBLU employees. Notice also that with only one flight per day, usually in the middle of the night, a rapid turn time is not a big consideration, so the hustle factor isn't as critical. Therefore the below-the-wing crew can be safely contracted out without compromising the operation. It's been pretty well thought out.

 

[UA777DEN]

I think we are going to see DEN and SEA from LGB next. I don't see ORD coming before since ORD isn't even a JetBlue city yet.

From what I heard from a JetBlue employee in LGB is that currently JetBlue is making plans for additional flights from DEN, he couldn't tell me what the plans were and to where they would be though. Just that they are planning on adding more flights.

According to a Frontier employee also, JetBlue is planning on adding 4 flights from DEN soon. JetBlue currently uses a Frontier gate which is why he new this.

I guess we'll find out. I'm sure they have plans on expanding SEA aswell.