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On 6/12/2003 10:06:29 PM Chip Munn wrote:
In March 2002 US had slipped from its traditional top spot to about a 93 to 94% revenue disadvantage, but now has a revenue premium. Furthermore, the company is now focusing on major initiatives to boost its revenue advantage (which is necessary to cover its higher than average unit costs) by focusing on big airline revenues, with a more modest route network. This will be accomplished with code sharing, RJs, East Coast focus city/airport dominance (BOS, LGA, & DCA), and its Corporate Travel Department.
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Chip, I must disagree with most of this particular statement, partiuclarly on the "how" front.
US has done nothing, and I do mean _nothing_ since Seigel took over to increase revenue. Zero. In point of fact, there have been:
1. Severe pullbacks in major cities. I believe DL is now the #1 carrier out of BOS, or soon will be, for instance. US won''t get anymore slots at DCA despite Dave''s Dangerfield routine. Heck, even in the bastard child hub (PIT), you see major yield erosion with HP''s success and now ATA coming to town.
2. This will lead an already ineffective corporate travel department to be unable to compete. Between the enourmous bad blood generated by Ben Baldanza last year (and the equally callous "demands" from US'' corporate travel folks during the BK process), many large and medium businesses have given US the boot as a preferred or recommended carrier (I have seen at least $1 million alone in PIT originated corporate travel leave US for this very reason). To suggest that jamming folks onto RJs on an already shrinking route network will allow dominance is laughable. Doing things like pulling the PIT international service, despite their force as a "negotiation" tactic, royally irk the corporate travel customers who basically justify the service (peek into the Envoy cabin on your next PIT-FRA flight and take a census--that particular corporation is now in talks with UA for it''s corporate travel needs). People can, will, and have been cutting deals with UA, AA, DL, CO, and NW because they all offer a superior route network and unlike Ben and Dave do not publically profess to want to continue to screw the corporate customer.
Corporate travel departments don''t want to have their customers have any more lumps in their travel experience. A "modest route network" and "code sharing" and lack of meaningful point to point service from major cities will only serve to make this problem worse. Combine that with the absolute arrogance on the part of the US corporate travel folks, and you have a losing combination.
This, BTW, is all before you consider the impact of the LCCs, whose presense has grown tenfold in the minds of corporate travel arrangers in the last 5 years.