Sorensen is the Milwaukee media "go to" guy, whenever they want "expert" insight into a commercial aviation topic. His consulting firm has clients in both commercial aviation and non-related industries.
Sorensen is now saying that he believes YX might keep LAS, but provide only redeye service.
He lives locally and is accessible to the local media. The only qualifications required to be an "industry expert" in Milwaukee.
I am giving it a year, do they think loyal customers are going to stick with them after this latest debacle?
Personally, I am taking my business to AirTran. Of course, we can only speculate who will be left a year from now. Their financial house appears to be in better order than Midwest's if the price of oil falls.
On the subject of inefficient aircraft, one of them, NWA, still flies DC-9's that are older than you.
NWA's DC9s are a bit of an anomoly, not easily comparable to others (correct me if I'm wrong). First, NWA owns them outright, which made them still more profitable than more efficient leased aircraft as oil continued its climb. Today, that may not be as true, given the current price of oil and the increased mx costs, as NWA has accellerated their DC9 retirement plans. Nevertheless, the DC9 remains a versatile aircraft for NWA. With DC9-3,4,5 they are able to match demand within a market given that they range from 100 to 125 seats, while offering a first class product (still with 16 seats) to draw elites. Their replacement with E190s and CRJ900s appears to be successful, but those aircraft are far less versatile than the 9s.
The MD80s, being more efficient than the 9s, aren't owned by YX (except a few, I believe), and they don't represent the core of the fleet. They may represent what YX is to a fair number of passengers (ie low fare leisure pax), who thus see their retirement as the end of an airline, but in reality they are not.
In the midst of sizable layoffs and salary cuts, airline exec talks about reason for the actions:
Quote:
It's a necessary step that's part of adapting to a more difficult economic environment. It is largely driven by fuel.
Quotation from Kevin Healy, AirTran Sr. V.P. of marketing and planning, when interviewed by Atlanta Journal-Constitution about his company's recent layoffs and pay cuts. Healy also indicated other positions may go. The legacies have announced job losses of anywhere between 1,000 - 7,000 positions per carrier.
Fly YX, thanks for the link - interesting. I got a couple data points from the interview as follows:
1) TH said that Midwest is seeking wage parity with other carriers its size. Apparently this means using Skywest as a comparison, not legacy carriers.
2) Despite a Midwest plan to return to its "roots", a lot has changed since the 80s &90s. Telecommunication has gotten so good that tele- and video conferencing are in many cases alternatives to physical travel.
Fly YX, thanks for the link - interesting. I got a couple data points from the interview as follows:
1) TH said that Midwest is seeking wage parity with other carriers its size. Apparently this means using Skywest as a comparison, not legacy carriers.
2) Despite a Midwest plan to return to its "roots", a lot has changed since the 80s &90s. Telecommunication has gotten so good that tele- and video conferencing are in many cases alternatives to physical travel.
I find interesting too that TH said getting MD80 replacements would not have made a difference. The cost to lease an A/C is $400,000 a month. This begs the question of why the industry doesn't charge a fare that would cover the cost of flying. Instead they are forcing employees to pay for high fuel prices. It just doesn't make sense. On principle alone, I would not blame the union for rejecting Midwest's wage cuts.
Location: Pleasant Prairie, WI USA DL FO (until 2/04), NW silver '03, NW gold '04+'05 Plat '06 (thanks, Leo!)
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Quote:
Originally Posted by Tim34
Their very best??? Like selling tickets on planes for weeks which they new were not going to fly. That is hardly the best care in the air!!
This is an excellent point.
Whenever I think of Hoaxsema these days I keep thinking of what Jesse Jackson wanted to to do Barack Obama.
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"We have got to stay focused on good customer service ... We need to be courteous to people and to be empathetic to our customers because in the end it's who has the most passengers and who provides the best quality service on the airline." -- Richard Anderson, CEO, Northwest Airlines
I find interesting too that TH said getting MD80 replacements would not have made a difference. The cost to lease an A/C is $400,000 a month. This begs the question of why the industry doesn't charge a fare that would cover the cost of flying. Instead they are forcing employees to pay for high fuel prices. It just doesn't make sense. On principle alone, I would not blame the union for rejecting Midwest's wage cuts.
Midwest is welcome to charge "a fare that would cover the cost of flying." However, they would lose most of their customers. They can also maintain expensive capacity with an MD80 replacement, but that would just lead to continued losses.
I don't understand why people don't understand basic economics. In an industry with vast overcapacity, it is very difficult to charge higher prices. The only solution is to reduce capacity to the point where the supply and demand curves meet at a profitable point. We will know in January if the fall capacity cuts across the industry are enough, but I suspect that if oil remains high there will need to be further cuts.
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Quote:
Originally Posted by flyYX
I find interesting too that TH said getting MD80 replacements would not have made a difference. The cost to lease an A/C is $400,000 a month. This begs the question of why the industry doesn't charge a fare that would cover the cost of flying. Instead they are forcing employees to pay for high fuel prices. It just doesn't make sense. On principle alone, I would not blame the union for rejecting Midwest's wage cuts.
Even if Midwest had the most fuel efficient planes in the sky, it's doubtful they would still be able to make money flying to leisure destinations.
Leisure passengers are extremely price sensitive. If Midwest (or any airline for that matter) began charging fares that would cover costs in today's environment, they'd be flying around a lot of empty seats. That's why you're seeing huge capacity cuts to places like LAS, MCO, and FLL starting this fall by both Legacy and low cost carriers. As additional evidence of this, listen to AirTran's conference call from earlier this week (or read the transcript). The news was not good. AirTran's management specifically mentioned the weak revenue environment, the inability to generate more income by raising fares, the need to cut capacity and defer aircraft deliveries, and the strong possibility that several additional stations will be closed. Aditionally, AirTran has asked for its employees to take wage cuts.
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