FlyerTalk Forums - View Single Post - Another example that this is going to be COdbaUA
Old Aug 3, 2011 | 7:02 pm
  #108  
SFOSpiff
 
Join Date: Sep 2010
Location: SJC
Programs: UA 1K
Posts: 1,628
Originally Posted by sxf24
Are you crucifying Smisek because he changed his mind based on compelling facts and data, or because he didn't have access to UA's books before the merger?
In the case of Smisek's comments about E+, yes, I blame him for not having an open mind before he had access to UA's books. His response should have been nothing more than "we'll have to look at it."

He was already biased, because I have no doubt that CO, and every other full-service carrier in the country, had already done their own E+ studies. They had to. That's what you do when a competitor offers a service you don't. It could have been as extensive as years of studies and surveys, or as simple as some basic math. But surely they looked at it, decided it wouldn't work, and came into the merger predisposed to eliminate it because their previous experience said it was a bad idea.

To answer the question "if E+ is so great, why doesn't everyone have it" - well, offering E+ has two costs:

1. initial labor costs to retrofit aircraft (plus minor costs like reprogramming computers to sell E+)
2. ongoing potential adjusted revenue due to fewer seats

My guess is that even if #2 is revenue neutral, or slightly revenue positive, it's the cost of #1 that deters most airlines. Maybe UA found a way to make it work. Or maybe UA took a risk involving up-front costs. Maybe it was smart, maybe not. But just because no one else did it, doesn't mean it was a bad idea. There's little financial upside to offering Ch. 9, but it distinguishes UA against other carriers.

Now here's where Jeff should have kept quiet for a while. UA and CO have roughly the same size fleets. If you remove E+ from UA aircraft, you have to send X number of planes into the shop. If you add E+ to CO aircraft, you also have to send roughly X number of planes into the shop. Keeping a mixed fleet is too difficult an option. You have to change one side or the other. But doing either has roughly the same cost. (I'm oversimplifying here, but the point is valid).

Actually, adding E+ to CO is probably cheaper than removing it from UA, because adding E+ requires removing one or two rows of seats. Removing E+ from UA aircraft would probably cost more, because they would have to obtain extra seats from somewhere. My guess (and I could be wrong) is that all the economy seats UA removed 10 or so years ago aren't still sitting in a warehouse on the off chance they changed their mind.

So, yes, I do think Smisek was unfairly and unnecessarily biased towards eliminating E+. They looked at it before and rejected it. They should have waited until they had all the information before saying anything more.

Originally Posted by dinoscool3
Read the date in the first sentence. This isn't 2006, it's 2009.
I never specifically claimed the article was from 2006. You read into it that way.

Last edited by iluv2fly; Aug 3, 2011 at 10:38 pm Reason: merge
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