Originally Posted by whlinder
Great service (unless it is along the lines of what WN considers great service) costs money. A worldwide network with partners costs money. Additional classes of service cost money. Low simple fares sound great to the customer, but with those additional costs US has to generate a revenue premium to offset them. Will "low simple fares" generate that additional revenue? I am very skeptical...
I'm guessing that EI doesn't think the additional revenue generated by being in oneWorld will be enough to cover the costs of being in oneWorld. Nor do they think the additional costs of business class are offset by additional revenue from business class.
Originally it appeared the EI couldn't decide whether it was a LCC or Legacy airline and was adopting a mixed strategy (Low fares, way better), much like U is now. EI management now seems to have resolved the airlines dual personality and is moving it more firmly towards a LCC "no frills" model. The point being that ultimately EI had to decide what kind of airline it wanted to be. U still seems to be grappling with these issues and believes that it can be a hybrid Legacy/LCC airline.
Some points:
EI is only dropping business class on short haul routes, (typically business class in Europe gives you the same size seat with better service, so this is not a huge loss IMHO).
Can the LCC model be applied to transatlantic/Long haul service. Ryanair has threatened to do it, (and I believe that later model 737's theoretically have the range), but for practical and regulatory purposes I imagine this is a non starter. It will be interesting to see what kind of transatlantic operation EI runs outside of OneWorld, especially since EI premier class is overdue for a rethink.
Price discrimination lives on in the long haul market. If anything, most legacy carriers have been upgrading thier international services (flat beds) and adding additional classes of service (premium economy, WT+) bucking the LCC short haul trend.
Ultimately this all may be moot for U if it cannot get through chap 11.