channa

They also had some ownership restrictions about having only some like 50 planes until towards the very end. At the end of the day, VX built an airline 1/5th the side of jetBlue, but managed to sell for 1/2 of jetBlue's market cap. That's pretty remarkable given how poor the economy was for the first half of VX's life.

chrisl137

It's been a mix both years, but I think I haven't had any 737's for the transcons this year. I was getting upgrades on the A320s last year, and this year I'm not getting them on anything - E75,73X, or A320 - probably flew about 1/3 on each last year.

pinniped

TK also has *some* incentive in that intra-Europe for them is often a 3-4 hour flight, whereas CDG or FRA to other European cities is often an hour or so.

Agree on VX though. I rarely saw the aircraft at all, and although I'm based out of a place they didn't fly, I also spend a lot of time in many major U.S. airports. VX always felt like a cute experiment without a substantial foothold anywhere. B6 and AS always felt like coastal regional carriers (and still kind of do), but at least they have a really strong presence up and down their respective coasts. I fly through SFO quite a bit and was never struck by the VX presence they way I am with AS at PDX or SEA, even when I'm in those airports on other carriers.

eponymous_coward

Bidding wars and "the winner's curse" in auctions are great things.

Eastbay1K

Are you forgetting the two tiny insignificant Chapter 11 cases that HA filed, in 1993 and 2003? You don't exit Chapter 11 with the same ownership as you entered, unless everyone has been paid in full. And that was not the case. So, while an entity named HA has been around 90 years, it isn't the same HA, at least a couple times over.

And as for VX not serving the same markets as WN, that is totally bunk among shorter hop business travelers around the West. Frequency and more convenient airports are far more important than F seats and a lounge, and more important than fares in many cases. While these people are going to want to sleep in a cushy bed in a nice lodging establishment, they really don't care where their potos sit for a couple of hours, as long as they get there when they want to, and there's a space overhead for the bag.

chrisl137

I'm comparing the two - I flew IAD-LAX yesterday morning and BUR-PDX in the evening.

I've done four transcons this year and I don't think the upgrade list was longer than 4 people on any of them, and didn't see more than one get upgraded on any. Any upgrades happened before T-24. There was essentially no "A" boarding group on any of them - transcon or Pacific coast.

Possibly, but none of the competition is any better except to NYC if you're paying for Y cabin, and anybody who needed a network was likely already on one of the US3. It's probably a combination of that plus former AA flyers dropping out of elite status on AS since they couldn't bank their miles there anymore. If FT is at all representative, I think there was much more complaining about that than there was about the loss of VX.

Visconti

Before making a firm offer, I'd imagine B6's dd (assuming their forecasts were accurate) allowed them to model both future profitability & viability after integrating the VX fleet. It could be B6 eventually planned to purge some routes, but there's little doubt a large part of their modeling was based on the future sustainability of the SFO/LAX premium tcon markets.

Whether or not these forecasts would have proven accurate is anyone's guess. Lots of things have to happen in the future, e.g., oil prices remain low, no depression, stable SFO/LAX premium demand; but, if these forecasts come to fruition, the margins on the higher tcon routes would be the primary drivers for sustainable gross margins. It's the classic 80/20 rule where a relatively small % of customers are responsible for the majority of the profits, while the rest provide the revenue to run operations; and, are, more or less, interchangeable and easily replaced.

I get the VX model fit better with B6, which is why I assume they made a firm bid for the assets. Equally, AS must have felt this was such a potential existential threat to their plans, they strategically over paid for those assets--so much, that even B6 had to walk away. Now, I have no idea the best course of action, and can only assume that AS management know what they're doing--it is their business, after all. If not, they're all fired; but, in most M&As, we need a little more time to see how it plays out.

All I do know is that their tcon business appears soft and the product in its current state isn't competitive (hence the promos, in my view) to this premium market. While no one ever said "let's lose money," no one ever said, "let's not try to make more." I'd like to see AS succeed, and like the intense competition in my SFO/LAX tcon routes. While not an Airline expert, absent of unseen events, I'd wager the premium tcon market (those willing to pay $1,000 - $1,500) for a better experience will have long term sustainable & stable demand; over the next several years, we're certainly going to have better visibility from UA/DL/AA/B6 who are all offering the product.

I just think AS "may" be in a better position if they had a more competitive tcon F product. Whether this will work, I don't know; but, another few Qs of this, they may have to reconsider trying something else. Or, just give up the market or fly it "as is" with zero economic profits, I suppose.

VegasGambler

it's not the same market because they are people who are looking to buy a different experience. A MO might be in the same city as a motel 6 and they are all serving people who want to spend the night in that city, but they are not serving the same market.

The numbers that you are referencing are passenger counts for all flights in/out of the airport. SFO and LAX are major west coast gateways. Taking a major international carrier like DL that flies wide-bodies to/from asia and connects them through to the rest of the country, and comparing them to a small domestic carrier makes absolutely no sense.

As for WN, that is basically the McDonald's of flying. It really is a totally different market. If you are willing to take free checked bags and no change fee in exchange for giving up and semblance of a decent product, service, and you are ok with the occasional uncontained engine failure, then WN is the airline for you. You should also eat at McDonald's 3 times a day. The fact that you have explosive gas after eating their food and will die of a heart attack in your 50's is irrelevant! They have the most market share so they must be the best!

This thread is about quality. You are talking about market share, and not even making a reasonable apples-to-apples comparison while doing that.

jinglish

@eponymous_coward isn't talking about LAX, and DL has no international destinations from SFO. They serve nothing but their hubs, a couple of focus cities, and HNL. Seasonally.Never change, FlyerTalk.

WrightHI

I would really like it if AS decided to sell me a lie-flat seat for what I currently pay to sit in a recliner (mostly via M fares). Oddly enough, they choose not to do that, and even more oddly, I still keep choosing to fly them even though several other carriers offer better products for only a few hundred bucks more. What can AS management possibly be thinking?

eponymous_coward

Airports and air travel are not hotels. The experience 90%+ of the flying public is buying is going in a plane and putting their butt in a coach seat. The fact that VX had mood lighting and cushy F recliners is essentially irrelevant to being able to expand their service to larger market share, because while domestic F/transcon J/F is profitable, it's not enough to drive travel and market share by itself.

My point is that despite white leather recliners, they didn't fuel VX's expansion anywhere near what B6 got in the 00's. Oh, incidentally... B6 was all-Y back then.

I'm saying luxurious F cabins are not the end-all, be-all of 60-180 minutes of flying- and all the evidence (including competitors who flopped with all-J configs domestically) points to having Y seats. There simply aren't a lot of markets where you can sell enough F; SFO/LAX/NYC, maybe BOS/WAS. There aren't enough critical masses of rich people with money to burn.

DL flies zero longhaul routes out of SFO. All their traffic ex-SFO is to domestic hubs plus random one-offs. If DL is connecting any partners it's through THEIR hubs, not UA's- I would bet money all the SkyTeam connecting action is into LAX/SEA/ATL/JFK/etc.

I'm saying that VX did not capture enough share in almost a decade to be bigger than two airlines not hubbed in SFO. DL is brought to the table because I know you have a thing about WN. If you want you can add AA to that list (which, I might point out, GAVE UP share and routes in SFO- and that you can probably give some credit to VX for, though Chapter 11 and consolidation/"cornerstones" is part of it too).

But even after AA contracted at SFO, they were still bigger than VX pre-AS merger.

Don't be ridiculous. If you're wondering why WN has gone from flying 3 airplanes around Texas in the 70's to one of the four biggest airlines in the US, that sort of dismissiveness is exactly why- WN comes in and eats everyone's lunch by doing some simple things well (it's why they're so huge intra-CA), and then you wake up and they're the only ones on OAK-SNA or what have you. Being able to serve city-pairs 60-120-180 minutes away with lots of frequencies and coach service is a tremendously successful model for making money for an airline, and it's one ALL the domestic airlines engage in. Not just WN.

I would argue AS's problem right now is they're finding transcon a hard nut to crack with a sub-par F product at stage lengths bordering where even FR thinks you need a nice product, and with B6 driving down premium prices in those markets, plus all the corporate business flocking to UA/AA/DL. Which is not the same problem as "why don't they have white recliners for SFO-LAX".

Eastbay1K

Much of the WN business market doesn't even carry a checked bag, and they'd have reduced/waived fees taking another carrier. They made it so pretty much every other carrier's product bailed from secondary CA markets. We all had the opportunity to fly UA Shuttle all over the West, with F, and an appealing Mileage Plus. We've got no OAK/So Cal service left on anyone but WN (and NK might have a stray flight). OAK is full of WN business travelers every weekday. Their product is decent enough on shorthaul. Are you suggesting that:

1) B6 is the airline for you if you want a pilot having an in-flight mental breakdown, requiring passenger intervention?
2) AS is the airline for you if you want an airline who goes cheap on the jackscrew lubrication?
3) DL is the airline for you if you want a pilot that decides to recklessly fly through a thunderstorm?

eponymous_coward

OZ is the airline for you if landing the plane safely on a sunny day at SFO is somewhat optional. AF is the airline for you if you're a fan of frozen pitot tubes. MH...

We could be here all week on this one.

VegasGambler

If you are going to consider every airline that's been through a bankruptcy or two to be not sustainable, then we are running out of airlines.

Eastbay1K

Exactly. The business model was not sustainable, so your point didn't make any sense. An airline named HA still exists. It is a different business than your premise of "small business can be sustainable too." Every airline that has been through a bankruptcy or two or three did not have a sustainable business model. In fact, one currently operating has essentially been through 6. HP filed 3x, US filed 2x, AA filed 1x, and when all was said and done, little HP, run by the man with a minibar in his car, runs the whole show, and it is called AA. But it is not the same business.

You know who is missing from this cast of full employment for Chapter 11 attorneys? Alaska Airlines. Whatever this company has done, for better or worse, for richer or poorer, in sickness and in health, death has not done it part. And once the Chapter 11 is done, OldCo is dead, no matter what it is called (except for extremely limited instances). Oh, and WN doesn't seem to be on the list, either, and that company is nearing 50 years of business, no?