I largely agree with this. It is a different era and virtually every single downside that TWA Fan seems concerned with has been led by or copied by every other network carrier. LK was simply doing what had to be done.

If I were to fault LK for anything, it is that he seems to have lacked the sort of vision to lead any substantial changes, whether they are good for the FFer or not. His tenure has largely been one of administering, rather than leading. Say what you will about bag fees, for example, but they have been relatively successful in generating revenue. LK clearly misjudged this trend and CO certainly left some cash on the table by being late to the party.

LK and CO simply spent too long chasing after the high-yield flier, not realizing that there weren't enough left to support a network of their size. They spent too long thinking that there is enough of a market for "exceptional" and that there was enough premium to be made to justify the costs. People like to criticize LK as a bean counter, but the mistakes he seems to have made have been when he didn't count the beans closely enough.

But I think the same could be said of Bethune at the end. He saved CO, yes, but I'm not sure that he really positioned it for sustained success. I think that the trends which LK struggled to handle may have simply been too far along to stop by the time he came to lead the airline. Then again, maybe none of the legacies were ever in a position to succeed in this era, and perhaps those problems go back before even Bethune?

If you get a better result from India who cares if the person speaks english. "No" is easy for a foreigner too.

CO actually lagged in raising stupidfares, and underpriced its premium cabins

I am happy that an accountant no longer runs this airline.

Perhaps we will see innovative calculated risk taking that nets profits for the airline and better service with a lawyer at the helm.

Such as:

- a premium transcon product ( any serious airline that wants to make money in the NYC area needs to have this). DL recently jumped on this bandwagon.The 737-900/800's are a joke. I would like to see Business First service between LAX/SFO-EWR. CO could make good use of the old BF seats and reconfigure a dedicated 757

- More expensive fares on certain routes. Sometimes I think continental fares are too cheap (especially in the premium cabins). It seems that continental's fare structure lacks guts - Really? - you could charge more. $2700 to London in business, when everyone else wants more? Sometimes I think CO is selling themselves short.

The new flat beds is an excuse to charge more, but of course, co needs to provide more - in line with the competition, the European and Asian carriers.
Then you can really get market share - by being better.

Over the years, I've probably contacted most every U.S. airline's customer service at one time or another. The only airline's CS who has either responded to me with an email indicating that they didn't read my email and/or in a manner that dismissed my concern was CO. And CO has does that consistently, in my experience. So consistentcy is one thing CO has, but not in a good way. Frankly, I can't think of any airline that has ever behaved this way, and across other industries, I can't think of another reputable company that behaves this way either. Well, maybe an insurance company, but they wouldn't necessarily be reputable.

In a couple incidents, CO left me in a pickle, and if it weren't for CO Insider, I would have likely sued CO to get it resolved. In fact, I encouraged a fellow FTer to do this once in the pre-CO Insider days, and once he filed, CO legal called and resolved the issue.

From a CS perspective, I think the goal should be two-fold: 1) to encourage the customer to return; and 2) to accurately aggregate data and report it so that management can act on it. I think that CO fails at both of these areas, has for years, and continues to do so.

All it takes to do the job well is an acknowledgement of the issue, an apology for a screwup, compensation if appropriate, and accurate reporting of the issue so that management can review aggregate data.

I could care less about the ability to call. In fact, in one recent issue, I called CO, and the rep couldn't be bothered to document the concern. She told me to write it in instead. I didn't, if she couldn't be bothered, I couldn't be bothered to write it in either. So data was lost.

A couple of issues there: A dedicated 757 subfleet with premium cabin setups for transcons, a la UA p.s., is a fine idea in theory, but where do they get the aircraft for this? Currently, they would have to drop several European destinations to generate the aircraft required for this type of transcon service. I'm not 100% sure but I believe UA has eight or nine aircraft dedicated specifically to p.s. service. All the while, EWR - LAX/SFO segments are some of the most difficult to upgrade on in the CO system because they are filling the, "subpar" 737-800/900 premium cabins with paying passengers.

So then, the question is this: Does CO really need to pull 757 aircraft off of lucrative international routes so that a premium transcon domestic subfleet can be created? I don't think so, and I'm willing to bet that Larry Kellner and Jeff Smisek don't either. They fill the aircraft they have now with revenue generating pax, so why detract from the international offerings to be more like UA? I believe your analysis is coming from the point of view of what you want to fly on, not what makes sense for the business, a question I think Mr. Kellner would ask regularly. I would love a premium transcon offering as much as the next guy, but not at the expense of being able to get to a host of secondary European cities.

Fare buckets and pricing are made with a host of information neither you nor I have access to. Maybe $2700 seems inexpensive to you, but if every other airline in the market is charging that and CO raises it, they lose revenue. I learned long ago to not question fare prices; they are what they are, and there is a reason for it, even if it isn't apparent to you and I. To be clear, that isn't to say that CO isn't capable of making a mistake, most assuredly they are and do, but I would again be willing to wager that they get it right in most markets most of the time, just like every other airline on the planet. Because it doesn't make sense to us doesn't make it wrong. But it's a moot point as we have no idea why routes and fare buckets are priced the way they are.

I don't really have an opinion about Mr. Kellner's tenure as the CEO of CO except to say that not a whole lot was done to stem the tide of service losses. CO may have been the last to cut services, but it was still cut. And they do have customer service issues, much like every other major airline. I think it might be a wash, given the external forces at play on the industry as a whole.

They're already flying some 757s on transcons, so I don't think it's as bad as you make it. But they could have setup the 739s for this purpose, who knows. It doesn't have to be 757s.

I think the point is that CO doesn't believe in the idea of a premium transcon product (Larry has said as much). It's not like they're wanting to do it when they have the fleet slack to do so.


And what are they paying? The amount that you pay on CO EWR-LHR in BF will get you JFK-LAX on UA in p.s.


That's the problem. CO's premium cabins are very often the cheapest ones out there. The concern is that CO is not charging enough, thereby leaving revenue on the table, and also affecting Elites by selling off upgrades for too small a premium.

Remember for each F seat that is anticipated to go empty or to an upgrader, they can oversell an additional Y seat. So selling fewer F seats at a higher price, plus additional Y seats sold may result in higher revenue overall.

Playing devil's advocate here a bit, but have you considered that maybe IF Kellner WAS let go, it was because he was holding on too much to the Bethune exceptionalism? We've already heard from The Jeff about some cuts and being no sacred cows...if Kellner was in any way forced out at CEO, maybe it was because he was opposed to UA merger, reduction of pillows, route cuts, etc etc.

Maybe the board wants to go the near LCC direction, and Kellner was 'not under my watch' but it was done anyway as he was on the way out.

I find a lot of posts on this thread WAY too introspective. Let me offer you a comparison:

Taking the financial years 2004-8, CAL seems to have grown revenue from $9.4 to $14.2 billion with a total operating margin over 5 years = $0.6 billion. In other words, it's operating margin was a miserable 1% of revenue - CO simply doesn't look self-sustaining any time soon with these results.

By comparison, over the same period, LUV grew revenue from $6.4 to $10.7 billion with a total operating margin over 5 years = $3.3 billion.

They're close to the same revenue but the gap in performance is obviously reflected in todays market cap (LUV is about 3.5x more valuable than CAL) and in the net worth in the balance sheet (LUV is healthy, CAL is close to zero)

Quite simply, one business is healthy enough to ride out the current storm, the other is financially hanging on by its fingernails.

The writing has been on the wall for over a decade. CO have had years, and trips through Bankruptcy to figure out a sustainable business model but they either don't have the imagination or the managers have ducked the difficult changes.

It's not so much that the legacies aren't in a position to compete, it's that the managers have failed to get them into a position where there's a financial reason for the existence of the business. The real legacy is, therefore, another 5 years of lost opportunity - simply hanging on, waiting and hoping for a reduction in competition is caretaking not management.

My point exactly. If UA could get away with it, they would operate only international flights (pacific) and the PS flight, which as I understand it is a cash cow.

Quoting the WSJ "United's average ticket between New York and Los Angeles was $884 round trip, while regular United service between Newark, N.J., and Los Angeles averaged about half that -- only $448 round trip."

Revenue management probably has the numbers to refute that theory, but I am often surprised at how low CO prices their premium products. It's too easy to be CO* - depending on your travel patterns/budget.

Indeed. You have stated it more eloquently than I did, but I was trying to convey the same point. I don't think either Bethune or LK did enough to fundamentally change CO in a way that enables them to make money over the long-term. Maybe it was cowardice or maybe it was lack of imagination or maybe it was simply being hamstrung by bad labor agreements, lousy fleets, and over-expanded networks. Whatever the reason, I think that LK's biggest failing is that he hasn't done anything, one way or the other, to better position CO for the long-haul. He's applied some nice band-aids, but I'm not going to throw a parade for a guy who's big accomplishment was narrowly avoiding bankruptcy.

Of course, this is the failing of pretty much all of the legacy airlines. Certainly UA and US are in even worse shape, followed closely by AA. About the only US carrier that might be argued to have acted aggressively to change the fundamentals of their business is DL, but I seriously wonder if their big bet will ever pay off, or if they have simply doubled down on a losing strategy.

Regardless, CO stands today where it stood at the beginning of LK's term - a small full-service carrier, lacking the reach to compete aggressively with the big boys, and lacking the cost structure to compete with the LCCs. It was a lousy strategy for the past decade and I think it will remain a lousy strategy for the next one. If even one thing (oil price increases, sustained decline in premium travel) doesn't break CO's way, it will be an even worse strategy than it was during the relatively good market of the past 10 years.

Larry's tenure was marked with a persistent disregard for elite passengers. Screwing people out of 50% EQM when they buy tickets on their corporate travel site is the best example. Continental has realized that this was just stupidity on their part and have changed this. They also implemented some pretty high fees on getting points tickets issued which really destroyed the value of their program. It's the major reason why I left.

Continental did well largely because of their fleet. I'm not sure how much Larry had to do with this.

I'm far from being a fan of WE-DON'T-CARE, but in my experiences they're far and away better than US and UA.

That's kind of like saying your '88 Geo Metro runs better than your neighbors '85 Yugo GV, and is certainly nothing to be proud of, but I'd take interacting with CO's CS over US or UA's any day of the week.

This was precisely my point, really. No, Bethune didn't solve the problem for CAL, but let's remember he brought the carrier back from the brink.

What Kellner did, instead of taking risks, being an innovator, or thinking outside the box, was to follow the "lead" of the other legacies. Unlike some others here I do not agree that this was inevitable. In fact, I would argue this was a serious mistake bound to ensure that CO would lose its exceptionalism and end up performing as poorly as the other legacies.

I couldn't agree more...yes I'm a former CO Gold who defected to the Red Tail after Gordo promised "no changes to OP" only to have significant changes announced 2 years later...well I'm back as a CO Gold today because DL's "best in class" doesn't really mean SM will even equal what we had in WorldPerks (I think we've found where the marketing folks from CO who came up with the term "enhancement" are currently working)....over the years I've had several conversations with LK via email and in person (while not as many as you Cigarman they were each answered personally by LK and usually within a few hours)....I've not always agreed with the decisions he's made but I understood the reasons behind them - LK always thought things through and you always knew he looked at every angle when making the decisions....comparing what Gordo did to what LK did isn't fair either, times are very different - I use to say Gordo's second book should be titled "from Worst to First and back again, the round trip story of CO" as he too cut many of the very things he credited with saving CO in the first place before he left....I'm far from drinking the CO Koolaid but LK has been a very effective manager - CO could have done much worse (just look at UAL, US, DL for example...hopefully Anderson will fix things sooner rather than later at DL but there's many many of the old guard still there so who knows)

Soc you should start an analogous thread in the NW sub-forum of the DL Forum asking what the legacy of Doug Steenland is. Let me start with my thoughts on that: