Want to know all about LK's legacy? Read all about it on the plaque with his CO accomplishments on AC 18. Cant miss it. As soon as you come out of the lavs, there's the self congratulatory pat on the back.

Best line. "Cultivating CO's unique working together culture". GMAFB !!!

I'd rather watch the paint dry on the new *A 777 paint job.

Most businesses find it easier to predict and manage costs than to achieve revenue targets - IMO that's because they tend to be too introspective and are not honest enough with themselves about the value they bring to their customers.

As I've twice proved to a former boss, MBA and VC in the High Tech. business, if you want to make a quantum change in a business, blind faith and conviction are more valuable than ability with numbers.

I don't think this probably is limited to CO - the one that worries me most on a personal level is BA which was dragged into it's present shape largely by Colin Marshall, and is rapidly losing all it's differentiation under the management of Willie Walsh - the personality traits required to be a pilot & MBA are, once again, not those required to reinvent yourself during major change.

Utter rubbish. Airline seats are only commodities because the managers of the airlines have encouraged us to think of them in that way.

The gas analogy breaks down very quickly anyway - gas is measureable and conforms to published quality standards an is interchangeable. Airline seats are not - one reason I don't use JetBlue much to the West Coast is because the scheduling is lousy. There are also perceptions of quality. It's the role of the managers to build on those, not keep filling us with the lowest price fallacy, which may only applies to a small sub-set of infrequent travellers.


You've really got stuck on this model. Moses didn't come down the mountain with this model carved in tablets of stone you know.

First, airlines sell seats in at least five ways:

1) they cut significant corporate deals on annual and multi-year basis. These may be discount-sensitive, but they're not driven by comparison shopping in exactly the same way

2) they sell a lot of seats on their own web site, part of which is driven by loyalty, but part also by people flipping between WN, CO, AA etc.

3) some are still sold through travel agents, who don't always offer the cheapest deal, and don't sell WN anyway

4) some probably get close to 10% of their revenue from loyalty schemes, particularly credit cards

5) finally, some seats are sold on sites where price is sensitive, such as Expedia & Orbitz, who also don't sell WN. I don't know what percentage of total revenue this represents but it's not the majority.


So, if the mangers have the revenue tail wagging the dog then, if they're competent, they do something about it, like develop different sales channels.

FWIW I think most of these sites are fundamentally flawed because they don't offer the opportunity to up-sell. Now I come to think of it, despite the number of carriers offering PE products from the US, none of the US sites even offer PE so they're basically an incestuous mess that the US carriers have brought upon themselves and which they just might be wise to junk forthwith.

I think this whole discussion ignores the effect of the Corporate deals which generate a significant chunk of revenue for all the legacy carriers. My limited experience of those suggest some are structured to offer flexible fares at not much more than I would pay for a deep discount ticket.

I don't know the numbers but I still wonder if the key to success isn't figuring out how to provide enough more to firm up revenues from these travellers, plus a big chunk of the small business / consultant market. I guess it depends how much more you have to provide, but how far to you have to lift costs through space, catering etc. to achieve a 10 or 20% increase in average revenue through bundling features with more flexible tickets? Or to allow you to shave your Corporate discount a few points?

We can go back and forth all day on this. The facts have been proven, consumers treat airline seats as commodities. And while you might not agree because of your own requirements for travel, you are not the majority.

On your other points.

1. Corporate deals are often O&D specific or are volume driven, which is only a limited set of passengers.

2. Of course they do, and the pricing is still sitting on the shelf in front of them. Whether it's toggling between CO.com and AA.com the price is still transparent in front of them to choose. Doesn't change my assertions.

3. Travel agents can sell WN as long as they use Sabre (which is the vast majority). Outside corporate travel, travel agency sales is tiny.

4. Sure. But most travelers are members of multiple programs and their individual elasticity is nearly impossible to calculate at the time of booking. If UA and CO are the $100 different, and you still get your FF miles. Most will book the cheapest.

Have any ideas for different sales channels?

And why would Orbitz or Expedia offer up sells? They get paid a flat rate by the airlines regardless of the ticket price. They just want you to use their channel rather than going to the individual airlines' website.

Plus you continue to ignore all the other factors I've mentioned. Therefore this is a pointless discussion.

well, airline seats obviously aren't just commodities, as the same seat on the same plane can sell for vastly different prices to different customers. But I think that discussion does get us a bit off topic about Mr. Kellner.

I agree that TWA Fan, bless him (her?), does conflate his gripes with what's ailing the company - I distinctly remember him blaming allegedly falling employee morale on CO's having cut the benefits it gives to top-tier frequent fliets. So, I take his rant with a grain of salt.

That said, I tend to agree with the critique that Mr. Kellner was not a visionary leader, and that he was more a bean counter than someone who understood his customers and how he could earn more by serving them better. Many of the changes we've talked about remind me of the types of changes management consultants recommend because a calculation shows one can earn XX / customer by implementing them. That's all fine, but it's not gonna get a company in CO's shape to be a top of its class performer.

I will fess up to any and all rants (I do not deny being a ranter, btw).

However, that I will not take credit for another's work...that gem belongs to another ranter

uhhh WN does sell thru Travel Agents.

And gas stations DO have a differentiated product, nobody with an expensive car is going to load their car up with qwick-E-junk gas.

It is not a FACT that consumers buy air travel only based on price. It may be an important consideration, but it's not the only factor in a purchase. There's a whole spectrum of travellers each with its own weighting of importance, which is not constant. It's the role of an airlines management, including but not exclusively, the sales & marketing operation to focus on the areas in which it can be successful, and possible walk away from those in which it can't.

If you go on believing incorrectly the only airline seat that can be sold is the cheapest, then CO ought to have been re-modelled more than 5 years ago to have a lower cost base than WN, B6, F9 etc. It sounds like you'd better start hoping you're wrong.

My apologies - when I wrote about WN as airzim said I really intended "Outside corporate travel, travel agency sales is tiny."

I think, perhaps, that you are overstating the case. The issue isn't whether CO can charge a premium, but just how large of a premium, and over how large of a market. I believe that there is a market for a premium service on some routes - SQ seems to do ok at the high end.

BUUUUUUT... just how much provision is there for this premium within the US? What could you possibly offer as a benefit on a 2-hour flight that will generate significant revenue? I can think of almost nothing that could conceivably bring enough consistent revenues over the bulk of CO's network to justify institutionalized higher costs. Because of that, I think that any premium products are best treated as ancillary products (pay-for meals, pay-for extra legroom, etc) rather than bundled into the product.

I'm a latecomer to this discussion, but I've enjoyed getting up-to-speed.

Disclaimer: I've never worked for an airline (though wouldn't mind doing so), though I fly a lot and I conduct research on marketing and human decision-making.

In theory, I like the E+ idea that a bunch of people have mentioned. In reality, I am skeptical of its ability to raise the necessary revenue system-wide, and I'm concerned about the up-front investment costs to re-do all the domestic cabins. But, in the spirit of this idea, would it not be possible for CO to change the front part of the coach cabin to look like (though not be identical to) intra-European business class?

I'm not talking about removing seats and increasing pitch. Instead, I'm talking about very explicitly blocking off middle seats to guarantee that some people have more room. But, not just that--also having the ability to block off middle seats in more/fewer rows depending upon the route and overall demand for seats. This would create a certain variety of domestic E+ experience (more horizontal space, yet equal pitch) without the extensive initial investment, and also with the flexibility to change the size of the E+ cabin as needed for certain routes/times of day. Maybe some routes at certain times of day just get 1 row like this, whereas others get 7.

The key, though, is that they could market an E+ experience, and potentially generate a revenue premium from it, but not incur the large investment costs up-front AND be able to make route-specific adjustments to the size of this "cabin". Unlike with AA's MRTC, it really wouldn't matter as much if there are certain routes for which they know that demand for more room is low.

For me, at least, if I can't get an upgrade, the next best thing is having the seat next to me free in coach.

I agree its not the only consideration, but it is the overwhelming most important factor for the majority of travelers. You can market you're product all you want, it makes virtually no difference.

I actually agree with you for once. That's exactly the problem that's nearly impossible to overcome in the US market.

In regards to SQ, you cannot ignore their cost basis when making a comparison. They aren't burden by labor agreements, health care and pension obligations, and high government taxes that legacy US carriers cannot avoid. They don't operate on a even playing field (nothing wrong with that, just market reality)

United dumped the seat blocking for 1K's i.e. open middles when they began selling E+ to the kettles...honestly the leg room is more important to me.

Beware of dissing a man until you have truly walked a mile(at least) in his shoes. Over the past three years, anyone STILL in business has to have something going for him or her