Reality is, from generation to generation, Americans are flying the airlines that their fathers flew ... Rebellion is just a phase in life, as menopause.


NW will make a comeback ... even in current state, its RASM and LF are still among the highest in the industry.

Operating margin has NOTHING to do with their capital expenditure.

With the slowed growth, B6 will have major difficulty veiling its cost growth: its CASM probably will catch up with its RASM at a faster pace. Only time will tell, and all I need is 2 quarters .

If it's just a personal opinion, that's fine. :) I don't like being a customer on LUV--I am a happy investor. You can't argue with the numbers: Southwest does a good job for its customers.

It fairness to TWA Fan 1, I don't believe he's talking about operating profit; he's talking about the bottom line.

Sorry that I was not very clear. He was rather vague as well.

but which line above the bottomline is used for expansion?

Even if interest expense can be used to explain part of the expansion, it has always been the case with JBLU since its start. JBLU was able to fund its expansion with good profit, why cannot it do it now?

And if operating margin slipped, what else can improve the bottomline?

You're actually sitting in the least spacious and least comfortable coach cabin in America.

When the superlative (least) is used to describe CO's coach product it detracts from the entire argument. Co's coach seating product is similar to almost all of the legacy carriers and most of the low cost ones as well. So let's be fair in the description of this part of their product, please.

I believe, TWA, that you are the exception to the type of passenger seen in coach. First, you are willing to pay for a more comfortable coach seat. Larry told us that most coach passengers are not willing to part with additional money for that. This also may be true for IFE. The removal of even one row of coach seats has a huge impact on the revenue generated by a single aircraft. If this cannot be matched by a rise in price, then it is a loss for the airline. Instillation of individual IFE is a wonderful thing but wildly expensive and it has a finite shelf life, given the rapidity of change in the electronics world. It all costs money and has to be paid for.
Your opinion appears to be based on anecdotal observation. Multiple airlines have tried to increase the room in coach and have failed, based on reams of financial data generated by the experience. If larger coach seating areas actually generated increased revenues, then multiple airlines would change their coach seating.
What is nice for you is that you do get a choice. You are willing to pay for expanded coach seating if you have to. I get a choice. I am willing to pay for an F ticket and it is nice to have an F product that is worth the purchase. We both win. ^

Airline financial reporting is a bit of a mystery to me, but it seems that, depending on whether equipment is purchased or leased--and what kind of lease they sign--the operating margin is influenced differently.

It's a while since I took a serious look at the financials for JBLU, but I have seen things soften recently. The airline is not sticking to its knitting. IMO, it needs to focus on short-haul routes; it also needs to cut back on the amount of aircraft it's planning to add to the fleet.

I think JBLU's problem is multifold. Another issues is that they don't sell enough tickets per flight: they need to sell more and risk having VDB's or IDB's. They also don't charge enough for tickets purchased at the last minute: they have a good product and they should start charging for it--at least they should charge the business travelers.

JBLU was in a nice position early on in that it had very favorable terms for the equipment it leased: it didn't have expenses during the first year. Those days have gone.

It seems to be crawling back on track, but it does need to take a cool, hard look at its operations.

First, if you want to fly in first class, then clearly none of the LCC's are for you. If I had the money to throw around, I'd fly FC exclusively as well. But given that I have to live within my means, I'm very conscious of shopping around for the best deal for my coach budget.

I would repectfully dispute your assertion that the coach products are essentially similar.

Measured in terms of seat pitch, CO has the least spacious coach cabin in the United States except for certain seats on certain planes on AirTran and AWA. It should be pointed out, however, that neither of these carriers operate these a/c's on transcons.

For transcons, therefore, CO's 737's have the least seat pitch of any coach cabin.

Yes, much of the competition only provides one more inch, but that extra inch can make a big difference.

Second, the coach seat. While I suppose this measure is a little bit more subjective, many passengers find CO's coach seat to be hard and uncomfortable.

Regarding the competition on transcons, all have more comfortable, padded seats.

Yes, most of the competition do not offer a hot meal in coach. And some do not offer many pillows or blankets.

Here are some tangible differences:

1. B6 -- 32-34" of seat pitch, comfortable leather seats (that are also wider than coach seats on CO) and PTV along with XM Satellite radio (currently being installed on all a/c's)

2. UA E+ 34" of seat pitch, more comfortable seats. IFE comparable to CO.

3. AA, DL, US, NW all provide 32" of seat pitch in their coach cabins on the types of a/c that fly transcon (the DL former Song a/c's have 33-34" of seat pitch and comfortable leather seats).

4. Frontier, while not providing transcon, has 33" of seat pitch on both its Airbus models

4. Southwest has 32-33" of seat pitch on its 737's

5. Midwest has 33-34" seat pitch in 2-2 seating arrangement on its 717's and some of its MD-82's

All these coach cabins are more spacious and more comfortable than CO. Is it palatial, decadent comfort? No. But it is more comfortable. And when you're talking about such a tight space a couple of extra inches of legroom makes a huge difference.

Finally, regarding what Larry Kellner says. What do you expect him to say? He's going to defend the company line no matter what. I don't find that remarkable but it also doesn't make what he says right.

What I'm most concerned about from Continental's senior management is the propensity they have to make assertions such as "passenger don't care about IFE" or "passengers won't pay for extra space." Both these views are not only false but what they really betray is a narrow view of the business, a narrow view that is leading CO down a perilous road.

And let's face it, when you cut through the corporate double talk, all they're really saying is they don't want to spend the money to make these improvements.

One comment about passengers not being willing to pay for a more comfortable coach seat. If this view is actually correct then why would it follow that passengers would be willing to pay more for a first class seat? The fact is people have been paying dearly for the extra space of FC since the inception of airline travel. And there have always been plenty of intermediate products such as business class.

The fact of the matter is that the marketplace is maddeningly fluid. There are people willing to spend $12,000 to fly to Asia in a sleeper suite. Others will only pay $198 to fly transcon. But there are lots of others in the middle.

The issue with the demand vectors for airline coach travel is that, despite what you have written, there have been very few actual cases in which a premium coach product was sold at the correct premium price. AA's MRIC example is constantly used as an example of this policy's failure. But let's not forget that AA hugely jacked up the prices of coach in order to justify MRIC. This, along with 9/11, doomed it to failure.

I believe UA has a better approach, creating a premium product that is a mechanism for rewarding its most loyal customers (a great idea) or that can purchased for an affordable additional fee ($40) Or jetBlue, which can be best described as a premium LCC, and whose fares are rarely the lowest but whose value equation is excellent; and let's not forget that B6 has done an excellent job of marketing itself as a premium LCC product and as a result flies with one of the industry's highest LF's.

As I have written before, my informal discussions with fellow B6 passengers has demonstrated that all are aware that there are often less expensive options to B6 but that they selected B6 for the space, comfort and IFE.

Sure, things look great right now for CO with their huge RASM, but what happens when the paradigm shift that is now happening in the industry really starts to take shape? Maybe then, an $859 rt in coach on a CO 738 with 31" of seat pitch, rock-hard thin seats and mediocre IFE won't seem like an appealing option to the vast majority of customers when there will be more comfortable and more affordable options on virtually every other airline.

Let's keep things in perspective. While the operating margin slipped slightly compared to 2 qtr 2005, B6 is not doing poorly at all. In fact, historically B6 has only posted quarterly losses that are a fraction of the losses posted at all other airlines except WN.

I am concerned about the trends that I see. I am also concerned about the planned expansion as indicated by aircraft orders and options. I just don't think it's sustainable--at least (apart from the US Army Air Force in WWII ;) ), such a rapid expansion of equipment has never been successful.

Only time will tell. On the other hand you did write in your previous post that you believe that B6 should concentrate on shorter-haul routes. That is precisely where the bulk of the route and fleet expansion is going, since the RASM is much higher on these routes.

So it could well be that the frantic expansion will be the correct strategy for B6, as long as they can stay focused on the profitable short-hauls.

Larry and Jim Compton both acknowledged the mistake in moving the 753 to 12F and corrected it.
Larry knows that coach is not comfortable. He's 6'4 I think and is not a happy camper in CO Y, and has said as much. As you said CO doesn't want to spend the money on that, and he said exactly that. They don't think people will pay for it. CO doesn't have a problem spending $$$ for things that people are willing to pay for.

they are making changes such as adding the 2 F seats to the 738's. While it would be nice for them all to go to 20F with the mid-cabin lav, they lose 9 Y seats and get 4 F. on routes that have really high F demand (x-cons) that works but not for most other markets.

United has IFE on every flight, has Economy Plus seating, as well as physically more comfortable seats.

When you factor in PS, and international 3-class 777 and 747 domestic runs, Continental is the dumps.

That's funny, people seem to be "tolorating" United Economy Plus.



I could not disagree more.

United and American are focusing on their product. They are both installing sleeper business seats, and United is installing new First Suites, in addition to already offering Economy Plus. Both airines made money this quarter, so the excuse that "profits" are in the way of a superior CO product is a bit ridiculous.

I am confused as to what you're talking about. Even though you used a quote of mine, your comments weren't related to what I said.