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-   -   Continental Pre/Post Merger Speculation Discussion Thread (https://www.flyertalk.com/forum/continental-onepass-pre-merger/813075-continental-pre-post-merger-speculation-discussion-thread.html)

channa Feb 13, 2008 1:48 pm


Originally Posted by CO 1E (Post 9245699)
Or, perhaps the merged entity could continue domestic E+ but reduce the number of E+ rows if necessary.

Not sure that is necessary. And I'm surprised how many here think of E+ as a cost, not a revenue generator.

After actually looking at a narrowbody A320, UA only had to eliminate one (1) row of seats to implement E+ on that one. So they're losing 6 seats total, which usually went unfilled anyway.

Going back to the earlier numbers in the thread, but using 6 seats lost, say 25% of the time you could have filled an average of 3 of them, and looking at a short-haul market of SFO-LAX with an average one-way fare of say $100 (and that may be generous), they leave $300 on the table 25% of the time (or about $75 per flight of lost revenue). After only 3 buy-ups, do they recoup this, and actually make more money. And from what I've seen, I can assure you people do buy up. And I'm not even counting the fuel savings/pax handling savings of the fewer people flown.

What's funny is how much UA encourages people to buy up. Remember they're blocking all of E+ for Premiers and E+ Access members. So that means the back (E-) is packed to the gills, often overstuffed, so people have no seat assignments (this is common on UA). So you check in, have no seat assignment, get offered to buy E+ for $29 or wait for your seat at the gate. A lot of people spend the money for the E+ for the insurance of a decent seat (in reality we know they would not have been denied boarding, as a seat would have opened up, and quite possibly it would have been into E+ anyway because that's where the open seats are). But people spend the money for the buy-up. It's brilliant, actually.

Having sat next to infrequent travellers on buy-ups, they're usually happy with their purchase. "Wow this is a lot more roomy," is what I usually hear. So instead of felling ripped by UA, they actually are more likely to come back (more revenue) because of the increased legroom. And some buy E+ Access for a year (again more revenue). CO is leaving a lot of money on the table by not having E+.

Bonehead Feb 13, 2008 1:56 pm


Originally Posted by channa (Post 9245966)
...CO is leaving a lot of money on the table by not having E+.

As well as creating cranky customers (like me), who are getting pretty fed up with the sardine-can-like conditions of coach, especially internationally.

[Devil's Advocate]

But could CO feel that E+ would rob them of revenue from people buying into the premium cabin due to the hideousness of coach?

[/Devil's Advocate]

CO 1E Feb 13, 2008 2:00 pm


Originally Posted by entropy (Post 9245872)
I dont see CLE disappearing as a hub. Both EWR and ORD and packed to the gills, so moving some connection traffic over CLE.

Exactly. There is no room left at EWR or ORD for expansion, period. CLE offers an already up and running solution.

pbarnette Feb 13, 2008 2:02 pm


Originally Posted by Bonehead (Post 9246021)
As well as creating cranky customers (like me), who are getting pretty fed up with the sardine-can-like conditions of coach, especially internationally.

I go out of my way to avoid CO for international flights. People often ask why I am so anti-CO sometimes, and it is because of the bad taste that 757s leave in my mouth. Hate that plane, and it makes me hate CO sometimes

channa Feb 13, 2008 3:07 pm


Originally Posted by Bonehead (Post 9246021)
[Devil's Advocate]

But could CO feel that E+ would rob them of revenue from people buying into the premium cabin due to the hideousness of coach?

[/Devil's Advocate]

Which is why UA's E+ solution is so elegant. If they did a real "Premium Economy" a la BA or VS, then yeah, I could see that robbing factor. I've flown BA PE, and while not Business by any means, it was quite comfortable (extra width, extra recline, same Y food, BA has free drinks). Perfectly acceptable.

With the only benefit of E+ being additional legroom, I doubt any C/J traveller is gonna say that Y + 4 inches of legroom is almost as good. :D

GDON Feb 13, 2008 3:55 pm

All those poor new hire F/As, CSAs, Pilots and ground staff....

entropy Feb 13, 2008 5:31 pm


With the only benefit of E+ being additional legroom, I doubt any C/J traveller is gonna say that Y + 4 inches of legroom is almost as good.
Especially with the same seat width on the 787... ouch!

Renard Feb 13, 2008 8:21 pm


Originally Posted by channa (Post 9243490)
Finally, looking at the hubs, CO has much more "powerhouse" hubs. Not that IAH is better than ORD or anything, but looking at where CO operates from, they carry a much larger percentage of the departures. ORD may be home base, but UA onlyhas 1 terminal out of what, 4-5? Sure, it's the biggest terminal, but they don't have even 50% of the departures. Whereas CO in IAH, they essentially own the place. Same with the other hubs -- UA doesn't "own" the airport the way CO does. So they have to be competitive and understand their customers are more of a flight risk (no pun intended :D ).

But since CO's customers tend to be more "locked," CO can afford to get away with more than UA could (e.g., 50% EQM, not catering to differentiated markets, etc.), because CO knows full well that many of its customers do not have a choice. So when CO tosses an all-Y RJ on a route, its customers suck it up for the most part. UA's customers could move to AA, hence why they put in explus and maintain things like E+.

I'm not sure CO Management understand this, and if they do, I'm not sure they have experience operating in a different competitive environment out of their hubs.

This is a very interesting and insightful analysis. What you say makes a lot of sense....if this does happen, will they be ready to change and adapt? or will they entrench in their belief that the old way is the way to go forward? With the CO we see today things like E+, F in RJs, and PS are described by CO management as unworkable.

Xyzzy Feb 13, 2008 9:18 pm

I found an interesting article this evening on the DL/NW merger. Looks like AF-KLM will invest. Also, they'll likely keep HQ in ATL and the Delta name...

sbm12 Feb 13, 2008 9:27 pm


Originally Posted by xyzzy (Post 9248297)
I found an interesting article this evening on the DL/NW merger. Looks like AF-KLM will invest. Also, they'll likely keep HQ in ATL and the Delta name...

With the Euro so high against the dollar it isn't all that surprising that the Europeans are investing so much in the American carriers (LH in B6, too). This would make a pretty strong TATL partnership, with the DL/NW/KL/AF/AZ crowd operating as a single force. It almost makes that "group of 4" thing they were talking about late last year look weak.

perezoso Feb 13, 2008 10:45 pm

If there was ever a question about CO leaving Skyteam as a result of mergers, then I think the potential AF/KL investment in DL/NW settled it.

entropy Feb 14, 2008 12:29 am

If DL+NW merge I think its the end of SkyTeam for CO.

We've always been the odd airline out in many ways. I think CO will be great in *A.

At least CO management recognizes the value of TLV... though this means there will be no CLE-TLV for the forseeable future. ORD-TLV here we come!

pbarnette Feb 14, 2008 2:15 am


Originally Posted by perezoso (Post 9248648)
If there was ever a question about CO leaving Skyteam as a result of mergers, then I think the potential AF/KL investment in DL/NW settled it.


Originally Posted by entropy (Post 9249003)
If DL+NW merge I think its the end of SkyTeam for CO.

We've always been the odd airline out in many ways. I think CO will be great in *A.

While I welcome the possibility of *A awards, I don't think CO will be any more tightly integrated into *A than they were in ST.

From what I can tell, CO is not tightly integrated into ST because they don't want to be. They don't want to play ball and feed traffic to AF or KL or anybody else. Instead, they launch service from EWR to everywhere they could in Europe, trying to keep the revenue to themselves (which is perhaps the right course, BTW). I think it is telling that CLE has had LON service all this time, rather than AMS or CDG. So, unless CO decides to change their strategy, I don't think SK is going to be overly excited about CO encroaching on their territory in CPH or OSL or ARN. Same goes for LH.

supermasterphil Feb 14, 2008 2:37 am


Originally Posted by channa (Post 9245966)

What's funny is how much UA encourages people to buy up. Remember they're blocking all of E+ for Premiers and E+ Access members. So that means the back (E-) is packed to the gills, often overstuffed, so people have no seat assignments (this is common on UA). So you check in, have no seat assignment, get offered to buy E+ for $29 or wait for your seat at the gate. A lot of people spend the money for the E+ for the insurance of a decent seat (in reality we know they would not have been denied boarding, as a seat would have opened up, and quite possibly it would have been into E+ anyway because that's where the open seats are). But people spend the money for the buy-up. It's brilliant, actually.

Exactly that happened to me. I didn't buy E+ but they were not able to give me a seat assignment for EWR-DEN on a 752 until a few minutes before boarding. I was calm as I didn't mind to get deboarded either but ended up with 16C (exit row, E+ - which means even more legroom than regular E+)

SPN Lifer Feb 14, 2008 3:26 am


Originally Posted by worldwidedreamer (Post #650) (Post 9235681)
I think both products have positive attributes. The free wifi and free booze at the PC's fits my fancy, as does the better hard product and reciprocal opportunities with the RCC. My hope is that if/when the two airlines merge CO management remains in place and they take the best parts of both products.


Originally Posted by channa (Post #655) (Post 9243437)
The RCC has more locations and better food. The lack of free drinks and WiFi is the killer.

I wonder what is the economic justification for free drinks? To make the President's Club more attractive, undoubtedly, even though we are always told this could change in the future.

The Presidents Club still offers life memberships. The Red Carpet Club has not for well over a decade.

Originally Posted by entropy (Post #675) (Post 9245872)
I dont see CLE disappearing as a hub. Both EWR and ORD and packed to the gills, so moving some connection traffic over CLE.

In the 1980s CLE was still a UA hub, and CO beat UA for dominance. There would be no reason to throw it away now.


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