spampurse

That's cute.

Cohiba

All very true. As many have noted, Indy's costs are too high, regardless of fuel. However, I'm glad you are pointing out DH is trying to make a positive impact. It has not been successful to this point and may not be in the end, but at least the airline is making an attempt to correct an unsatisfying status quo.


Cheers.

Cohiba

Tell me about it. Apparently we should all stop shopping at the newest retailer in our neighbourhoods too. After all, their constant specials and weekly sales force the existing merchants to match their prices and often lose valuable profit that could keep them in business. Personally, I think the market is a good thing.

In one way I'd be mad at the new retailer; if the actions were done out of spite. That is not what DH is doing.


Cheers.

MKE-MR

Do you know their history? It could be argued that their entire business plan was originally based on spite

mid

Parasitic distortion? Legitimate operators?!?! HUH?!?!

Sir, that's got to be about the dumbest thing I've ever heard posted on a public thread.

I'm just not sure what your point is anymore.

Are you suggesting that there should be some minimum price that the fare should be sold at?

Are you suggesting that the legacy carriers are somehow more legitimate because they have been around longer? Because they have crazy cost structures that made more sense in the 70's than in the year 2000?

What would be your solution? All the LCC's go away and the majors can charge what they want?

Not a single thing you have suggested in this thread points to any constructive understanding of just what a positive outcome would look like.

My point is this: the LCC's and particularly DH are free to set whatever price they want for the seats they have available. If they want to offer $0 fares out of IAD, they can do that. It's up to their management and their shareholders to decide what their business strategy should be and how they should arrange their product mix to try and make money.

United, American, Northwest, and all of the other majors deserve NO protection from new market entrants. They have a huge advantage just by being as large as they are and having the customer base they have. To suggest that a little airline is somehow "threatening" a carrier as large as United is simply ludicrous IMHO.

I can fly from IAD to BOS for $100 RT on DH vs $200 on UA. How is that not consumer friendly? Do you even understand the concept? Markets operate on principles of equilibrium. If we aren't there now then we will be there shortly because no company can operate below their cost for any appreciable amount of time.

If DH goes under, you can bet your bottom dollar that someone else will fill their shoes. The LCC is not going to go away. And if any group deserves blame for fueling their success, it's the majors.

mid

I'd say that they had two choices:

1. Take the deal that United offered them where they lose money because of United's mismanagement.

2. Strike out on their own where if they lose money and kick the bucket, it's their own fault.

Which one would you choose? Certain death or 50/50 chance to live?

I don't think spite had anything to do with it. They made a business decision that was a "bet the company" move. We have to respect their determination at a minimum.

HeathrowGuy

See, that's just it - in most of DH's markets, there were *no shoes to fill* - the market already offered adequate schedules at fare levels customers were willing to bear.

There is a big difference between a LCC moving into underserved markets & implementing a lower-but-still-rational pricing structure and a LCC dumping 10+ daily roundtrip flights into an already-saturated competitive market and charging practically nothing to fill the seats. The first instance is the story of Southwest, jetBlue, and AirTran, all of whom have met with success. The latter is representative of Indy Air, Tower Air, National (LAS), and other failed low-cost-carriers that are remembered for being little more than a costly nuisance to the industry.

L Dude 7

Airlines can set their fares at whatever level they like. However, if they want to stick around, they need to set them at a profitable level. The dot-com boom was great. All sorts of companies offered products at fire-sale prices. It was a great time for consumers to get great deals. However, these deals did not last, and many of the companies offering them disappeared.

LCCs like jetBlue, Southwest are turning profits on low fares. DH has a cost structure more akin to a legacy airline than an LCC.

Yes - and the numbers from FlyI have shown that their current pricing is below costs. A similar problem is occuring with legacies.

Who would fill their shoes? FlyI has clearly shown that an airline based on RJs serving small cities from a hub at IAD has failed miserably. Look at Love field. You don't see other airlines chomping at the bit to fill Legend's shoes and fly 50-seaters corss country. FlyI started with a capitalization 3 times larger than jetBlue. jetBlue also turned a profit in its second year of operation (and that year happened to feature September 11, 2001) Unless there is some major miracle, FlyI will not come close to turning a profit in its second year.

I'll agree that the majors can shoulder much of the blame for the success of the low-cost carriers. However, FlyI can hold most of the blame on itself for duplicating many of the high-cost aspects of major airlines (small jets, small airports, hub operation), while charging low fares.

mid

I would argue that DH is a bit of a different animal. They aren't a pure play LCC because they were operating as a traditional regional carrier with policies and practices that were modeled after their largest customer, United.

In that sense, it was perfectly reasonable for them to use RJ's to service those customers. Now, they need to as quickly as possible move away from those RJ's and get into those 319's.

This is an important point: they had those RJ's for a reason and they needed to keep them going until the could transition to 319's. I don't think their long term plan was to keep the RJ's going. More likely: they had RJ's and RJ mechanics and they saw them as a bridge to the larger aircraft loads.

Look for those RJ's to go away at the earliest possible time.

jasondc

...those RJs arent going away. DH sold their deposits on the remainig A319s they had on order and gave up their delivery slots for the additional A319s they had on order. that means that they wont be gettin any additional A319s in the near future..

mid

That's more likely to be a temporary condition than a permanent one. Those 319's will show up sooner than anyone thinks.

HeathrowGuy

More like to show up at Indy Air's doorstep is the repo man:

"Merrill Lynch estimates that there is a more than 90% chance that Delta Air Lines (nyse: DAL - news - people ) and FLYi (nasdaq: FLYI - news - people ) unit Independence Air will file for bankruptcy within the next few days."

http://www.forbes.com/markets/2005/0...markets15.html

With any luck, the madness that is Indy Air will soon come to a long-overdue end...

mid

You were half-right.

It was Delta and Northwest.

FlyI lives to fight another day!

Maybe when Delta liquidates, DH can get some of their business.

HeathrowGuy

Just hope DH is around for Xmas...

GotCalcio4

If US or UA ever treated me or my family poorly, I wouldn't fly them. I'm sorry, but UA and US are much more valuable than DH to the industry. The day DH liquidates, many won't even blink. If UA liquidated, that would be a different story.