Airlines in crisis

http://news.ft.com/ft/gx.cgi/ftc?pag...H0SC&live=true

And who is to blame? The same group heard on every airline PILOTS!
United gives there pilots a 40% raise to get the USAIR deal approved. That deal collapses so American, Delta, United, Continental are left with over 10 Billion Dollars in extra pay over five years. Delta alone has given the pilots 2.5Billion over five years.

WN just announced they had a profit for the last two months! Go figure! Who is to blame, terrible management and greedy pilots. Will the only airline left in 2003 be WN. Hard work, good prices and a great attitude: this is the recipe for success, something DL, UA, CO and US have no idea how to achieve.

Alaska turned a 3rd Quarter profit, even before the government money was factored in...

Have you been reading today's Wall Street Journal too? Their article about AS on page A8 mentions the 3rd quarter profit and makes it look like my favorite airline has a rosy future. I bet they'll be picking up market share on the west coast while UA is having trouble.

[This message has been edited by Westcoaster (edited 10-19-2001).]

Here's why Southwest and Alaska are doing well. Southwest has a very unusual culture. They have employees who are paid less than the industry average but who don't mind. They like working there so much that they don't care that they're getting a hell of a lot less than the big boys. That makes things a lot easier for them. They also aren't as dependent on business travel as other airlines.

As for Alaska, they are a regional airline and don't play near where the terrorists hit. From what I hear, they have one transcontinental flight, from DC to Seattle.

You can't compare a regional airline like Alaska or a unique airline like Southwest to the rest of them, who cater to a very different market -- one that was already reeling due to the economic slowdown and that will get hit again due to the attacks.

Besides, I would hate to think of how bad things would be if it was just Alaska and Southwest. I've never flown Alaska, because it doesn't have the routes I need. I don't like flying Southwest at all, and if I had to go cross country on them, it would really suck.

Besides, I would hate to think of how bad things would be if it was just Alaska and Southwest. I've never flown Alaska, because it doesn't have the routes I need. I don't like flying Southwest at all, and if I had to go cross country on them, it would really suck.

mdtony,I agree. It would be a sad day for us all if these were the only choices. I have SW Companion Pass status and still shudder to think of them as the leading carrier model. They serve a very limited purpose.My limited experience with AS doesn't make me feel any better about them either.

Excuse me, but Southwest is very dependent upon business travel, infact, that is how the airlines started. You can compare them to UA, DL and CO, that is what I am doing. Infact, if DL, CO and UA keep going like they are going, the only difference between them and WN will be that WN does not fly international. I fly mainly for business and find more leg room in WN then any of the others in coach. I think you do you not understand the fact that WN is growing with business passangers as they become more and more dissfranchised with the full service carriers offering in some cases less then WN. The big guys dug their own grave yet WN prospers. It is thinking like yours at the big guys that have them in this trouble - unable to see what is really going on!

Absolutely right. Can't compare their management, can't compare their staff, can't compare their business model, can't compare their earnings reports.

dupe, sorry.



[This message has been edited by SuperSlug (edited 10-20-2001).]

No, I think the point is being missed. And that is that the major difference between WN and the others is the hub and spoke system.

The hub system has two big advantages:
1) it offers an airline a way to build a very large network of city pairs served, and

2) it offers an airline a virtual monopoly on non-stop flights in the hub city

It also has big DISADVANTAGES:
1) It is operationally very difficult. Flights have to land and take off in cycles that must be carefully orchestrated. People say WN has difficulties because of its quick turn, but this is nothing compared to the difficulty of scheduling and operating a hub

2) It introduces lots more fixed costs, e.g. those of frequent routes from feeder cities into the hubs and out again. Without very high yields, the airlines will quickly drown in these fixed costs. And if they discontinue these routes, they lose a great deal of incremental business.


Now, let me address the profitability of AS and even CO. AS serves one area very well, and has a virtual monopoly in that area. Through very careful cultivation of alliances, they become an extension of other airlines (such as CO, AA etc.) instead of a threat to them. CO has done the same thing in a sense with its alliance with NW and HP. Both airlines have a virtually seamless FF program with their alliance partners.

Airlines can be very successful as virtual monopolies in a geography. And they can extend their success through alliances so other airlines feed their pax into them. But the hub system is always going to be a tough way to make a buck.

Maybe it's because I haven't flown on Southwest for years, but I just can't stand them.

For example, I'm not a happy boy because United is making me stop in DEN in order to fly to SAN from BWI. That's one stop. If I were to fly Southwest, I'd have to probably make at least two. Just off the top of my head, I'd have to go to MDW, then to LAS, then to SAN. Yuck.

And don't even get me started on some of the passengers on Southwest, or the lack of reserved seats.

I'm sorry, I'm not a cow. Don't herd me like that. I'll pay the extra $50 to fly an airline that treats me like an adult, not some kid getting on a school bus or someone getting on a Greyhound.

Come to think of it, does Greyhound of the air mean anything to you?

Actually, Southwest has three BWI-SAN one-stops daily (through ABQ,HOU, and BNA). And their short turnarounds mean that you'd get there sooner than on a UA one-stop through DEN. But I understand your point, although I think your idea of being treated like a "kid getting on a school bus" is overstating things just a bit.

Point is (getting sort of back on-topic), those very measures that you (and I) despise about flying Southwest are part of their business model. We may not buy into it, and that's fine. But plenty of others do--and it's that very model, and, of course, the management and employees that implement it, that has put them in the (relatively) good financial position they're in now, compared to the other airlines.

We can b**ch and moan all we want about WN. But we can't argue with the results.

(disclaimer: I own WN stock, but don't plan on selling it for at least 29 1/2 years)

Yes, their business model works just fine. But you know what? That's because they're the sixth largest airline in the country and they don't provide the same amount of services as do the big boys.

Their model works fine for their size, but ramp it up to the size of AMR and it won't.

Thus, saying the Southwest model is the way to go is inaccurate.

Well, WN's business model has taken them from a small Texas puddle-jumper to a major national airline, so I would not doubt for a second that it could grow to the size of AA or UA with enough effort. That said, I dobut that WN would do such a thing, since their business model precludes service into most major airports. It's much more likely that UA or AA would shrink to the size of WN before WN grew to UA or AA proportions.