What would you do? Let's say you and David Neeleman of JetBlue were able to raise a huge amount of capital for a startup carrier. How would you do it? What would you do different? Here's my idea, kick it around....

1. "Focus on the T". Take a map of the USA, and place a T on it. My focus would be on the areas that currently have little or no low fare options. North-South across the heartland, East-West across the northern third of the country. Yes, essentially take on NW. With the Humphrey Terminal at MSP currently open, it could make MSP a very strong focus city. My other focus city would be MKE. I would draw from S. Wisconsin and the Northern Chicago suburbs. Would also focus on US-Canada markets. To me that seems to be a ripe market for a low-fare carrier.

Fare structure: All fares are one-way, like WN. 14 day advance, 7, 3, and walk-up fares offered. Only full Y fares are refundable. Tickets sold by web and thru selected (not all) travel agents only. travel agents will have access to same web-only fares, and I feel that a 8% commission on each ticket will still be cheaper than labor costs of a telephone res center. Will not participate in TA Res systems like Sabre, all bookings via web. All ticketless travel.

Fleet: New Airbus A320 family. I prefer the comfort of the Airbus over the 737, so my choice is based on my preference. But the common rated cockpit is a plus as well.

Cabin: 2 class cabin. Minimum 16 seats in FC cabin. FC seats available for $50 per segment above full Y fare. Leather seats throughout, DirecTV screens at every seat. No meal service on board, even in FC. BYO.

FF Program: My program will recognize distance traveled, but will also recognize fare paid. For example:

Segments <250 miles = 1 credit
251-750 miles = 2 credits
751+ miles = 3 credits

fare bonus 14 day advance fare = 0 credit
7 day advance fare = 1 credit
3 day advance fare = 3 credits
walk up (full Y) = 5 credits

Credits may be used for upgrades or free tickets. FF rewards will be similar to Southwest. If a seat is available and you have enough credits, it is yours. No blackout dates on awards, but there will be capacity controls. During holiday periods only. All award travel must be booked online thru website. Elite levels will be offered with bonus points, but no free upgrades.

Thats as far as I've gotten. I tend to think about this when I'm waiting for an airplane. Anyone have any other ideas?

I wouldn't bother. Why fight for a piece of a business that has shown an industry profit only three out of the last 50 years?

I'd rather spend my money gambling at Vegas. I'd have more fun.

Mdtony -

I see your point, but... It's been shown that airlines can consistently turn a profit if they break away from the current business model. Southwest is consistently profitable because they have created their own niche. JetBlue appears to be bucking the trend as well.

Rather than watch the current system fall apart from the comfy seat at a blackjack tabel, I thought I'd try to see if I could build a model that looks good to the most frequent flyers.

i agree with mdtony.

why would anyone start a business in an industry that is so regulated by the government as so heavily taxed? having gotten my mba at a superb school, i know that one thing management teams abhor are events that are out of their control. this industry is full of them.

on top of that, the customers of the business are a bit, let's just say, extreme. i mean, if an elite kit arrives on march 1 instead of february 28, letters and emails arrive in droves from customers expecting something. that's kinda sad when customers are just waiting for something to go wrong so they can pounce. any idea how much is spent just on customer care? yikes.

then, there is all of the media scrutiny surrounding this industry. you don't see quite as many articles poking and probing regarding, let's say, semiconductors.

it's a rough business. i'll pass, thank you.

[This message has been edited by fly co to see the yanks (edited 02-25-2002).]

No way, I disagree 100%!

Doesn't matter how many MBA's you have or where they come from. Were it the case that airlines draw too much publicity and scrutiny, we'd all still be riding the train and shopping at Montgomery Ward's! I agree that the current system doesn't work well in most cases, but I think a better airline could be built...

Nice topic.

"My airline" would offer fares dependent upon how much business you were giving/willing to give to the airline. You would get very good prices with few or no restrictions in return for real loyalty measured by gross profit contribution and adherence to forecast travel plans.

Fares would be far lower than Y or B fares, but a bit more than leisure fares.

I would have a one class cabin with comfortable 2 X 2 seats, perhaps in a fleet consisting only of either A320 or B737s.

I might do a hybrid point-to-point model with small mini-hubs, using primary airports to make interlining and connections easy.

Actually, the biggest problem with the airline business is labor.

Labor holds the airline over a barrel. There is too much of an imbalance between the power of labor and management.

Unions are strong in the USA today only in two areas, really: transportation and government. In each case they hold most of the cards.

I think new business structures might be the answer, perhaps a franchise model a la "United Express" where many different local operators work together under a common tradename.

I like the franchise idea. I know British Airways has done some of that in South Africa and the UK, but I don't know if it works well or not.

As for the labor situation, that's why I eliminated telephone res sales. A travel agent is much more efficient if the agent doesn't have to use a GDS to access inventory. Southwest doesn't participate in any except Sabre. And a travel agent who doesn't sell doesn't cost the company in salar/benefits. "DuxfanAir" could even use it to their advantage.

2X2 seating? I don't know.... That business model doesn't seem to work well for Midwest Express, because you need the higher yield to offset the loss of seats. MRTC seems to have worked at AA. The customers like the increased legroom, and it has allowed AA to reduce the number of seats sold at fire sale prices, thereby increasing yields. But maybe a 3X2 seating config, like the old Air Canada domestic FC product could work?

Actually, Midwest Express has been consistently quite profitable except for just recently.

The 2X2 seating works because it eliminates complexity. Having only one class is far easier to administer and cuts numerous operating costs.

"My airline" would cater to business travellers and get them to pay more, and in return would be more comfortable. The higher revenue would more than offset carrying those empty, narrow seats

fly da to see the dux!

Richard, sounds like you and I might be competitors.

I would build an airline that caters to all, but rewards those spend/fly the most. By catering to all, you insulate yourself from downturns. By keeping costs low enough, you avoid having to gouge business travellers in order to subsidize leisure travellers. by placing fare incentives in the FF program, you give business travellers an incentive to spend more. Having one cabin for simplicity of product makes sense, but there's a reason why AirTran put a business class cabin on their airplanes. There's a reason MetroJet didn't work, it wasn't diferent enough from Southwest to draw customers away.

besides, Tyler has already created a slogan for "DuxfanAir"



[This message has been edited by duxfan (edited 02-25-2002).]

duxfan: hmmm...did i say that a better airline couldn't be built? that's odd, i didn't think i said that. what i said was that i wouldn't want to be in the business. from a manager's perspective, there is too much out of my control that impacts my performance/livelihood.

[This message has been edited by fly co to see the yanks (edited 02-25-2002).]

So the real question is:

"If you were starting an airline and had lots of financing, what parts of your airline would be different than Southwest?"

I would do everything I could to keep unions out.

As for 737s vs. A320s, the 737s might be more fuel efficient if you get blended winglets. http://seattlepi.nwsource.com/busine...rtners25.shtml

However with a slogan like "fly da to see the dux!" I can't fathom who would want to fly on this airline.

Since I can't figure out why 777 pilots are paid more than 737 pilots other than union seniority, I would order 777-300s and hope to acheive insanely low CASMs, resulting in insanely low fares. But maybe I'm just naive...

FCTSMBAW

I'm sorry, I stand corrected, and you are correct about the above quoted statement.

But since the question was "if you were to start an airline and FF program..." and you've decided that you wouldn't try I guess we're even then, huh?

hey whlinder, haven't seen ya around since bowl season!

you might not like the slogan, but I can't imagine that "ride with the huskies" would work either! LOL

actually, I really don't think the unions would be a problem. Southwest is very heavily unionized, but their labor agreements do not fit the mold of typical labor agreements. they pay among the highest in the industry, but they have the contracts structured to get among the highest productivity as well. unions and management can work together, when both sides WANT to work together.

maybe the 737's could be made more fuel efficient with the winglets, but until you find a way to widen the cabin, the A319/320 is still much more comfortable in coach. compare a UA 737 seat with a UA A320 seat, and you'll see what i mean!