S-c-o-p-e
Paradigm shift
The Airline industry is evolving into a mature industry because cost of capital and expenses have limited new entrants while mergers have consolidated the industry.
Here's the Boeing outlook.
http://www.boeing.com/commercial/market/long-term-market/airline-strategies-and-business-models/#
http://www.boeing.com/commercial/market/long-term-market/traffic-and-market-outlook/#
Scope Bomb.
The new industry normal is a focus on profits and shareholder returns.
How does management handle capacity to ensure profits?
1) Reduce capacity to ensure pricing power.
2) Codeshare and JV to use others capacity to generate revenue.
How can you maintain brand standards to sell your tickets on others?
1) Get antitrust immunity so you can collaborate.
2) Take an ownership position to funnel returns and control standards.
Now that capacity is constrained by the big networks will growth ever return to historic levels? It may but unchecked market share grabs are unlikely. This means that with in a network system who does the flying will be highly competitive. If scope is given does it come back? NO!
Why is every airframe more valuable to the pilot group now?
1) There will be limited growth at best. New airplanes are replacements.
2) We have set the market price for out sourcing that violates the scope clause.
What is management’s next move?
1) Take an ownership in more foreign carriers. We already are part owners in Aeromexico and GOL. Open skies with Mexico is on the horizon. An Asian carrier would be an excellent addition.
2) Get JV immunity so you have a say in pricing, capacity and product standards.
3) Move capacity around at will when needed paying an infraction penalty, if necessary.
4) Shield ancillary revenues from contract pay considerations. Funnel revenue through investment where it is tied to others performance, not our own operation. Profit sharing is our only claw back of this flying.
Last edited by notEnuf; 06-05-2015 at 08:23 AM.