Hi all,

I recently wrote a paper on the future of the legacy airlines for my M.B.A. program. I wanted to share it with you all and get any thoughts and feedback you may want to share. I didn't get into as much detail as I wanted to when I began writing, but we were allowed a maximum of 30 pages and I reached that rather quickly. Anyhow, it is somewhat lengthy but I would love to hear your thoughts on this. The link below should bring you to the paper. Thanks!

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I am editing my first post to explain in a little more detail....

This paper has already been handed in and graded. I'm not much interested in hearing about grammar mistakes at this point as it is too late for that. What I really wanted to hear were thoughts about the content itself. Basically, I believe that the national/LLC airlines are slowly killing the major airlines and their regional partners. I don't truly believe that either the major or regional will dissapear, but will lose SUBSTANTIAL market share until they make some significant changes in their operations. The big problem is the horrendous service that they provide to their customers!!! Take a look at the paper (skipping the history section, as it is largely there for background info only) and let me know whether you disagree or agree. Is there something bigger that I missed or something irrelevant that I mentioned?

***NOTE**** I realized I mention nothing about the unions and manangement/employee problems. I really wanted to get into detail on this area but was not able to fit it into the allotted pages for this assignment. I actually believe that a significant portion of the problem lies right here!!! ************

 

Thanks for taking a look at it! Actually, I probably should have explained a little more in more first post. This paper has already been handed in and graded. (For what it's worth, I received an A). For that reason, I left out the bibliography and removed some info on the cover page. If you would like to see the bibliography I am happy to provide that info.

What I was looking for was some feedback on the actually content. Essentially, I stated that the major airlines are dying a slow death and may die completely if they don't make some changes. This was due to the terrible service quality they provided and the fact that the whole regional airlines (which are providing the worst service quality) are tied into the operations. This was the reason I posted in the regional section.... I wanted to see what other regional pilots thought. Feel free to skip the history section as well... it is there more for some general background info which I assume all of you are pretty aware of.

Also, for what it's worth, I work everday as a pilot and have several thousand hours, and not "just" a college student.

Anyone else with some insight on this topic? You agree or am I talking nonsense???

Can this get moved back into the major and or regional section? That is really the audience I wanted to speak to and what the paper is all about!

 

You didn't mention superior fuel hedging as a possible factor as to why some National/LCC carriers might have an advantage over the majors. I also think to an extent the majors will have a sizeable share of the market thru the commuters because of the markets there serve that the LCC's won't touch. (Saginaw, Flint, ect.) But, it is a good paper.

 

Congratulations on getting an 'A' - you put a lot of effort and thought into it, and did a very good job.

You asked for some feedback, so here comes my two cents . . .

The main premise of your paper is that poor or lacking customer service is the root cause for some of the financial demise of the US air carrier. I agree that customer service is important, however I would argue that commercial aviation is now a commodity business to the consumer and therefore ticket prices are very elastic. A person buys a ticket to get themselves and their bag(s) from point A to point B. What they ultimately care about is getting there for the lowest cost possible. Good customer service is a nice perk but not a requirement. If a customer can pay $30 or $40 less on Airline A instead of Airline B, then Airline A will get the business, including from most business travelers. Companies are trying to reign in costs in this economy at every level.

If you have not read it, I strongly suggest reading "Nuts", a book about Southwest Airlines. My post would be entirely too long if I went into great depth, but in that book the authors discusses for example the very important difference between:

1) excellent customer service comes NOT from "making the customer come first" BUT from management making (1) company employees come first, (2) company investors second, and (3) strangely enough, CUSTOMERS THIRD, or last in this little equation.

2) hub and spoke airline operations versus point to point operations (particularly the tremendous economic efficiencies that can be achieved through better aircraft and crew member utilization - therefore allowing the cost savings to be passed to the customer in the form of a lower ticket price)

The legacies have been trying to brow beat their employees into providing better customer service for years. Funny thing happens however, when your pension is stolen from you, your paycheck is cut by 1/3 to 1/2, etc.

The employee beatings may continue, but the morale, and therefore customer service, will not improve.

In "Nuts", Colleen Barrett, the former CEO of Southwest, comments that over the years countless airline executives have gone to their Dallas headquarters to meet with SWA executives and ask them how they do what they do to make them successful. She said her answer was always the same, there are no tricks, there are no secrets. But what was consistent every time was the response from the other airlines - "well, we can't do that, it would never work." They obviously went to Dallas to eat lunch and not really learn anything. (To be fair, however, changing the corporate culture at any airline is probably like trying to move the Empire State Building in NYC three inches to the left. If it was not built that way, in that spot from day 1, it will not happen)

I agree with newKnow, above. Fuel hedging is an important part of the financial success of airline. Certain airlines have been more successful than others at this strategy. HOWEVER, fuel hedging is one piece of an intricate puzzle, where every puzzle piece must stand on its own before the whole can be considered a financial success.