American to compete with ULCCs.
10-29-2015, 10:08 AM
#11
Gets Weekends Off
Joined APC: Dec 2005
Posts: 8,902
Originally Posted by TallFlyer
While from a regulatory standpoint you're right, I'm curious what the LCC's insurance underwriters would have to say on that.
Learning all about airline flying and CRM is one thing on an 60-76 seat aircraft that actually has a direct connection from the yoke to the control surfaces, perhaps entirely another in Fifi with 200 people in the back.
Learning all about airline flying and CRM is one thing on an 60-76 seat aircraft that actually has a direct connection from the yoke to the control surfaces, perhaps entirely another in Fifi with 200 people in the back.
What happened to the concept of niche? Isn't it smarter for Legacies to to stay in their niche?
10-29-2015, 10:08 AM
#12
Gets Weekends Off
Joined APC: Dec 2009
Position: Airplane
Posts: 2,385
I'm not involved in hiring for Spirit, but just seeing things on APC, most pilots being hired on at Spirit have upwards of 6000-8000 hours, a few thousand hours of TPIC and some have extensive international experience.
I think to insinuate that Spirit hires pilots at ATP minimums is wrong.
I think to insinuate that Spirit hires pilots at ATP minimums is wrong.
10-29-2015, 10:11 AM
#13
Gets Weekends Off
Thread Starter
Joined APC: Jan 2009
Posts: 1,459
Originally Posted by Lobaeux
Yes, it is.
The question is, does Scott Parker have enough time and leeway to absorb criticism about lower ticket prices, lower perceived RASM and decreased expectations, EVEN if the number of seats and routes that will compete with the ULCCs is relatively low. It will be interesting to see the following results and expectations AFTER this is initiated, although I would expect there to be NO breakout on the effect this strategy has to lower revenues.
If the perceived affect of this change in strategy (which I believe will actually be small, regardless of amount of press this is getting) lowers expectations, revenues and therefore affects the stock, he may not be in a job for too long.
Maybe I'm missing something, but I really see this as more of a "story" than anything else. The amount of seats being offered at this price will probably be low and will have virtually little affect on Spirit or Frontier.
Now, if American prices EVERY seat on EVERY route that it competes with an ULCC, that would be something, but IMO you're going to see no more than 5 to 10 of available seats, but maybe less available at these prices.
The question is, does Scott Parker have enough time and leeway to absorb criticism about lower ticket prices, lower perceived RASM and decreased expectations, EVEN if the number of seats and routes that will compete with the ULCCs is relatively low. It will be interesting to see the following results and expectations AFTER this is initiated, although I would expect there to be NO breakout on the effect this strategy has to lower revenues.
If the perceived affect of this change in strategy (which I believe will actually be small, regardless of amount of press this is getting) lowers expectations, revenues and therefore affects the stock, he may not be in a job for too long.
Maybe I'm missing something, but I really see this as more of a "story" than anything else. The amount of seats being offered at this price will probably be low and will have virtually little affect on Spirit or Frontier.
Now, if American prices EVERY seat on EVERY route that it competes with an ULCC, that would be something, but IMO you're going to see no more than 5 to 10 of available seats, but maybe less available at these prices.
Further to your point, I find it interesting that Parker, the progeny of the ULCC king BF, and top dog of the most prolific LCC in US history, now finds himself Captain of the new big legacy America West. He may know a thing or two about LCCs, and have the guts to act on those intuitions. It may be a good thing, or perhaps a bad thing, in the eyes of AMR stockholders.
10-29-2015, 10:13 AM
#14
Gets Weekends Off
Thread Starter
Joined APC: Jan 2009
Posts: 1,459
Originally Posted by ShyGuy
Didn't they hire some Riddle kids with 250 hrs? Supposedly they did just fine with Fifi.
Problem is it doesn't seem that the ULCC is focusing on the DFW-LBE type routes (avoiding PIT), instead, they are doing the big ones like SAN-ORD, DFW-ATL, ATL-ORD, pretty much major hub services and not only that, quite a few hub-to-hub flights. ULCCs are no longer going for the niche outside airports like Allegiant does. The route network now more than ever does look like a direct attack on AA. It isn't surprising to see AA react on a pricing scheme. One thing that is clear is the airline-within-an-airline concept won't work. Uni Ted, Delta Song, Continental Lite, all failed. So keeping it all the same and matching certain seats on price alone may be a good strategy. Delta does something similar too in terms of no seat assignment, no checked bag, a bare minimum fare. Time will tell how it shakes out but it is the world's largest airline now so they will make some tweaks and changes here and there.
Problem is it doesn't seem that the ULCC is focusing on the DFW-LBE type routes (avoiding PIT), instead, they are doing the big ones like SAN-ORD, DFW-ATL, ATL-ORD, pretty much major hub services and not only that, quite a few hub-to-hub flights. ULCCs are no longer going for the niche outside airports like Allegiant does. The route network now more than ever does look like a direct attack on AA. It isn't surprising to see AA react on a pricing scheme. One thing that is clear is the airline-within-an-airline concept won't work. Uni Ted, Delta Song, Continental Lite, all failed. So keeping it all the same and matching certain seats on price alone may be a good strategy. Delta does something similar too in terms of no seat assignment, no checked bag, a bare minimum fare. Time will tell how it shakes out but it is the world's largest airline now so they will make some tweaks and changes here and there.
10-29-2015, 10:36 AM
#15
Gets Weekends Off
Joined APC: Feb 2015
Position: Downward Dog
Posts: 1,877
Originally Posted by ShyGuy
Spirit has gone deep into DFW, ORD, and FLL/MIA market which are all strong AA hubs. What do you expect, AA sit back and not compete?
10-29-2015, 11:08 AM
#16
Gets Weekends Off
Joined APC: Jul 2013
Posts: 4,695
Originally Posted by Autothrust
They don't need a price war. The big three just need to do a few months of preferential hiring from the LCC's. It would only take a few months at 100 per the big 3 before they seriously hurt the LCC's ability to expand.
"Back in the day" (mid-late 90's), Frontier was having a bit of an issue. UAL was hiring a decent amount of Frontier's CA's. Naturally, the F9 CA's were pretty well networked. But at that time, they ALSO did most, if not all of their training at the TK. Hmmmmmmmmm. But it was to the point that it impacted Frontier's staffing.
Originally Posted by JoeyMeatballs
Sadly, I'm not so sure. They could hire anyone with ATP mins to fly an Airbus
But that WASN'T the point he was making.
Originally Posted by Lobaeux
I think to insinuate that Spirit hires pilots at ATP minimums is wrong.
But if you were to take a cross section of the demographics, Spirit probably wouldn't be that far off from the legacies on a per new hire/per specific back background, etc.
10-29-2015, 11:23 AM
#17
Gets Weekends Off
Joined APC: Jan 2010
Position: Representing the REAL Delta
Posts: 857
Originally Posted by TallFlyer
While from a regulatory standpoint you're right, I'm curious what the LCC's insurance underwriters would have to say on that.
Learning all about airline flying and CRM is one thing on an 60-76 seat aircraft that actually has a direct connection from the yoke to the control surfaces, perhaps entirely another in Fifi with 200 people in the back.
Learning all about airline flying and CRM is one thing on an 60-76 seat aircraft that actually has a direct connection from the yoke to the control surfaces, perhaps entirely another in Fifi with 200 people in the back.
10-29-2015, 11:39 AM
#18
Gets Summer Off
Joined APC: May 2009
Position: AA
Posts: 667
I always thought the design philosophy of the A320 was to accommodate 300 hr. wonder pilots in Africa or the developing region of your choice. Granted, the way the industry is here in the US, Airbus pilots generally have much more experience, but I think it's fair to say you could train almost pilot to fly one.
As for the competiton, I don't know why this is a shock. It was before my time, but Parker and the team successfully put the screws to Southwest in PHL ten years ago. Sure, LCC's costs were much lower than AA's are today, but the principle of matching or even beating fares on nonstop routes with direct competition worked, because they could still fill the plane with profitable connecting traffic. I think that will still work today. So if AA has to eat it on a few seats from DFW to SAN, they'll probably still be able to come out ahead on the flight with the revenue from everyone connecting from XNA or OKC or wherever.
As for the competiton, I don't know why this is a shock. It was before my time, but Parker and the team successfully put the screws to Southwest in PHL ten years ago. Sure, LCC's costs were much lower than AA's are today, but the principle of matching or even beating fares on nonstop routes with direct competition worked, because they could still fill the plane with profitable connecting traffic. I think that will still work today. So if AA has to eat it on a few seats from DFW to SAN, they'll probably still be able to come out ahead on the flight with the revenue from everyone connecting from XNA or OKC or wherever.
10-29-2015, 12:47 PM
#19
Gets Weekends Off
Joined APC: Oct 2008
Posts: 1,236
Originally Posted by Autothrust
They don't need a price war. The big three just need to do a few months of preferential hiring from the LCC's. It would only take a few months at 100 per the big 3 before they seriously hurt the LCC's ability to expand.
Also I believe the legacy flow through agreements would prevent this from being a possibility anyways.
10-29-2015, 01:23 PM
#20
Gets Weekends Off
Joined APC: Nov 2012
Position: 1900D CA
Posts: 3,403
I really don't see the fight between Legacy and LCC/ ULCCs having much to do with pilot hiring.
This is a fight for market share. There is a new, lowest cost competition, and the big guys are fighting back. Really has nothing to do with hours, atps, pilot hiring. Its simple business competition, has nothing to do with us pilots.
That being said, I think this will be a very interesting and important fight. I'm a Frontier pilot, so I will watch closely. I know that American is fighting Frontier hard on DEN-PHX and MCO-PHL. My take on it is that as long as oil prices are so low, and American is making a billion plus in profit, why shouldn't they fight hard against the ULCCs? They are making so much money right now, they basically have to spend it to defend market share. Spirit overlaps a ton of domestic American routes, of course they will fight back.
I wonder what percentage of their economy class seats will be delegated their new ultra low fare tickets? I wonder the same about Deltas 'basic economy.' This seems like a much better idea than the TED, Song attempts of the past. This model gives them much more flexibility and still get to sell the high dollar tickets to subsidies the low cost, low perks fares.
As long as they sell a few $1,000+ First Class tickets and some Business and expensive economy tickets, they can certainly afford to sell sub $100 tickets with no perks. Especially when gas is $1.50 a gallon.
The ULCCs have a much lower CASM, about 6 cents or less, compared to Americans 10+ cents, but they certainly charge way more for a good amount of their tickets.
Seems like a hard fight ahead. A rise in gas prices should help out the ULCCs. But in the meantime, I think they've got some competition.
This is a fight for market share. There is a new, lowest cost competition, and the big guys are fighting back. Really has nothing to do with hours, atps, pilot hiring. Its simple business competition, has nothing to do with us pilots.
That being said, I think this will be a very interesting and important fight. I'm a Frontier pilot, so I will watch closely. I know that American is fighting Frontier hard on DEN-PHX and MCO-PHL. My take on it is that as long as oil prices are so low, and American is making a billion plus in profit, why shouldn't they fight hard against the ULCCs? They are making so much money right now, they basically have to spend it to defend market share. Spirit overlaps a ton of domestic American routes, of course they will fight back.
I wonder what percentage of their economy class seats will be delegated their new ultra low fare tickets? I wonder the same about Deltas 'basic economy.' This seems like a much better idea than the TED, Song attempts of the past. This model gives them much more flexibility and still get to sell the high dollar tickets to subsidies the low cost, low perks fares.
As long as they sell a few $1,000+ First Class tickets and some Business and expensive economy tickets, they can certainly afford to sell sub $100 tickets with no perks. Especially when gas is $1.50 a gallon.
The ULCCs have a much lower CASM, about 6 cents or less, compared to Americans 10+ cents, but they certainly charge way more for a good amount of their tickets.
Seems like a hard fight ahead. A rise in gas prices should help out the ULCCs. But in the meantime, I think they've got some competition.
Thread
Thread Starter
Forum
Replies
Last Post
