That is good to hear, as I believe the first player that can actually make this happen is going to have a huge advantage for the first few years. I believe the control of your own feed has value, but the ability to staff your own feed is going to multiply that value in the current pilot labor market.

Would you rather fly a 70 seater for a regional or a major??

 

That’s great to hear. Really is.

 

And an advantage UAL could use, after years of poor management that hurt its position in the market against its peers.

 

Not old or that wise but its simple math.

Frontier and Spirit do not make money on $20 dollar fares. Those fares by design stimulate demand. Frontier and Spirit make their money on their $100-$300 dollar fares (and ancillary revenue).

So how does UA (or DL/AA for that matter) compete with the ULCC's much lower cost base?

By doing exactly as Kirby wants to do.

First, the "global gateways" derive most of their revenue from the huge international network United has. Spirit and Frontier obviously can't touch that revenue at all.

The growth Kirby is talking about will come from the mid continent hubs, ORD, IAH, DEN, and its a two pronged exercise.

First, the hubs are being rebanked to allow more connections and to increase aircraft utilization which drives down cost.

Second, adding small markets to the hub allows United to tap revenue from towns that are too small for a LCC or ULCC to serve. Doing so increases traffic flows and bolsters yields on the larger, more competitive routes. Adding these destinations in turn makes even more small airports possible by increasing the number of possible connections.

For example, if you have a hub with 300 daily flights and 50 cities served, you might be able to trap 40 passengers a day to (insert small regional airport here). If you increase that to 500 daily flights and 70 cities, that number may rise to 60-75 passengers per day thus making the destination viable. By adding 10-15 of said routes, thats potentially 800-1000 new passengers per day coming through said hub.

Now, how does this allow a legacy to compete? Frontier and Spirit by design are already super efficient. They tend not to create mega hubs, because the fixed costs associated are extremely high. Their bread and butter is point to point routes with rock bottom fares to stimulate demand. They also grow to keep unit costs down. This generally works because even their high fares aren't really that high, so you typically don't have to worry too much about RASM falling a legacy on the route isn't willing to compete.

Now circling back to United and the inital talk of ULCC fares, United competes by tapping traffic that the ULCCs simply can't in small markets. There isn't enough O&D demand or the quasi ULCC hub simply isn't big enough.

This in turn fills the majority of United's aircraft higher yielding connecting traffic. United then can sell basic economy to fill the rest of the cabin matching the higher-tiered ULCC fares.

Once United does that, with price being equal, nobody in their right mind books Spirit or Frontier over United. Those passengers get more leg room, entertainment, a seat that reclines, and free refreshments all at the same price.

Thus if there isn't enough O&D traffic for both carriers, the ULCC loses the higher-tiered fares that actually turn a profit.

Case in point:

In 3Q17 Spirits RASM plunged a breathtaking 6.3%, and its profit margin fell to 11ish%. It will be much more difficult for a ULCC to grow aggressively in a legacy stronghold than it will be for said legacy to defend it.

Oh, and ULCC labor costs will go up, not down, only adding more cost pressure to the bottom line.

 

Great news, I truly hope our MEC embraces this outside the box concept. Last go around the LUAL co-negotiating chairman was Phil Ottis, Phil is our negotiating committee chairman today. As I mentioned on a previous thread. Phil was at the table when the company in our JCBA negotiations (UAL - CAL merger contract) offered an outside the box provisional concept to bring some 50 seat flying to mainline flown by mainline pilots under a UAL contract and flown with regional FA’s and regional below the wing staffing. Both MEC’s declined to proceed with pursueing this outside the box concept at the time.

Today Kirby wants more 70/76 seaters. The only way that’s going to happen if these new potential additional aircraft are flown by UAL pilots at size approriate UAL rates. Additionally, thinking outside the box we could prevent these potiental new RJ’s from replacing existing 737 & A319/320 flying and on routes these planes fly. Essentially restricting them to the type of routes Kirby says we need to fly them. Smaller markets into our hubs not hub to hub or hub to large market, ie. EWR to ATL or ORD to DFW.

 

Ah, you consider Uber and Lyft taxis. Riddle me this: if they're taxis, why did you write that a huge number of Ubers and Lyfts are driven by former taxi drivers?

The next step, autonomous vehicles, will completely eliminate human taxi drivers, be it Yellow Cab or (as you half assert) Uber.


Countless pax? That's hilarious! Do they tell you that on the jetway while they're waiting for their rollaboard?


Final suggestion: ask one of the bean counters at your regional what will happen to your precious RJs if Essential Air Service is eliminated. The Trump administration is pushing to eliminate that subsidy. They didn't get it eliminated in 2017 but I'm sure they'll push for with every new budget.

 

Find a $20 all-in airline ticket on Frontier or Spirit and then post the information here for us to verify.

 

The term "taxi" is generic. I guess you needed me to be more specific to refute your obviously terrible comparison.

 

You really are clueless if you believe a middle seat on a 737 in the back of the a/c is more comfortable. I never had to check a rollaboard either. If you do, you will get your bag on the jetway and be off the a/c much quicker than in the back of a 737, I promise!

Trump can eliminate EAS. Trump was smart to welcome Norwegian Air to compete against mainline too! Your precious international flying is at risk.

 

Maybe that’s why United wants to buy Expressjet? Bring all the pilots to mainline and merge the seniority list...that way, there’s no restriction on scope and United can add unlimited 50-110 seat jets.