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WJ didn't invent this. Many smaller carriers also employ this as a cost/time saving measure. It in no way detracts from safety or otherwise. It actually demonstrates teamwork which I know is a foreign term or even a 4 letter word in some circles.

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......One day, in mid 1976, TXI’s executives had an idea – one that was probably the most productive ideas in the history of the airline business: the notion that lower prices inhere increased demand. This would generate higher load factors and result in higher revenues. The industry was already starting to lean towards deregulation - American Airlines’ “Super Saver” fares were only about a year away.

The executives at Texas Air thought up the whole program. No-frill flights at 50% fare reductions; instead of meals they would serve peanuts. They were, thus, known as “peanuts fares.” TXI held a press conference that December in Washington announcing their intentions to reduce certain fares on less popular flights to half price. This brought TXI national attention, as this was the first cut rate fare with no restrictions, just a flat 50% fare on one flight on each day in certain markets.

The fares went into effect in January 1977, and the affected flights were immediately sold out. Don Burr remarked, “God, we’d never carried more than three people and a dog between here and Salt Lake City and all of a sudden planes were full.” (Peterson, 68) After the “peanut fares,” the airline Texas knew as “Tree Tops” was suddenly turning a profit.

Nonetheless, TXI started experiencing labor strife after its newfound success. Frank Lorenzo was notoriously anti-labor, and one of the airline’s unions went on strike. The strike lasted for 5 months, effectively grounding Texas Air as the pilots refused to cross the picket lines.

Eventually, labor would be part of the reason for Burr’s resignation from TXI. Donald Burr had a plan which he thought, at the least, could bring the non-union employees together. His plan was relatively simple, and would become the cornerstone of PEOPLExpress. His idea was to unleash a worker’s full potential by allowing him to move back and forth between different jobs within the company. It was known as “cross-utilization.” He included a catch, however: employees would be required to buy shares of stock. He thought that if every employee had something of his own vested into the company, it would motivate them to succeed, which would make the company succeed. He threw himself headlong into the idea, spending months doing fine tuning.

Unfortunately, Frank Lorenzo was not as fond as Burr of the plan. He humiliated Burr in front of the other executives, walking out of his presentation after 15 minutes muttering “this is Bullshit.” This childish display left Burr embarrassed and gave him serious thoughts of leaving and starting his own airline. (Peterson, 73-4)

Don Burr finally left TXI nearly three years to the day after the inauguration of the peanuts fares. He wasn’t the only one leaving Texas International however. He brought with him his personal secretary and the director of marketing. The three pulled all the money out of their savings and came up with about US$550,000 – enough to buy them about half an airplane.

They set up an office in downtown Houston, thinking up ideas and making contacts. Burr contacted Herb Kelleher (founder and CEO of Southwest) in Dallas and talked to him about his airline. Kelleher was flattered to have someone try to model their business after his and he allowed some of Burr’s people to come watch his operation for a few weeks. By that time, Burr had lured a few more of Lorenzo’s executives to jump ship and join him in Houston. He had a fairly large sized management team for an airline which didn’t even exist! (Peterson, 96)

From Southwest, Burr compiled his ideas: Buy a cheap, used airplane, sell the seats even cheaper, put it on a short route, and give it a quick turn around, producing a schedule reminiscent of a city bus line. They decided that the Northeast was the best place to operate, with its high volume of traffic. The question was one of where to fly out of. Terminal space in New York was quite hard to come by. Burr’s marketing man suggested with Newark. It was within 15 miles of Manhattan and had an unused terminal building that had been vacant for over a decade. The team settled on Newark.

Donald Burr went to Boston venture capitalist Thomas Lee in the spring of 1980 with his idea:

Take a 737 airplane that’s got 118 seats. Put it on a short hop; say, Buffalo to New York – about an hour’s trip. Charge thirty-five dollars a ticket, less than the cost of driving, and that gets you $4,130. The fixed costs of the fuel, crew, and other essentials-total about $2000 or so, which gives you have over $2,000 gross profit per hour; a profit margin of nearly 100 percent.(Peterson, 99)

With a high density route like Buffalo-New York, there was no doubt that such low fares would fill the plane. The key to his plan was the low fixed costs. He harkened back to his cross-utilization plan fromTXI. Employees would be trained in several jobs, increasing efficiency and boosting productivity. The salaries would be much less than normal airline jobs however; about half. But they would get stock at lower-than-market prices, giving them motivation to succeed and, thereby, boosting productivity. Fares would be collected in flight; soda could be purchased for fifty cents a can, and passengers would be charged five dollars for every checked bag. No revenue source was overlooked. (Peterson, 99)

They decided on the name People Express. When they first went to Wall Street, investors quipped that it “sounds like a communist airline” – a comment not that far off: passengers of PEOPLExpresswould receive a flying experience more in tune with Aeroflot than Pan Am.

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So what is your point? The model is sound from a profit perspective just as the "ownership" of the arline is a productivity booster (once people "get it"). The only problem is that those "fixed costs" did not remain fixed for very long. The only way the model works is if the price of the fare fluctuates with the cost of the flight.

I am sure "Westjetters" put in a little more effort and have a little more pride because it reflects directly on their bottom line. There is nothing wrong with that. this is the same thing that ticks me off every quarter when my payout is anything less that the maximum because I know first hand that the people on the fron t line don't "Get it" performance = profit = profit to share.

If everyone actually worked for the time they were at work we would never have productivity issues. Problem is everyone wants to do as little as they can get away with and still get paid more. That is the mentality of failure.

FWIW Burr had it right

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So what is your point?

No point - just posted an interesting article I found. BTW, I do "get it" and, as an Air Canada pilot have pushed many a wheelchair, carried many a stroller and make a serious effort to make the operation as safe, efficient and beneficial to our passengers as possible.

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......One day, in mid 1976, TXI’s executives had an idea – one that was probably the most productive ideas in the history of the airline business: the notion that lower prices inhere increased demand. This would generate higher load factors and result in higher revenues. The industry was already starting to lean towards deregulation - American Airlines’ “Super Saver” fares were only about a year away.

The executives at Texas Air thought up the whole program. No-frill flights at 50% fare reductions; instead of meals they would serve peanuts. They were, thus, known as “peanuts fares.” TXI held a press conference that December in Washington announcing their intentions to reduce certain fares on less popular flights to half price. This brought TXI national attention, as this was the first cut rate fare with no restrictions, just a flat 50% fare on one flight on each day in certain markets.

The fares went into effect in January 1977, and the affected flights were immediately sold out. Don Burr remarked, “God, we’d never carried more than three people and a dog between here and Salt Lake City and all of a sudden planes were full.” (Peterson, 68) After the “peanut fares,” the airline Texas knew as “Tree Tops” was suddenly turning a profit.

Nonetheless, TXI started experiencing labor strife after its newfound success. Frank Lorenzo was notoriously anti-labor, and one of the airline’s unions went on strike. The strike lasted for 5 months, effectively grounding Texas Air as the pilots refused to cross the picket lines.

Eventually, labor would be part of the reason for Burr’s resignation from TXI. Donald Burr had a plan which he thought, at the least, could bring the non-union employees together. His plan was relatively simple, and would become the cornerstone of PEOPLExpress. His idea was to unleash a worker’s full potential by allowing him to move back and forth between different jobs within the company. It was known as “cross-utilization.” He included a catch, however: employees would be required to buy shares of stock. He thought that if every employee had something of his own vested into the company, it would motivate them to succeed, which would make the company succeed. He threw himself headlong into the idea, spending months doing fine tuning.

Unfortunately, Frank Lorenzo was not as fond as Burr of the plan. He humiliated Burr in front of the other executives, walking out of his presentation after 15 minutes muttering “this is Bullshit.” This childish display left Burr embarrassed and gave him serious thoughts of leaving and starting his own airline. (Peterson, 73-4)

Don Burr finally left TXI nearly three years to the day after the inauguration of the peanuts fares. He wasn’t the only one leaving Texas International however. He brought with him his personal secretary and the director of marketing. The three pulled all the money out of their savings and came up with about US$550,000 – enough to buy them about half an airplane.

They set up an office in downtown Houston, thinking up ideas and making contacts. Burr contacted Herb Kelleher (founder and CEO of Southwest) in Dallas and talked to him about his airline. Kelleher was flattered to have someone try to model their business after his and he allowed some of Burr’s people to come watch his operation for a few weeks. By that time, Burr had lured a few more of Lorenzo’s executives to jump ship and join him in Houston. He had a fairly large sized management team for an airline which didn’t even exist! (Peterson, 96)

From Southwest, Burr compiled his ideas: Buy a cheap, used airplane, sell the seats even cheaper, put it on a short route, and give it a quick turn around, producing a schedule reminiscent of a city bus line. They decided that the Northeast was the best place to operate, with its high volume of traffic. The question was one of where to fly out of. Terminal space in New York was quite hard to come by. Burr’s marketing man suggested with Newark. It was within 15 miles of Manhattan and had an unused terminal building that had been vacant for over a decade. The team settled on Newark.

Donald Burr went to Boston venture capitalist Thomas Lee in the spring of 1980 with his idea:

Take a 737 airplane that’s got 118 seats. Put it on a short hop; say, Buffalo to New York – about an hour’s trip. Charge thirty-five dollars a ticket, less than the cost of driving, and that gets you $4,130. The fixed costs of the fuel, crew, and other essentials-total about $2000 or so, which gives you have over $2,000 gross profit per hour; a profit margin of nearly 100 percent.(Peterson, 99)

With a high density route like Buffalo-New York, there was no doubt that such low fares would fill the plane. The key to his plan was the low fixed costs. He harkened back to his cross-utilization plan fromTXI. Employees would be trained in several jobs, increasing efficiency and boosting productivity. The salaries would be much less than normal airline jobs however; about half. But they would get stock at lower-than-market prices, giving them motivation to succeed and, thereby, boosting productivity. Fares would be collected in flight; soda could be purchased for fifty cents a can, and passengers would be charged five dollars for every checked bag. No revenue source was overlooked. (Peterson, 99)

They decided on the name People Express. When they first went to Wall Street, investors quipped that it “sounds like a communist airline” – a comment not that far off: passengers of PEOPLExpresswould receive a flying experience more in tune with Aeroflot than Pan Am.

People Express made countless easily identifiable mistakes in their 6 or 7 year lifespan. They pretty much wrote the book on how not to run a LCC.

The only info that was of any value was the price stimulation data that allowed others to more accurately estimate CoE's.

Things might have gone a little differently for them had they been better business people and had access to something along the lines of MARS1. Alas, that technology didn't exist in the early 80's.

:cool:

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"I for one find it a great way to clear the cobwebs after sitting quietly for a few hours."

Believe it or not, short haul / domestic flying keeps one's mind pretty busy. I will therefore remain hopeful; pilots aren't likely to develop 'cobwebs' while doing 'their part’ for the operation?

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"I for one find it a great way to clear the cobwebs after sitting quietly for a few hours."

Believe it or not, short haul / domestic flying keeps one's mind pretty busy. I will therefore remain hopeful; pilots aren't likely to develop 'cobwebs' while doing 'their part’ for the operation?

You forget that at 979 miles, WS operates with, quite comfortably, the longest average asl of any scheduled airline in Canada.

The next closest, according to their calculations, is 886 miles.

Grooming with that fancy lid on must be problematic. I bet it keeps falling off when you lean over to cross seat belts!

:cool:

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Grooming with that fancy lid on must be problematic. I bet it keeps falling off when you lean over to cross seat belts!

Bean, why do you need to be so antagonistic? Scratch-Head.gif Does it make you feel superior or something? Do I need to remind you of certain historical facts to bring you back to the level of "mere mortal"?

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Bean, why do you need to be so antagonistic? Scratch-Head.gif Does it make you feel superior or something? Do I need to remind you of certain historical facts to bring you back to the level of "mere mortal"?

Historical facts? Newsflash: No one cares about it anymore. All the players have gone on to bigger and better things. It's ancient history.

Who's being antagonistic?

WestJet's ASL was 979 miles in 2Q 2011, (5.238b asms/138.1 seats per departure/38,750 departures = 979 miles). The other major sched airline reported their ASL as 866 miles during the same quarter.

That makes WJ a longer haul airline, does it not? Surely these numbers can't be wrong? They are calculated by the airlines themselves.

As for the hat comment, don't take life so seriously. It's a hat. I have a closet full of them. When I bend over to pick stuff up and I'm wearing one, they often fall off my head. Get over it.

:rolleyes:

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Historical facts? Newsflash: No one cares about it anymore. All the players have gone on to bigger and better things. It's ancient history.

Who's being antagonistic?

WestJet's ASL was 979 miles in 2Q 2011, (5.238b asms/138.1 seats per departure/38,750 departures = 979 miles). The other major sched airline reported their ASL as 866 miles during the same quarter.

That makes WJ a longer haul airline, does it not? Surely these numbers can't be wrong? They are calculated by the airlines themselves.

As for the hat comment, don't take life so seriously. It's a hat. I have a closet full of them. When I bend over to pick stuff up and I'm wearing one, they often fall off my head. Get over it.

:rolleyes:

Are you drunk? Scratch-Head.gif As much as you wish it were true the "facts" will never be forgotten and besides, who gives a sh1t about ASL - AC flies to LGA about 20 times a day, a destination Westjet couldn't make work, very short distance - very lucrative route. Maybe someday you'll get over your inferiority complex but from your recent posts it looks like you got a way to go. Do yourself a favour and look here for help: CPA

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Are you drunk? Scratch-Head.gif As much as you wish it were true the "facts" will never be forgotten and besides, who gives a sh1t about ASL - AC flies to LGA about 20 times a day, a destination Westjet couldn't make work, very short distance - very lucrative route. Maybe someday you'll get over your inferiority complex but from your recent posts it looks like you got a way to go. Do yourself a favour and look here for help: CPA

Zzzzzz....... I bet you believe everything you read in the newspapers too. :wink_smile:

I'm sure WJ would be able to make LGA work, were it handed the slots that would allow it to operate a decent schedule. I also suspect that they would be able to make the route very lucrative with fares half the going rate, just as they have done pretty much everywhere they have chosen to operate since day 1.

At least we are agreed that WJ is Canada's long haul leader, as defined as the airline that operates the network with the longest average flight length, even with a fleet of 737NG's. Frankly, I'm not quite sure how else you would define it? Surely you don't question the data provided by the airlines in question?

Inferiority complex? That's a laugh.

I simply point out the painfully obvious, such as when I wear a hat, it sometimes falls off when I lean over to pick something up.

I suppose that makes me inferior to the forces of gravity, however, I am not troubled by this, nor do I have a complex around this issue. Regardless, it's something that's being worked on and when Dr. Nefario and his minions who, at this very moment, are slaving away at the problem in my basement, have a solution, I'll be sure to share it with you.

Lighten up. It's the dog days of summer....

:wink_smile:

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At least we are agreed that WJ is Canada's long haul leader, as defined as the airline that operates the network with the longest average flight length, even with a fleet of 737NG's. Frankly, I'm not quite sure how else you would define it? Surely you don't question the data provided by the airlines in question?

I can't understand why this is so important to you. Is there some magic about having the longest ASL that I am not aware of? You're like some goofball at the car club bragging about the fact that his car has bigger lugnuts than everyone else's - so what? I don't know, I've never been in management so maybe there is something about ASL that I don't understand but to me it just looks like another meaningless statistic that bonehead managers (who can't actually fly the airplane) throw around to impress each other - you know; "my ASL is bigger than yours".

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WestJet's ASL was 979 miles in 2Q 2011, (5.238b asms/138.1 seats per departure/38,750 departures = 979 miles). The other major sched airline reported their ASL as 866 miles during the same quarter.

Out of curiosity does the AC figure include JAZZ?

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I can't understand why this is so important to you. Is there some magic about having the longest ASL that I am not aware of? You're like some goofball at the car club bragging about the fact that his car has bigger lugnuts than everyone else's - so what? I don't know, I've never been in management so maybe there is something about ASL that I don't understand but to me it just looks like another meaningless statistic that bonehead managers (who can't actually fly the airplane) throw around to impress each other - you know; "my ASL is bigger than yours".

Without accurate ASL info, it's impossible to compare cost structures between airlines.

If two airlines have identical casm, but their asl is significantly different, the one with the shorter ASL has a tremendous cost advantage.

In 2Q United mainline's asl was 1,820, their regional carriers was 561 miles with a consolidated cost base of 13.85 cents a mile. Southwest's asl was 685 miles with a cost base of 12.49 cents a mile. That info gives both investors and airline management an extremely clear picture of where they stand in the marketplace, and what direction they are likely headed.

Provided the method of asl calculation is identical across the industry, I could care less what the relative ASL's are, as long as they produce sustainable and on-going profit, as well as growth.

I do, however, think many people would be surprised to realize that the airline they thought was the short haul carrier was actually a longer haul airline than the one they would have assumed to be so.

That intrigues me, but no more than why my hat often falls off when I lean over to cross seat belts.

Rich makes a very good point. There's little point in having 2 businesses operating in the same market that provide an identical product at an identical price. If that becomes the case, consumers need only to flip a coin to decide which product they want to choose, and sometimes, the coin flip goes the wrong way, as Canadi>n discovered in the late '90's.

Thus, "visibly unique and easily contrasted".

:wink_smile:

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I can't understand why this is so important to you. ...

Regardless of what beano has written in answer to you the real answer for airline people is 'It does not matter one iota'.

One should worry about one's own airline and not how 'big-a-one' the other fella has. There are not two comparable airlines anywhere in the world. Different markets, different aircraft, different ways of computing the numbers. CASM, ASL, RASM etc are not legally regulated items and an airline can calculate them anyway they feel, so trying to compare one to another is a waste of time.

(p.s. Someone please pass this on to Calin R. who is wont to quote these same comparisions and obviously does not understand the business either)

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Is this Domestic comparison only or international because AC flies MUCH longer stage lengths on the international front where WJ is not a competitor

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Regardless of what beano has written in answer to you the real answer for airline people is 'It does not matter one iota'.

One should worry about one's own airline and not how 'big-a-one' the other fella has. There are not two comparable airlines anywhere in the world. Different markets, different aircraft, different ways of computing the numbers. CASM, ASL, RASM etc are not legally regulated items and an airline can calculate them anyway they feel, so trying to compare one to another is a waste of time.

(p.s. Someone please pass this on to Calin R. who is wont to quote these same comparisions and obviously does not understand the business either)

After watching legacy airlines getting the snot knocked out of them for the better part of 20 years by LCC's world wide, this advice is astounding, yet heavenly music to my ears.

I sincerely hope the advice is diligently and slavishly followed by management who intend on competing against any operation I am ever remotely connected with.

Such advice worked out brilliantly for Mexicana.

:cool:

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Is this Domestic comparison only or international because AC flies MUCH longer stage lengths on the international front where WJ is not a competitor

WJ's intra Alberta ASL is much shorter than their transborder / international asl from Alberta. Alas, the only asl number that matters for WJ is their system asl.

:wink_smile:

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After watching legacy airlines getting the snot knocked out of them for the better part of 20 years by LCC's world wide, this advice is astounding, yet heavenly music to my ears.

Yeah, this all presupposes that LCCs are somehow inherently better. All LCCs have done is destabilize the industry and train the general public to think that they should be able to fly half way across the country for 99 bucks - very much the same thing that Wal-Mart has done to the retail industry.

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Yeah, this all presupposes that LCCs are somehow inherently better. All LCCs have done is destabilize the industry and train the general public to think that they should be able to fly half way across the country for 99 bucks - very much the same thing that Wal-Mart has done to the retail industry.

Pandora's Box continues to open....

http://www.nytimes.com/2011/08/17/business/global/airlines-race-for-slice-of-burgeoning-asia-market.html?pagewanted=2&_r=1&emc=eta1

B)

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I'm sure WJ would be able to make LGA work, were it handed the slots that would allow it to operate a decent schedule. I also suspect that they would be able to make the route very lucrative with fares half the going rate, just as they have done pretty much everywhere they have chosen to operate since day 1.

Exactly where does Westjet currently have fares that are half the going rate? Might have been that way closer to day one but not any more. Compare any Canadian and some US routes against AC and the advertised fare is usually identical......to the dollar.

When I priced out my recent trip to YYG, both AC and Westjet fares were identical. I only chose Westjet because of the direct flight instead of flying via YHZ. However, the AC flight through YHZ might have gotten me home as planned rather than six hours late.

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Exactly where does Westjet currently have fares that are half the going rate? Might have been that way closer to day one but not any more. Compare any Canadian and some US routes against AC and the advertised fare is usually identical......to the dollar.

When I priced out my recent trip to YYG, both AC and Westjet fares were identical. I only chose Westjet because of the direct flight instead of flying via YHZ. However, the AC flight through YHZ might have gotten me home as planned rather than six hours late.

In a commodity business, fares will be matched immediately. It's the nature of the beast. One way fares from YYC-YVR were $294 in 1995 pre WJ and changed overnight to $59 in Feb 1996.

The advent of powerful, relatively inexpensive RMS systems in the early 90's allowed any airline to scientifically "match" fares, but usually heavily fenced to protect the juicy, last minute high yields.

What instantly changes when an LCC enters the market is the legacy carriers ability to charge premium fares for last minute, "gotta go" business travel.

They can use RMS to dance around advance purchase low fares, but having, for example, a $1,200 one way fare on a 450 mile sector between major markets be crushed down to $400 or so completely alters the averaging equation, and therefore, route profitability.

It's this sort of erosion that keeps the brain trust at legacy airlines awake at night.

B)

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