Wja To Lgw

[Thebean]

I'm pretty sure the numbers will indicate Rouge is printing cash. It's all about how costs are allocated. I'm more interested in the consolidated numbers. JetStar was "wildly profitable", but nearly bankrupted the mothership.

I guess we'll see how the numbers stack up over the year, eh?

If things are going as well as you say, yoy margin rankings and BELFs should leap frog significantly up the chart every quarter, not just during the historically best quarter of the year. We've seen no such thing over the past 6 months. Whoops.

Below is 2Q 2014's score card. Given the decline in fuel price yoy, everyone's yoy numbers should be better so that, in of itself, is not particularly impressive.

It's like me saying I make more take home pay this year because I'm spending$40 less a week on gas. Um. Nope. My pay is the same, my expenses have been temporarily reduced.

What would be impressive is an airline significantly moving up in the rankings, which would indicate improvement over and above what would be expected.

It is not unusual for one airlines actions in the market to impact another's especially in duopoly situations. Certain airlines launched what WJ referred to as a "full court press" in 97-98 era which dragged down WJ's earnings. Alas, they dragged down the instigators earnings even more and the white flag was waived within about 18 months.

Cheap fuel is camouflaging the true impact of all kinds of initiatives and strategies on both sides of the border. The street in the US is very twitchy about some of the goings on, especially the industry adding too much capacity. There are many who would not be disappointed to see $90 oil return to, once again, separate the men from the boys.

We'll see numbers starting in about 3 weeks.

2nd Quarter 2014 Operating Margin - with interest expenses as an Operating Cost.

Last years 2Q ranking in ( ).

1. Spirit 21.0% (1)

2. Alaska 18.3% (3)

3. Allegiant 18.2% (2)

4. Southwest 14.8% (5)

5. Delta 13.4% (6)

6. Virgin America 10.6% (12)

7. Republic 9.7% (10)

8. Weighted Avg 9.6% (8) 6.9% avg last year.

9. WestJet 7.21% (9)

10. AAG 7.19% (13, US Airways was 4th)

11. UAL 7.0% (11)

12. jetBlue 6.8% (14)

13. Hawaiian 6.2% (7)

14. Air Canada 3.7% (16)

15. SkyWest -.35% (15)

Break-even load factor

1. Spirit 69.7%

2. Alaska 70.5%

3. Southwest 71.5%

4. Allegiant 72.6%

5. Republic 73.8%

6. WestJet 73.9%

7. Delta 74.200%

8. Hawaiian 74.203%

9. Virgin America 76.0%

10. Weighted Avg 76.7% (78.3% avg BELF last year).

11. AAG 78.2%

12. jetBlue 78.8%

13. UAL 79.3%

14. Air Canada 81.0%

15. SkyWest 84.2%

[FA@AC]

Again with the report card thing? Really???

None of what you just posted has anything to do with how Rouge will make out on a route that it is almost a year away from launching.

What I have learned from your crooning away about the beauty of WS' ability to offer connectivity to its network of 100+ tails from its LGW flights is that BA will sit by and mount no competitive response whatsoever. BA will, however, hit the nuclear button the second Rouge enters LGW with 1 flight per day during the summer peak only.

Ok then.

[Fido]

Again with the report card thing? Really???

I think that as a kid Beaner bamboozled his parents with his report card and he is still trying the same trick.

[Thebean]

Again with the report card thing? Really???

None of what you just posted has anything to do with how Rouge will make out on a route that it is almost a year away from launching.

What I have learned from your crooning away about the beauty of WS' ability to offer connectivity to its network of 100+ tails from its LGW flights is that BA will sit by and mount no competitive response whatsoever. BA will, however, hit the nuclear button the second Rouge enters LGW with 1 flight per day during the summer peak only.

Ok then.

So sorry. I forgot that some people really don't want to know where they fit in the big picture, especially if it isn't exactly consistent with the story that's being told. I guess it's easier to let other people do the thinking for you and all you have to do is repeat the mantra and go about your daily business, like the soma consuming inhabitants of Brave New World.

I'd love to play chess against some of you given the apparent inability to anticipate anything more than one move ahead.

But then again, most people haven't made a living doing so. It isn't altogether surprising to me when people glaze over when presented with an outline of how things will likely play out from a strategic perspective.

On the other hand, I'd glaze over if some of respondents on this thread started to delve into their particular areas of expertise. I haven't a clue how to fix airplanes, perform key f/a duties, and my piloting experience is limited to single engine VFR.

That's why I never comment on such things. I wouldn't have a clue what I'm talking about.

One thing that remains consistent in any industry or business I've been involved with is the front line's solemn belief that they know far more about how to run the business than the "dopes" in the head shed.

Does anyone recall is the unmitigated disaster that ensued when the employee owners took over the running of UAL nearly 20 years ago and influenced a number of very dumb moves that came close to wiping out the airline. Turns out they weren't as smart as they thought they were.

[FA@AC]

That's why I never comment on such things. I wouldn't have a clue what I'm talking about.

Much as you didn't have a clue what you were talking about when you declared that UA or US would fail, that Porter, Sunwing, Virgin America, Frontier, and Interjet would by now be history, and that every other player in the industry in North America would be brought to its knees by a Westjet-Southwest-Volaris alliance. Tsk tsk. Talk about inability to anticipate anything more than one move away.

So forgive those of us who don't think that you're as brilliant as you think you are. You're the only person on this thread who is suggesting that those in the (AC's) head shed are "dopes". I don't consider the people currently running Air Canada or WestJet to be dopes, but there's a guy on this board who fits the description well.

[DEFCON]

Predictions made by anyone are just that. I don't remember anyone calling the AC head shed dopes, but I do think the numbers being generated and discussed suggest that costs at AC aren't as contained, or constrained as they may be at the Beans favoured carrier. On the other hand, it will be interesting to watch the WJ experiment unfold now that that their growth oriented boss has taken the company forward with gigantic expansion plans exposing it to all the pitfalls inherent in said growth.

[Thebean]

Nope. I said they'd bankrupt themselves, and they did.

Killing off airlines is like trying to wipe out cockroaches. There's always another drain for them to climb up.

Virgin America's cumulative documented losses are over half a billion dollars. It's a hole i suspect they'll never dig themselves out of and now they are being pasted by a reinvigorated JetBlue with Mint as well as others upgraded transcontinental flying as well as an insane decision to try Love Field short haul. They are an example of an airline who's ranking on the Scorecard can be expected to slip, and slip badly this quarter.

The privately held outfits on the list are cash flow operations. Were they net profitable with sufficient profitability rather than "treading water" profitabity, they'd have been taken public long ago.

Investors don't pump money into high capital cost ventures for charity.

Now, in Porters case, they hit a home run not from their core business, sched flying, but from the sale of bricks and mortar. Maybe the core business is bricks and mortar? In any event, the windfall from that sale allows them to underwrite the operation for a long time to come if they choose to do so.

In my mind, a very telling sign is Porter's unwillingness to add to the core Q400 fleet to expand what is purported to be a profitable operation. Sure, they've added Pittsburgh, but without an any additional airframes, it comes at the expense of flying elsewhere. Perhaps someone else would care to do the analysis to figure out what frequencies were cut elsewhere to accommodate the new flying? Why do i know no one on this board is up to that challenge?

Strategy in a hyper competitive, high stakes business requires lots of head fakes and deception. Do yourself a favor and familiarize yourself with the efforts the allies went to keep axis powers completely unbalanced as to what they were really up to. The axis wasted all kinds of energy focussing on all kinds of red herrings as a result of the allies "bodyguard of lies". The allies had the axis utterly convinced that Norway was to be invaded when nothing could have been further from the truth. Do some homework on just how many German soldiers were pulling their puds in Norway in May 1945. Now consider Crandell's comment that the "airline business is the closest thing there is to legalized warfare".

In any event, I judge airline success on P&L over the long term, not the ability to keep the doors open for business to meet the payroll, which is the focus of those on the frontline. As long as they get a paycheck every 2nd Friday, larger matters are immaterial to them.

I have never suggested anyone anywhere is a "dope". I pointed out that in any business I have ever been associated with that front line staff tend to have a habit of believing they know far more about business matters than those in senior management.

I do tend to question strategies that have resulted in very obvious outcomes on numerous occasions in the past and wonder why some believe that if the strategy is repeated, the outcome will somehow be different in the future.

It's like a bad carpenter constantly nailing his thumb and wondering why his thumb always hurts.

There are always anonymous genius trolls on every board poking holes at everything without ever producing any sort research or evidence to support their musings. They read what they want to read and glaze over anything that doesn't fit their preconceived notions.

If they were as smart or as good as they think, they should / could easily parlay that knowledge into a significantly higher paying line of work. Funny how that doesn't happen that much, eh?

There are a couple of notable exceptions on the board and they know who they are.

As for the rest? It's all part of the entertainment.

[Thebean]

Predictions made by anyone are just that. I don't remember anyone calling the AC head shed dopes, but I do think the numbers being generated and discussed suggest that costs at AC aren't as contained, or constrained as they may be at the Beans favoured carrier. On the other hand, it will be interesting to watch the WJ experiment unfold now that that their growth oriented boss has taken the company forward with gigantic expansion plans exposing it to all the pitfalls inherent in said growth.

I'd argue that the "gigantic expansion plans" occurred long ago when WJ was expanding at a rate of 30-40% per annum.

Adding 5 tails to a fleet of 130+ aircraft does not meet the definition of "gigantic expansion" in my world.

[FA@AC]

I have never suggested anyone anywhere is a "dope".

I have. I remember reading a number of years back about the pickle a former executive of WestJet who considers himself the most brilliant individual on earth got himself and his company into when his 007 caper came to light. "What a dope!" I thought. I think I even said it out loud.

[Maverick]

I have. I remember reading a number of years back about the pickle a former executive of WestJet who considers himself the most brilliant individual on earth got himself and his company into when his 007 caper came to light. "What a dope!" I thought. I think I even said it out loud.

My oh my, when threads don't go the way you like you become a very petty, bitter chap, or chappess. I don't know your gender or actually care for that matter...

[FA@AC]

My oh my, when threads don't go the way you like you become a very petty, bitter chap, or chappess. I don't know your gender or actually care for that matter...

Nah, I just find it very funny that Bean needs to belittle anyone who doesn't lap up his version of things. It is a bit rich given both what he became famous for Canada-wide and for and his history of inaccurate predictions here.

[Thebean]

It inevitably heads that direction when this, and a couple of other rabid apologists are incapable of formulating a coherent argument in support of their statements.

It is a further example of how people don't think things through, perhaps for no thought of their own.

When I was a busboy at The Marble Works in Ottawa in the summer of 1979, I didn't need to think anything through. I just had to clear tables for $2.50 an hour + tips and leave Walter and Stephan Krepskito figure out how to make sure I got paid twice a month. We thought they were dopes, too. Turns out they were two of the smartest restaurantuers in the region.

Have you ever stopped to consider why some lawsuits that seem to be slam dunks are settled amicably with a nice donation to worthy charitable organizations? Probably not, I'd venture to guess.

WJ lost far more money trying to create its own reservation system. From what I heard, the internal cost was far in excess of $50m. Then there was the Sabre cutover fiasco. How about Hamilton short haul losing about $750k a month? I could come up with many more examples of dumb things airlines have done, including WJ.

The key is ensuring the smart moves translate into considerably more black ink than red ink.

Those scorecards, which have been published for about a decade now, are a pretty good indicator of who's consistently making smart moves and conversely, those that for various reasons, often self inflicted, that seem to continuously swim in sand.

It's not a complicated business. Design a company with capacity and infrastructure to match economic demand for 12, or very close to 12 months a year and you have it made in the shade.

If the company is designed to maximize revenue for 3-4 months a year, it is pretty obvious it is going to continuosly run into trouble. Sure, cheap fuel will keep the dragons away for a while, but sooner or later, that will change and it's back to the same old, same old.

I completely understand why that concept is an anathema to labor because the solution leads to a very unpalatable solution.

For the record, I've never really understood the "swing capacity" argument. How does it work again?

Use cheap aircraft and expensive labor to add capacity when times are good, and remove that cheap capacity when times are tough or during slow seasons?

Wouldn't it make more sense to remove the high cost capacity when times / seasons are tough and leave the lower cost capacity in place?

[FA@AC]

It inevitably heads that direction when this, and a couple of other rabid apologists are incapable of formulating a coherent argument in support of their statements.

And you are invariably lead to further attempts to belittle anyone who has a view that differs from yours. The quote above is an example.

Several coherent arguments have been made by those who don't agree with you about what is likely to happen at LGW and LHR next year. VS--a carrier whose past management you, for reasons I don't understand, hold in very high esteem--operated quite differently at LGW and at LHR for years, so that was mentioned. In response to your "HUB/SPOKE" lecture, it was pointed out to you that LHR is, in a way, an AC HUB given Star Alliance connectivity there. You, if I read your post correctly, suggested that both labour costs and hard product offerings for BA at LHR and LGW were the same. I pointed out that you had that wrong. Examples of differing pricing at different, nearby airports were also cited (LGA/EWR, BWI/DCA, MIA/FLL) to suggest to you that low yields at one airport don't always trash yields at nearby ones. You have been singing away about how wonderfully WestJet's LGW flights will connect to the rest of its network and have made no mention of how BA might respond (should they bother to respond), yet AC, according to you, is poking the BA hornet's nest with its planned, seasonal, one daily LGW frequency.

These arguments may be valid or they may not be, but they are coherent. But you are one of those who, in your own words "reads what they want to read and glazes over anything that doesn't fit their preconceived notions". Those notions have a long history of leading you to proclamations that haven't been any more accurate than anybody else's here.

[Thebean]

I last had contact with David Tait more than 15 years ago when he was with Virgin.

At that time, Virgin was doing a lot of interesting things and was highly respected in the industry by people that, with all due respect, have accomplished quite a bit more than I suspect you have in your rather anonymous career. Perhaps you'd like to share your background so we can all assess the degree of your vast experience? Nah, I didn't think you would. It's more fun being an anonymous troll. In any event, David Tait was sufficiently well thought of to have been hired by AC.

However, note the key statement: At that time.

I haven't seen David, nor do I know what he's up to for something around a dozen years now.

If LHR is a hub, and a secondary one at that, why would you bust it by siphoning traffic away from it to serve identical destinations? As pointed out earlier, other than obvious high density, short haul business routes and Las Vegas, BA does not allow any overlap on flights offered from LGW. They know precisely what would happen if they did. Jetstar does the same. They completely isolate the n/s service on the sub brands to minimize the impact of canibalization and yield erosion. Its a lesson that was learned the hard way.

And if LGW was so critical to the network, why has it taken 30 years or more to come to that conclusion, and then only after a competitor announced that it had acquired slots there?

And is there any truth to the stories I've heard from more than one pretty reliable source that a certain airline announced service to LGW without having applied for, let alone received approval from the slot regulator for summer 2016 frequencies?

And if BA pays its LGW f/a's less, with more efficient work rules, why did they not bother creating a sub brand to sell the product. It's British Airways. Not British Airways "Blighty".

Most people would consider LGA the "business" airport in the NYC area, given its proximity to Manhattan yet fares from YYZ to both LGA and JFK tomorrow are widely available at $327 all in. EWR gets a premium only because it has yet to see LCC competition on that route. Porter is not LCC competition. Not with their casm.

YYZ - FLL / MIA are priced virtually identically in the next few days. No premium to be had there either.

YXX-YYZ is sold out Friday at cheap rouge fares. There are seats available on every YVR -YYZ departure. Had YXX-YYZ not existed, the vast majority of those passengers would have made the hike to YVR as they likely did last year and paid the higher fare, which, according to folks here, is a highly profitable route, even with high mainline costs.

With empty seats at the mainline, there might be a temptation to start cutting back mainline capacity on YVR-YYZ down the road. What's the point of flying empty capacity around when the customers that used to fill the seats have headed down the road to avail themselves of cheaper fares on the self inflicted competitor?

That's how yield erosion and canibalization works in real life.

In the words of the only airline CFO I'm aware of who never presided over an operating loss in a 10 year+ career, "it's the pennies that make the dollars".

[DEFCON]

“Adding 5 tails to a fleet of 130+ aircraft does not meet the definition of "gigantic expansion" in my world”.

But those five tails are the beginning, I presume, of grander international plans. The aircraft are older, of a different type and the new operations will take the fleet far from home base.

Although the tails are smaller, they’re becoming numerous, which in my view makes Encore a large piece of the expansion plan.

Taken together and coupled with the fact all this activity was never part of the founders original game plan makes it fair I think to see the expansion plans as ‘gigantic’ in scope.

[FA@AC]

Goodness me, more David Tait worship now? You have completely missed the point. VS operated differing strategies at LHR and LGW for years, and I gather that in your view it was correct to do so. When AC does the same you write volumes about what a mistake it is making. Maybe you'll be good enough to remind me of when anybody described LGW as being "critical" to AC's network. It's one station just like LHR, just like EDI and just like MAN. Maybe the route will do well. Maybe it won't. AC has, btw, already operated a summer program to LGW. It hasn't taken AC 30 years to become interested in LGW.

As for yield erosion at LHR, you might be mistaken about the difference in yield between high- and low-end stuff during the summer season. The lowest fares aren't all that low. The highest (J and Premium Y) fares are less high and/or sold less frequently than they are at other times of the year. J class sales to Europe are common in summer. Belittle that as an incoherent argument if you like, but you have already back peddled from your claim that yields across the board will tumble, and you now posit that perhaps only premium yields will.

Maybe you should have stuck with your example of HND/NRT to illustrate your point about yield damage. You should continue to ignore the "incoherent" argument of American carriers having awful slot times at HND as being the reason they do poorly there.

[Thebean]

More anonymous ramblings.

Ok. You don't like David Tait. I get it. Without knowing your background, I'm not sure why anyone should really care. In the day, he had the ear of at least a few of the world's business icons. I doubt you do. Enough said.

Who's back pedaling on yields? They are going to drop in precisely the same way they have dropped everywhere else WJ has launched services.

Do we really have to go over the difference between operating competing services from the same hub again?

From LHR, Virgin operates to

Aberdeen

Atlanta

Boston

Chicago

Delhi

Detroit

Dubai

Jo'Burg

Lagos

Los Angeles

Miami

Newark

JFK

San Francisco

Shanghai

Washington

From LGW, Virgin operate to:

Antigua

Barbados

Cancun

Havana

Las Vegas

Montego Bay

Orlando

St Lucia.

Do you see the pattern? They don't operate competing flights from two nearby airports. There's probably little stopping Virgin Atlantic from operating LGW-JFK or LGW-LAX, but they don't, and for long established, universally understood reasons.

The mistake is not necessarily operating from two airports in major metropolitan areas, it's dividing services to the same market between the two. You might be able to get away with it from mega cities like NYC, but from smaller markets like Toronto?

Not such a good idea, as has been learned over and over again by countless airlines and even airlines in Canada when it was possible to operate to BC from the Muni and YEG, but correctly deemed stupid to do so.

I don't have my old AC/ CP printed scheds handy, and they only got back to 1995, but it's been a long time since AC was in LGW.

http://www.acl-uk.org/reportsStatistics.aspx?id=98&subjectId=27

Norwegian launched daily service from LGW to WAW this summer. I doubt you'll see BA rush over to LGW to offer competing service, even with the lower cost flight crews you mentioned. Why would they duplicate, dilute and cannibalize existing service and after already having spent years unwinding the Gatwick mess.

I'm still awaiting the universal argument that is presented to explain the actions. It's always a variation of the "well, things are different in the Canadian market".

They aren't.

[J.O.]

Speaking of ramblings, you're the airline industry answer to the Taliban. Your view of the world simply can't be wrong, no matter how many times the rest of the world fails to follow your heavily blinkered path. Why don't you go enjoy your retirement and put it to rest for a while. There's a minions movie coming out soon. You should go see it, it might just lighten you up a tad. God knows you need it.

[runaway]

My oh my, when threads don't go the way you like you become a very petty, bitter chap, or chappess. I don't know your gender or actually care for that matter...

The Bean cheerleader to the rescue again.....not!

[runaway]

Bean's posts have become repetitive and somewhat redundant. The same info with a different spin and always posts questions with narcissistic overtones. You seem more infatuated with Air Canada's inevitable failure (in your mind) than your beloved Westjet. Something doesn't add up!

[Fido]

From LGW, Virgin operate to:

Antigua

Barbados

Cancun

Havana

Las Vegas

Montego Bay

Orlando

St Lucia.

Do you see the pattern?

Yup, I see the pattern.

Virgin operate to vacation destinations from Gatwick. They leave the higher yield traffic at Heathrow.

[Thebean]

And they don't mix the two.

Taliban? That's a new one.

I don't want to see anyone fail. In fact, I'd prefer to see the opposite, but that will only occur on a consistent, long term basis if organizations avoid rash and ultimately pointless strategic decisions.

I absolutely understand how AC would be threatened if WJ had figured out a way to get the slots required to operate 7 or 8 daily round trips from Canada to LHR. That would entail a sledgehammer approach.

But is it really worth the risk blowing up the LHR goldmine over a couple flights a day from Canada to LGW?

I doubt it, but that sort of reaction is deeply embedded in the DNA. It hasn't worked before, so I'm not exactly sure why it is thought it will work this time around but I guess we'll see what happens.

TTFN. Got some more travelin' to do with some gigs in exotic locales. That'll be me doing my roadie impression with the PRS 22 in T2 YYZ later this week, and possibly YUL Saturday morning, depending on southbound loads.

[Maverick]

Bean's posts have become repetitive and somewhat redundant. The same info with a different spin and always posts questions with narcissistic overtones. You seem more infatuated with Air Canada's inevitable failure (in your mind) than your beloved Westjet. Something doesn't add up!

Okay, you're good at chucking sh!t.

However, since you've pointed out that something doesn't add up why don't you enlighten us.

[DEFCON]

Dagger cheerleads for AC and Bean for WJ.

I don’t understand why some take their commentaries so personally, they're just about the business and this is an aviation chat forum after all.

[Fido]

Lets see:

Lufthansa operates to both JFK and EWR

Airlines fly to SFO, SJC and OAK

Delta trying to go to both DFW and DAL

Some airlines go to JFK, EWR and LGA

Because they feel they can make money.