Allegiant Strike
- Thread starter wainscottbl
- Start date
hook_dupin
Well-Known Member
Flat margins and an outlook that would have put Blue on the bottom of the pile is not "doing fine." If I were a stock-holder and I saw all the competitors improve in the 2012-2014 timeframe while my investment stayed flat, I'd demand action.
The same chart, with Allegiant doing well, shows why I think the pilot group has a very strong position as their mediation unravels.
The Spirit story is a good one to tell: the pilot group struck, there was an agreement, and now Spirit is doing better than ever. It's a shame that it took the multi year process of negotiating, NMB mediation, cooling off, and a strike to get there. If I were a Spirit investor, I might ask "How much money could I have made if you, management, would have figured out how to get pilots on your side earlier?"
Making more money is pretty much the goal of corporations. The outsourcing strategy is not unique to the airlines. The idea of pushing out a key part of the value chain so that firms can compete and drive down costs is happening in virtually all sectors.
Pilots and pilot groups need to recognize this trend strategerize accordingly.
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Tommay85
Well-Known Member
Eh, I can jumpseat for free on Spirit out of BQN, and Southwest out of SJU. I'd rather blow torch my nipples off.
I'd rather PAY for couch on JetBlue than ride business/first on anyone else. I feel like they'd have a market if they were patient long enough. Maybe not, but I feel like a proper PR campaign, which is expensive, yes, but could sway people eventually.
McDonalds is probably going to continue to fall pretty hard. Chipotle and Jack in the Box(because of Qdoba) probably won't for example.
I'd rather PAY for couch on JetBlue than ride business/first on anyone else. I feel like they'd have a market if they were patient long enough. Maybe not, but I feel like a proper PR campaign, which is expensive, yes, but could sway people eventually.
McDonalds is probably going to continue to fall pretty hard. Chipotle and Jack in the Box(because of Qdoba) probably won't for example.
Bernoulli Fan
Controller
If I got 7-8% every year, I would call that doing fine. You can always be more greedy, though.
"The pile" has to have like products to expect similar results. JBU so far has had a more quality product; it makes sense that the margins are lower.
This is true, but there is no guarantee that JBU making its product more like NKS will make it more money. As quality declines, I would expect just as many customers to abdicate as to come over from other ULCCs.
ChasenSFO
hen teaser
I don't disagree. However, in the airline industry, outsourcing usually leads to a dive in quality and consistency that is very noticeable to the customer and operational inefficiencies that have effects stretching across the network. Sure, it saves money, but in an industry where most hourly employees are there almost exclusively for the flight and other travel benefits, hiring lower paid people who don't have those perks quickly drives out the proud and passionate to make way for the desperate and apathetic. When Frontier switched from it's own staff at SFO to Swissport, it was like a different airline forever on having to work with them operationally. At what point does the focus switch from squeezing every last penny of profit out of the company to retaining some resemblance of cooperate image and morale? When legacy airlines are setting customer satisfaction goals of 25-35% and on-time goals in the ball park of 50% or less, why even bother to pretend they care about the product, the customer or the employees?
hook_dupin
Well-Known Member
Note that the chart I showed was operating profit: that's simply "revenue vs costs" and is before interest expense, depreciation, and taxes. Once you take all that in, JBLU had a net margin between 2% and 3% for the 2011-2013 period. 3%... Gulp! Investors can do better with much less risk in municipal bonds.
I don't think they'll go full on ULCC, but JBLU's lesson, and the one I'm trying to point out, is that airline consumers are much more price conscious and much less concerned about a higher quality product than those very consumers say that they are. Part of it I think is the difference between consumers and customers. For vacationers, the consumer and customer are the same. However, that's not true for, say, corporate travel. The corporations paying the travel bills may not care about in-seat entertainment or those deliciously awesome blue corn chips. Instead, many companies just care about making the expenses as small as possible.
This gets back to airlines trying to differentiate on quality: they're having a tough time doing it. The "quality focused" airlines of JBLU and Virgin America have had to rethink their corporate strategies some. This is an industry where the "cattle car" airline now leads the satisfaction surveys -it's become a one-dimensional price war. As a result, the strategies that are working the best are those that attempt to keep costs low. Hence outsourcing and vicious labor battles. I think the industry is in someways comparable to the cable TV market. Sure, there may be 8-12 firms in the space nation-wide, but there's only really a few options in each location. Gate slots are to the airlines what government-issued monopolies are to the cable firms. Customer satisfaction is about the same for both cable and the airlines.
ChasenSFO
hen teaser
Seriously? I never would have guessed that. I'm well aware that there is no shortage of people willing to fly Spirit or Allegiant, but I'm honestly shocked that they would be more satisfied with the experience than those on Virgin America or JetBlue...
hook_dupin
Well-Known Member
I was referring to LUV. A decade ago, they were mocked as the "cattle car." Today, people seem happy to stand in line and race for a seat.
mikecweb
Well-Known Member
JetBlue scores higher.
Roger Roger
I am le tired
It's just like politicians. People say they want change in government, but keep electing the same people. Passengers say they're tired of fees and the cattle car model, but when the rubber meets the road they won't pay the premium for a better product.
I think we need to repeal 121, and let safety enter into the equation again. People will be a lot more willing to go with higher ticket prices If they know the cheap option has a statistically significant chance of ending as a smoking hole. (Kidding of course)