V-Flyer

United are the latest to be hit again by oil prices and the weak US economy.

BBC News story.

TED is gone as they cut domestic capacity by 17%-18%.


Nick

Sensible decision and follows BA, AA etc.

As I said in the post by Bill S in the main forum, I wonder how long before we see EZY/FR et al cut capacity.

VS surely have got to start chopping some routes or at least suspending them. Although to be fair VS did defer 5 346's last year which must have helped. Without being too doom and gloom but I feel there will be more job cuts around the corner at VS.

Now is the time to be owning a massive desert airfield, I feel many, many more a/c are about to be mothballed.

Originally posted by willd
Sensible decision and follows BA, AA etc.
VS surely have got to start chopping some routes or at least suspending them. Although to be fair VS did defer 5 346's last year which must have helped. Without being too doom and gloom but I feel there will be more job cuts around the corner at VS.

Hopefully any cutting won't be too severe. In most cases these US cuts are aimed squarely at non-profit routes. VS appears to be a cherry picking operator that covers its costs per route, although obviously that won't have taken into account the massive fuel spike. Also, VS don't have a hub to hub setup that operates at a loss to feed core routes. VS also have quite a good J class yield - just look at the size of J on the 346!!!
And if it all goes bad there's always SRB's wallet to save some pride.

I have a feeling that sooner or later VS are going to have to go down the same lines, even though VS are smaller in size compared to the others in terms of fleet size and route network.

If anything, I suspect any VS fleet cuts may revolve around the A340-300.

Back on topic, sensible move by United and I hope that this is all they will need to do.

Originally posted by McMaddog
Hopefully any cutting won't be too severe. In most cases these US cuts are aimed squarely at non-profit routes. VS appears to be a cherry picking operator that covers its costs per route, although obviously that won't have taken into account the massive fuel spike. Also, VS don't have a hub to hub setup that operates at a loss to feed core routes. VS also have quite a good J class yield - just look at the size of J on the 346!!!
And if it all goes bad there's always SRB's wallet to save some pride.

I held your views for a long time but I really don't see how VS cannot go down this route.

They may cherry pick but often are competing against large american carriers with good feed (ORD for example). The middle eastern carriers are also taking alot of traffic off VS, once upon a time VS could pick up pax flying DEL-JFK or DXB-LAX but now ultra long haul routes are being introduced they are taking business away and passengers are chosing to transit at airports other than LHR (BRU, HAM, DXB).

All of the ex LGW routes with exception of MCO and LAS only exist due to VH. If people book less with VH it will be less bums on seats.

VS lack of a hub could hurt it though, if BD scrap LBA-LHR then all passengers that would have flown down to connect to VS could begin to look elsewhere such as MAN for a better easier service.

Worth remembering that whilst there is a large J class a lot of tickets are reward tickets.

Also important to remember that with increase in fuel costs people are less inclined to send freight by air. Instead they will source a product locally to keep costs down.

SRB may well be willing to sell off other companies to keep VS afloat but it hasn't stopped them from rationalising the service (eg IFBT) and won't stop them from doing so in future.


VS have cleverly rationalised in the past (742's mothballed post 9/11 and YYZ/ORD dropped) so I think it will happen. Heck oil has increased over 100% in 6 months!

I think that VS is a totally different kettle of fish to the likes of UA/AA/DL/CO/NW. United and AA are enormous, inefficient behemoths of organisations that have been propped up by chapter 11 and the US govt post 9/11, therefore any unexpected shock like the fuel prices is bound to cause big bother.
VS is a tiny company compared to the big carriers and their routes are surely only operated for profitablilty not necessity. We might see a couple of a/c grounded and the odd route cut but with the fleet already at near enough full stretch I don't think there is too much to give.

In the long run we might look back on this period in an almost fond way as it has almost forced the hand of US majors to up their game and become more efficient. It might even help the environment as less flights are flown and older aircraft are retired.

Sensible move by UA to scrap Ted. This allows them to stop the entire 737 fleet and standardise on an A32x fleet in the ~130 seat aircraft size.

The main benefits I can see are increased aircraft and crew scheduling flexibility from having only a common type of 100-130 seater in use, and increased revenues (or increased FF satisfaction from upgradeability) by reinstating the higher yielding seats in the aircraft.

Mike

Continental now following suit, with an even more aggressive approach - see link

Originally posted by MarkedMan
Continental now following suit, with an even more aggressive approach - see link

Very interesting.

Although the headlines read worse than the actualy truth. CO are actually (like UA) cutting out their older 737 models, which were going to be retired in the next 5 years and replaced with next generation 737s or 739's. So really they have just accelerated. Sad to see so many jobs go.

I wonder if all these US carriers cutting jobs is really because this should have been done years ago but they have survived on US government hand outs. Surely more mergers will be seen.

Originally posted by VS075

If anything, I suspect any VS fleet cuts may revolve around the A340-300.

With the lowest fuel burn in the fleet VS is more likely to keep the 343's around. The 346 ISTBC has the highest cargo loading so they will probably stay...which leaves the 744's...

However as has already been mentioned, the VS fleet is stretched very thin right now, so I don't see any planes leaving VS for a while. What would help is if VS put a standard 744 cabin in place, this way the 744's could be used on all routes.

Originally posted by willd

VS lack of a hub could hurt it though,

LHR isn't a hub [?]

Originally posted by willd


Worth remembering that whilst there is a large J class a lot of tickets are reward tickets.

Just so I know where you are coming from...are you saying VS has a lot of reward tickets in the UC cabin ?

Originally posted by willd

I wonder if all these US carriers cutting jobs is really because this should have been done years ago but they have survived on US government hand outs.

What hand outs? the only type of hand outs were made after 9/11 and these have been repaid.

What has help the US airline and IMHO hurt them more than anything is the US bankruptcy system.

in the 70's, 80's and 90's Braniff, Eastern and Pan Am all folded, AA, Delta and United bought up the assets and expanded to take their place. Maybe we need one to fold to bring the US airline system back to a healthy level....Of course some lunatic will buy up the parts and start the cycle again [:I]

quote]Originally posted by Scrooge
With the lowest fuel burn in the fleet VS is more likely to keep the 343's around. The 346 ISTBC has the highest cargo loading so they will probably stay...which leaves the 744's...

However as has already been mentioned, the VS fleet is stretched very thin right now, so I don't see any planes leaving VS for a while. What would help is if VS put a standard 744 cabin in place, this way the 744's could be used on all routes.
[/quote]

After 9/11 VS just accelerated its plans to get rid of the 742. Sadly this cannot be done this time around, the only thing would be a reduction in 744 routes. Something I cant really see happening unless VH sees a massive decrease in demand for its holidays and thus cant get bums on seats on some of the less frequent Caribbean routes.

LHR isn't a hub [?]

Yes but VS relies heavily on feeder services from BD and other intra European airlines. If they all start to feel the bite and cut services then VS will have less feed. Also VS has in the past done well using LHR as a long haul hub, so connecting Asia with America, but with the increase in excellently run Middle East airlines this sort of business is in decline also.

Just so I know where you are coming from...are you saying VS has a lot of reward tickets in the UC cabin ?

I am not one with the knowledge of how many reward seats each cabin has. But what we could see is less availability of the lowest priced J ticket, which is Z is it not? Also we will see reward seats become harder to get. VX has deliberately modeled its FFP to ensure there are no reward seats on any of its flights as they loose airlines money. Whilst you can argue you pay say £50 extra with each full ticket ten times to enable you on the 11th time to get a reward ticket, it still is more profitable to sell that seat at full whack.

What has help the US airline and IMHO hurt them more than anything is the US bankruptcy system.

Thats what I was referring too.

As I stood in the shower a few mins ago a minor revelation hit me.

So VS are supposed to get 77W's at a good lease rate as compensation for the 788's being delayed.

Now what is to stop VS using the 77W's as a replacement for the LHR 744's allowing them to move over to LGW and be reconfigured into a leisure layout.

The 77W at least IMHO is the perfect aircraft for VS right now, if the lease rates are right keep the darn things and use them to phase out older aircraft.

MMM A VS 77W/ 788 fleet

Dave - THAT'S what you think about in the shower?


Dooooooode. [:0]

Where do Virgin America stand in all of this? I was looking at their website the other day and I noticed that there was no mention of any new routes in the near future.
Does being 'the new kid on the block' make it harder for them in the current financial situation and does anyone know how they are actually doing ?

-Steve

What I'm wondering, given ALL Vegas UA flights are 'Tedded', does that mean Vegas is switching back to mainline, or that UA's atlas drawing department has had it completely removed?

It looks like everything is going back to main line...those that survive that is.

Originally posted by Scrooge
As I stood in the shower a few mins ago a minor revelation hit me.

So VS are supposed to get 77W's at a good lease rate as compensation for the 788's being delayed.

Now what is to stop VS using the 77W's as a replacement for the LHR 744's allowing them to move over to LGW and be reconfigured into a leisure layout.

The 77W at least IMHO is the perfect aircraft for VS right now, if the lease rates are right keep the darn things and use them to phase out older aircraft.

MMM A VS 77W/ 788 fleet

[oo]

I cannot believe I had not thought of this myself. Of course talk about the 77W has died down a lot of the recent months. As has the tender for replacement LGW a/c.

The 77W is an amazing aircraft, the CEO of EK freely admits that without the 77W EK would not be in the position it is today, no other a/c can offer the flexibility/range/density of the 77W.

Originally posted by Stevieboy
Where do Virgin America stand in all of this? I was looking at their website the other day and I noticed that there was no mention of any new routes in the near future.
Does being 'the new kid on the block' make it harder for them in the current financial situation and does anyone know how they are actually doing ?

Not really sure how they are doing. They have been cautious in their FFP as I mentioned earlier.

I believe that one of the reasons for lack of routes is due to DoT restrictions. Couple of rumours doing the rounds hint at services to Hawaii using 319's and new services to ORD. MIA has also been strongly hinted at.