UAL's Tilton disses LCCs
07-23-2006, 02:26 AM
#1
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UAL's Tilton disses LCCs
United chief sees edge in long haul over discounters
Only major carriers can offer worldwide service, Tilton says
By Ameet Sachdev
Tribune staff reporter
Published July 21, 2006
Low-cost airlines will "never" fly long-distance routes to China nor short hops to smaller cities because those flights don't fit with their economic model, said United Airlines Chief Executive Glenn Tilton.
The only domestic airlines that can offer such comprehensive service, Tilton said in a speech at a Chicago aviation conference Thursday, are the majors, such as United, American Airlines and Delta Air Lines.
"The simple Southwest [Airlines] model, although compelling from a cost perspective, will never serve Shanghai nor will it ever serve Springfield, Ill.," he said, referring to the leader of the low-cost carriers.
Southwest and other discount airlines use a single-type of plane to offer frequent flights to smaller airports in major cities, while United and other large carriers generally fly around the world using multiple types of planes.
Some in the aviation industry beg to differ with Tilton. They cite examples of low-cost carriers in other countries eyeing international routes.
Virgin Blue Airlines, partly owned by English billionaire Richard Branson, recently secured permission from the Australian government to introduce flights from Sydney to Los Angeles. The airline has said it could be ready to offer the flight by next year.
Australia's national carrier, Qantas, could be vulnerable if that occurs. The L.A.-Sydney route reportedly accounts for as much as 20 percent of the airline's profit.
On the heavily traveled New York-London route, two new airlines, Maxjet Airways and Eos Airlines, provide all-business-class flights at lower prices than British Airways.
"I think it's very misleading for anyone to assume that United has an advantage on long-haul routes over low-cost carriers," said Matthew Andersson, senior aviation consultant at CRA International in Chicago. "Their long-haul routes are not immune from more competition."
Southwest has said it may expand to international routes in a few years. The Dallas-based carrier gained knowledge about long-haul flights through a partnership with ATA Airlines, cemented in a 2004 deal to acquire gates at Midway Airport. ATA flies to Hawaii and Mexico.
Long-haul flights are more of a possibility for low-cost carriers thanks to new, more fuel-efficient aircraft expected to be arriving soon.
The Boeing 787 Dreamliner, which is scheduled to enter service in 2008, promises to fly across the oceans using 20 percent less fuel than similar midsize planes.
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Only major carriers can offer worldwide service, Tilton says
By Ameet Sachdev
Tribune staff reporter
Published July 21, 2006
Low-cost airlines will "never" fly long-distance routes to China nor short hops to smaller cities because those flights don't fit with their economic model, said United Airlines Chief Executive Glenn Tilton.
The only domestic airlines that can offer such comprehensive service, Tilton said in a speech at a Chicago aviation conference Thursday, are the majors, such as United, American Airlines and Delta Air Lines.
"The simple Southwest [Airlines] model, although compelling from a cost perspective, will never serve Shanghai nor will it ever serve Springfield, Ill.," he said, referring to the leader of the low-cost carriers.
Southwest and other discount airlines use a single-type of plane to offer frequent flights to smaller airports in major cities, while United and other large carriers generally fly around the world using multiple types of planes.
Some in the aviation industry beg to differ with Tilton. They cite examples of low-cost carriers in other countries eyeing international routes.
Virgin Blue Airlines, partly owned by English billionaire Richard Branson, recently secured permission from the Australian government to introduce flights from Sydney to Los Angeles. The airline has said it could be ready to offer the flight by next year.
Australia's national carrier, Qantas, could be vulnerable if that occurs. The L.A.-Sydney route reportedly accounts for as much as 20 percent of the airline's profit.
On the heavily traveled New York-London route, two new airlines, Maxjet Airways and Eos Airlines, provide all-business-class flights at lower prices than British Airways.
"I think it's very misleading for anyone to assume that United has an advantage on long-haul routes over low-cost carriers," said Matthew Andersson, senior aviation consultant at CRA International in Chicago. "Their long-haul routes are not immune from more competition."
Southwest has said it may expand to international routes in a few years. The Dallas-based carrier gained knowledge about long-haul flights through a partnership with ATA Airlines, cemented in a 2004 deal to acquire gates at Midway Airport. ATA flies to Hawaii and Mexico.
Long-haul flights are more of a possibility for low-cost carriers thanks to new, more fuel-efficient aircraft expected to be arriving soon.
The Boeing 787 Dreamliner, which is scheduled to enter service in 2008, promises to fly across the oceans using 20 percent less fuel than similar midsize planes.
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07-23-2006, 08:22 AM
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Originally Posted by Gordon C
Southwest has said it may expand to international routes in a few years.
Bull******. It took them forever just to get into DEN, bringing their destinations to a grand total of, I think, 61. I don't have any problem with Southwest, but I'm not expecting to see them in Hong Kong, London, or even Mexico any time soon.
07-23-2006, 10:32 AM
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SWA and International service
Originally Posted by MikeB525
Bull******. It took them forever just to get into DEN, bringing their destinations to a grand total of, I think, 61. I don't have any problem with Southwest, but I'm not expecting to see them in Hong Kong, London, or even Mexico any time soon.
07-23-2006, 11:00 AM
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An important point that Mr. Tilton hopefully hasn't missed is that Southwest Airlines is profitable and United is not.
There is little benefit to serving markets once covered by the essential air service act, and UAL recently lost the Air Mail contract (due to poor on time performance) so aside from bragging rights what is the point of serving every market on the planet?
From a shareholder's viewpoint, a CEO should return value on the [shareholders] investment, that's his job. I think the recent history, and the balance sheets, speak for themselves - I'd take a SWA management team over Glen Tilton any day.
There is little benefit to serving markets once covered by the essential air service act, and UAL recently lost the Air Mail contract (due to poor on time performance) so aside from bragging rights what is the point of serving every market on the planet?
From a shareholder's viewpoint, a CEO should return value on the [shareholders] investment, that's his job. I think the recent history, and the balance sheets, speak for themselves - I'd take a SWA management team over Glen Tilton any day.
07-23-2006, 11:08 AM
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Whoopdeedoo! So Mr. Tilton spoke his piece, like he's the epitome of airline management excellence! I have a United captain sitting right next to me as I type this. When I showed him the post about Tilton, he just laughed and rolled his eyes. He doesn't laugh about losing his pension.
HSLD, I think "every" United employee would be right with you on taking the SWA management team over Tilton!
HSLD, I think "every" United employee would be right with you on taking the SWA management team over Tilton!
Last edited by Skygirl; 07-23-2006 at 11:14 AM.
07-23-2006, 11:14 AM
#8
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Originally Posted by HSLD
I'd take a SWA management team over Glen Tilton any day.
Tilton continues the United management philosophy that they know everything better than anyone else.
It will be very interesting to see how their second quarter turns out.
07-23-2006, 11:23 AM
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Originally Posted by SWAjet
We fly some long stage lengths at SWA already, and would fly more if we had more airplanes.
I just made the point that the Bulk of SWA's market is the short leg sequence...250-1000 miles. I know you fly a few longer sequences....BWI-OAK
PHX-TPA etc, but your core market is the shorthaul (less than 2 hour legs).........This would be similar to PHX-GDL or TPA-CUN or TPA-GCM or BWI-YYZ........all 2 hour or less legs to International destinations.
I don't expect SWA to be flying 8 -13 hour legs to HKG, NRTor LHR, FCO, CDG anytime soon.
CUN is cancun
GCM is Grand Cayman
GDL is Guadalajara
YYZ is Toronto
FCO is Rome
07-23-2006, 12:14 PM
#10
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Originally Posted by HSLD
I'd take a SWA management team over Glen Tilton any day.
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