The Brancatelli File: Why Can't the Big Six KISS?

AlphaSigOU · 01-31-2003, 09:36 AM

Good info in today's The Brancatelli File, a newsletter for frequent travelers. For more info on The Brancatelli File or to subscribe to his free newsletter, go to http://www.zyworld.com/brancatelli/home.htm .

Why Can't the Big Six KISS?
BY JOE BRANCATELLI

January 30, 2003 -- This is why the Big, Sick Six are dying: Surf to the Continental Web site and search for a fare between Atlanta and Houston. The cheapest quote you'll find is $183.50 roundtrip. Click on the rules link and you will be confronted with 1,110 words of restrictions, change fees and other obligations. As a basis of comparison, this entire column is 1,024 words.

This is also why the Big Six are dying: Surf to Travelocity's Fare Listing function and request the fares for American's nonstops between New York/Kennedy and Oakland. Travelocity reports that American offers 50 fares ranging between $134 (one-way coach) to $3,620 (roundtrip first class) in 10 fare "buckets" (L,N,R,V,Q,K,M,H,B,Y and F).

Then there is this: Since 9/11 the Big, Sick Six have further complicated the travel process by adding new rules and/or fees in the following categories: flight changes; checked luggage; paper tickets; upgrades; standbys; elite frequent-flyer qualification; ticket refunds; voluntary denied boarding; frequent-flyer award levels; in-flight meals and unaccompanied minors.

Or try this: If you book United Airlines, you may actually travel on equipment operated by Air Canada, Air New Zealand, All Nippon, Austrian, Lauda, Tyrolean, bmi, Lufthansa, Mexicana, SAS, Thai, Varig, Air Dolomiti, Aloha, BWIA, Gulfstream, Great Lakes, Virgin Blue, US Airways, Air Wisconsin, Atlantic Coast or SkyWest. In fact, you may even find yourself "flying" on SNCF, the French railroad.

Does your head hurt? Mine sure does. And that's the point. The Big, Sick Six are dying because they have forgotten one of the cardinal rules of any business: Keep It Simple, Stupid. They have strayed so far from KISS that, beyond the fares and the rotten attitude and the lousy service, travelers are revolting and going where it's simple.

Simple is JetBlue, which has driven American off that JFK-Oakland route. With just one class of service and fewer than a dozen fares, all of which fall in the narrow range of $119-$299 one-way, JetBlue has overcome American's roomier coach cabins, its first-class upgrades and its formidable frequent-flyer program. Less than a year after it entered the JFK-Oakland market to stunt JetBlue's growth, American is surrendering on March 2.

Simple is Southwest, the flying bus that business travelers once loathed. While the Big, Sick Six have watched their Byzantine fare structures collapse since 9/11, Southwest has actually increased the percentage of unrestricted, full-fare tickets it sells. Last year, 35 percent of all its tickets were sold at full fare compared to only 31 percent in 2001. Moreover, Southwest's average fare per mile--a crucial measure of airline revenue--is now higher than the average fare per mile charged by American Airlines.

Simple is AirTran, which is prospering in Atlanta, Delta's hometown and major hub, by offering a comprehensible, uncluttered two-class service. AirTran, along with JetBlue and Southwest, made money in fiscal 2002, something none of the Big, Sick Six were able to claim.

"I think people are getting fed up with the majors," AirTran chief executive Joe Leonard said this week.

Leonard has a vested interest in bashing the Big, Sick Six, of course. But Glenn Zander, chief executive of Aloha Airlines, told me the same thing last year.

I happened to be in Zander's Honolulu office the day last August when US Airways launched its suicidal series of complicated, convoluted anti-consumer initiatives. The soft-spoken, mild-mannered Zander is no radical--he's the former chief executive of TWA and he has Aloha in a code-share arrangement with United Airlines--but he's amazed by the hole the Big Six has dug for itself.

"It's insanity," Zander said of the way the Big Six are mucking up their systems with huge fare disparities, complex rules and repellant restrictions. "I literally have to tell you I do not know what they are thinking. But I do know customers don't like" it.

Thankfully, Zander does not practice what he decries: Like Southwest and JetBlue, Aloha serves its 20-minute inter-Island short hops and its trans-Pacific mainland flights with just one type of plane (several variations of Boeing 737s) and the airline's in-flight service, rules and fare structure are all comparative models of simplicity.

"The minute the disparity between your lowest fare and your highest fare exceeds a factor of three, you begin to confuse and lose customers," Zander explains.

But it's not just the complex fares that are repelling travelers now. Over the years, the Big, Sick Six have created an industry that is crippled by its own complexity: too many plane types, too many classes, too many fares, too many rules, too many restrictions, too much of everything. It is fat, it is bloated, it is incomprehensible to customers and it is rapidly collapsing into vast oceans of financial red ink.

And do you know what's the saddest thing of all? The Big, Sick Six can't help themselves even when they try.

After being decimated by JetBlue on the New York-Florida runs, Delta this week gave up the ghost on the airline-within-an-airline debacle known as Delta Express. Mirroring Southwest's experiences in other markets, JetBlue has won passengers from Delta and its Delta Express pygmy even while convincing travelers to pay higher average fares.

So Delta responded this week by introducing still another convoluted wrinkle: a new airline-within-an-airline called Song. Song already shows all the earmarks of being strangled by its own complexity.

Although it claimed it will offer "simple" fares, Song's publicity couldn't even quote an exact fare range. Instead, it only warbled that "most" one-way fares would be between $79 and $299. The projected Song service philosophy isn't so much simple as another pile of convolution layered on top of Delta's already unwieldy networked operations.

In fact, despite an estimated $65 million of development costs, Song couldn't even keep its logo simple.

Know how airlines and travel Web sites are enamoured of using a straight line connecting two dots as a graphic representation of flying efficiency? Not Song. The logo Delta unveiled Wednesday includes a looping, meandering, lime-green streak that crosses over itself en route from its starting point to its ending point.

Beware an industry that has become so complicated that it can't even connect two points with a straight line.

mikeytex · 01-31-2003, 10:49 AM

That's good stuff Chuck! It's amazing how the concept of throwing more money at something is going to make it better (in some people's eyes). If I were running an airline, I would try to copy the success patterns of the SWA's and JetBlues's. And my other question would be, do they have an organizational chart that is heavily-laden with vice presidents, managers, etc., that translates into more overhead?

UnitedFreak · 01-31-2003, 11:48 AM

Joe has a huge chip on his shoulder. He's the type of individual who could be given champagne and caviar for free and he would still complain.

I hope he never sets foot on a Delta, Delta Shuttle or Song flight.

Joe...stick to jetBlue, AirTran and Southwest for your domestic travel needs. And don't fly any US carrier when travelling internationally. That would suit me just fine.

Scott · 01-31-2003, 01:47 PM

Joe is one of a growing number of self-appointed blowhards who excel in trouncing an industry in turmoil. While these pedantic wanna-be's spout kernels of truth, they lack the hands-on experience of running an airline. Let's see how efficient Jet Blue, Air Tran, or WN would be at operating a global system with multiple aircraft types and 24/7 operations. I'd give WN the nod of certainty, but the others a minimal chance.

01-31-2003, 04:43 PM

Unfortunately, though many passengers echo his opinions. At AA, they're charging passengers to keep their AAdvantage Executive Platinum status, which he mentions. Why should you be charged for your loyalty?

And speaking of loyalty, JetBlue is making a killing in its markets. They're the talk of the town in New York. I've been with AA for 14+ years & I never hear people talk about AA with such enthusiasm. But the question is can these upstarts stick around long-term? Look at People Express in the '80s.

01-31-2003, 09:36 AM	#1
AlphaSigOU Insane Collector Join Date: Jul 1999 Location: Wylie, Texas Age: 44 Posts: 1,419	The Brancatelli File: Why Can't the Big Six KISS? Good info in today's The Brancatelli File, a newsletter for frequent travelers. For more info on The Brancatelli File or to subscribe to his free newsletter, go to http://www.zyworld.com/brancatelli/home.htm . Why Can't the Big Six KISS? BY JOE BRANCATELLI January 30, 2003 -- This is why the Big, Sick Six are dying: Surf to the Continental Web site and search for a fare between Atlanta and Houston. The cheapest quote you'll find is $183.50 roundtrip. Click on the rules link and you will be confronted with 1,110 words of restrictions, change fees and other obligations. As a basis of comparison, this entire column is 1,024 words. This is also why the Big Six are dying: Surf to Travelocity's Fare Listing function and request the fares for American's nonstops between New York/Kennedy and Oakland. Travelocity reports that American offers 50 fares ranging between $134 (one-way coach) to $3,620 (roundtrip first class) in 10 fare "buckets" (L,N,R,V,Q,K,M,H,B,Y and F). Then there is this: Since 9/11 the Big, Sick Six have further complicated the travel process by adding new rules and/or fees in the following categories: flight changes; checked luggage; paper tickets; upgrades; standbys; elite frequent-flyer qualification; ticket refunds; voluntary denied boarding; frequent-flyer award levels; in-flight meals and unaccompanied minors. Or try this: If you book United Airlines, you may actually travel on equipment operated by Air Canada, Air New Zealand, All Nippon, Austrian, Lauda, Tyrolean, bmi, Lufthansa, Mexicana, SAS, Thai, Varig, Air Dolomiti, Aloha, BWIA, Gulfstream, Great Lakes, Virgin Blue, US Airways, Air Wisconsin, Atlantic Coast or SkyWest. In fact, you may even find yourself "flying" on SNCF, the French railroad. Does your head hurt? Mine sure does. And that's the point. The Big, Sick Six are dying because they have forgotten one of the cardinal rules of any business: Keep It Simple, Stupid. They have strayed so far from KISS that, beyond the fares and the rotten attitude and the lousy service, travelers are revolting and going where it's simple. Simple is JetBlue, which has driven American off that JFK-Oakland route. With just one class of service and fewer than a dozen fares, all of which fall in the narrow range of $119-$299 one-way, JetBlue has overcome American's roomier coach cabins, its first-class upgrades and its formidable frequent-flyer program. Less than a year after it entered the JFK-Oakland market to stunt JetBlue's growth, American is surrendering on March 2. Simple is Southwest, the flying bus that business travelers once loathed. While the Big, Sick Six have watched their Byzantine fare structures collapse since 9/11, Southwest has actually increased the percentage of unrestricted, full-fare tickets it sells. Last year, 35 percent of all its tickets were sold at full fare compared to only 31 percent in 2001. Moreover, Southwest's average fare per mile--a crucial measure of airline revenue--is now higher than the average fare per mile charged by American Airlines. Simple is AirTran, which is prospering in Atlanta, Delta's hometown and major hub, by offering a comprehensible, uncluttered two-class service. AirTran, along with JetBlue and Southwest, made money in fiscal 2002, something none of the Big, Sick Six were able to claim. "I think people are getting fed up with the majors," AirTran chief executive Joe Leonard said this week. Leonard has a vested interest in bashing the Big, Sick Six, of course. But Glenn Zander, chief executive of Aloha Airlines, told me the same thing last year. I happened to be in Zander's Honolulu office the day last August when US Airways launched its suicidal series of complicated, convoluted anti-consumer initiatives. The soft-spoken, mild-mannered Zander is no radical--he's the former chief executive of TWA and he has Aloha in a code-share arrangement with United Airlines--but he's amazed by the hole the Big Six has dug for itself. "It's insanity," Zander said of the way the Big Six are mucking up their systems with huge fare disparities, complex rules and repellant restrictions. "I literally have to tell you I do not know what they are thinking. But I do know customers don't like" it. Thankfully, Zander does not practice what he decries: Like Southwest and JetBlue, Aloha serves its 20-minute inter-Island short hops and its trans-Pacific mainland flights with just one type of plane (several variations of Boeing 737s) and the airline's in-flight service, rules and fare structure are all comparative models of simplicity. "The minute the disparity between your lowest fare and your highest fare exceeds a factor of three, you begin to confuse and lose customers," Zander explains. But it's not just the complex fares that are repelling travelers now. Over the years, the Big, Sick Six have created an industry that is crippled by its own complexity: too many plane types, too many classes, too many fares, too many rules, too many restrictions, too much of everything. It is fat, it is bloated, it is incomprehensible to customers and it is rapidly collapsing into vast oceans of financial red ink. And do you know what's the saddest thing of all? The Big, Sick Six can't help themselves even when they try. After being decimated by JetBlue on the New York-Florida runs, Delta this week gave up the ghost on the airline-within-an-airline debacle known as Delta Express. Mirroring Southwest's experiences in other markets, JetBlue has won passengers from Delta and its Delta Express pygmy even while convincing travelers to pay higher average fares. So Delta responded this week by introducing still another convoluted wrinkle: a new airline-within-an-airline called Song. Song already shows all the earmarks of being strangled by its own complexity. Although it claimed it will offer "simple" fares, Song's publicity couldn't even quote an exact fare range. Instead, it only warbled that "most" one-way fares would be between $79 and $299. The projected Song service philosophy isn't so much simple as another pile of convolution layered on top of Delta's already unwieldy networked operations. In fact, despite an estimated $65 million of development costs, Song couldn't even keep its logo simple. Know how airlines and travel Web sites are enamoured of using a straight line connecting two dots as a graphic representation of flying efficiency? Not Song. The logo Delta unveiled Wednesday includes a looping, meandering, lime-green streak that crosses over itself en route from its starting point to its ending point. Beware an industry that has become so complicated that it can't even connect two points with a straight line. __________________ *Chuck Corway (AlphaSigOU)* *Causa latet vis est notissima* -- the cause is hidden, the results are well known. James Bond: "I'll take the full odds on the ten, two hundred on the hard way, the limit on all the numbers, two hundred and fifty on the eleven, thank you very much." Plenty O'Toole: "Hey! You've played this game before!" James Bond: "Just once." *REMEMBER THE ALAMO!!! REMEMBER PEARL HARBOR!!! REMEMBER SEPTEMBER 11!!!!* Last edited by AlphaSigOU; 01-31-2003 at 09:38 AM.

01-31-2003, 10:49 AM	#2
mikeytex Insane Collector Join Date: Nov 2002 Location: Alvin, Texas (Nolan's back!!!) Age: 48 Posts: 1,172	That's good stuff Chuck! It's amazing how the concept of throwing more money at something is going to make it better (in some people's eyes). If I were running an airline, I would try to copy the success patterns of the SWA's and JetBlues's. And my other question would be, do they have an organizational chart that is heavily-laden with vice presidents, managers, etc., that translates into more overhead? __________________ Certified Jellybean Addict!!!

01-31-2003, 01:47 PM	#4
Scott Insane Collector Join Date: Mar 2000 Location: Escondido, Ca. USA Age: 50 Posts: 2,763	Joe is one of a growing number of self-appointed blowhards who excel in trouncing an industry in turmoil. While these pedantic wanna-be's spout kernels of truth, they lack the hands-on experience of running an airline. Let's see how efficient Jet Blue, Air Tran, or WN would be at operating a global system with multiple aircraft types and 24/7 operations. I'd give WN the nod of certainty, but the others a minimal chance. __________________ Fly the Friendly Skies of United uniTED takes wing Feb 12, 2004

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01-31-2003, 11:48 AM	#3
UnitedFreak Senior Collector Join Date: Dec 2000 Location: Atlanta Posts: 194	Joe has a huge chip on his shoulder. He's the type of individual who could be given champagne and caviar for free and he would still complain. I hope he never sets foot on a Delta, Delta Shuttle or Song flight. Joe...stick to jetBlue, AirTran and Southwest for your domestic travel needs. And don't fly any US carrier when travelling internationally. That would suit me just fine.

01-31-2003, 04:43 PM	#5
NYCAAer Guest Posts: n/a	Unfortunately, though many passengers echo his opinions. At AA, they're charging passengers to keep their AAdvantage Executive Platinum status, which he mentions. Why should you be charged for your loyalty? And speaking of loyalty, JetBlue is making a killing in its markets. They're the talk of the town in New York. I've been with AA for 14+ years & I never hear people talk about AA with such enthusiasm. But the question is can these upstarts stick around long-term? Look at People Express in the '80s.