Maybe Ryanair and Southwest would codeshare?

<i>there's no track record in aviation history of successful longhaul budget carriers.</i>

The only thing I will offer is that this doesn't have to be successful over the long term to hurt the legacies. Can the legacies afford even small cuts in their loads or average fares on TATL routes? If Ryanair sticks around even 3 or 4 years, they hold the potential to drive down fares. And the last few years have shown that airfares are quite sticky and, once dropped, the airlines have a very hard time raising them.

If the US legacies had other profitable routes, then I would be more sanguine, but they don't, at least not in any significant numbers. If they lose the narrow margins they have on the TATL routes, then they may as well just pack it in.

The legacies just don't have much wiggle room. That is why I think they should be concerned, not because Ryanair is going to last (I don't know) or that they will carry tons of passengers (they won't - at least not initially). But they don't need to do either to destroy the economics of the TATL routes for the legacies. They only need to lower prices or loads by a couple of % points.

<i>Guess which one I would pick?</i>

I know which one I would choose too. But there are many passengers that will go to extreme lengths to save a few dollars. And, even if nobody connects on Ryanair, that still leaves them competing for the 50% or so of the traffic that doesn't connect via the US. It doesn't matter which pool Ryanair poaches from, as long as they poach. And, as I noted in my above post, Ryanair only needs to steal a few % points of traffic or average fares to make AA's path to a profit that much rockier.

I guess we have to agree to disagree on this subject.

I really don't see RyanAir poaching anything but the lowest fare passengers that with improved economy can be replaced with a nice sale fare......just like that!


Here is another example:

A US soldier stationed in Germany wants to go home for Christmas and his family lives in Columbus, Ohio.

RyanAir -
Frankfurt-Hahn - bus extra $
Hahn-Standsted - RyanAir (ticket $)
Standsted-Islip - (another ticket with re-checking in Standsted so more $ and a mess if the first flight is delayed/canceled)
Islip-??? (possibly a bus to LGA or ???, more $)
LGA-Columbus - (another ticket, no ticket protection, more $)

Legacy Airline -
FRA-CVG-CMH - all one ticket, all protected, etc..


Please tell me that even the lowly paid soldier would chose the right flight, even if it meant few $ more initially, because at the end s/he would save much more before you add on all the charges, meals, drinks while doing all these crazy connections.

Airlines such as RyanAir are great when one needs point-to-point flights. That's it. Not much poaching there from the legacies. It's a low fare traffic that the legacies probably don't even want or need.

So, AAFF and I answered the question &quot;how the US Legacy carriers will respond to this...&quot;, asked in the 2nd post of this thread. We think they will ignore it.

Now, while a couple of you disagree with what AAFF and I have written in this thread, I don't see any answer to that question.

So, let's hear it. What do you guys think the US legacy carriers will respond? Get out of Trans-Atlantic service? Decrease fares to fight? Increase fares? Switch to all-business class? Put more seats, remove seats?

I think we might see some or all of the following:

<b>Short-Term</b>
- Bonus miles
- Fare sales
- Increased frequencies/destinations. Perhaps a repeat of the AA service to Stansted.

<b>Long-Term</b>
- Move toward a la carte pricing for long-hauls. At the very least, I think the two checked bag thing will be gone within a couple of years. It might only go down to the 20kg standard that Euro carriers have for non-TATL routes (accompanied by astonishingly high over-limit fees), but I think they will go. Food might go pay-as-you-go, particularly for westbound flights. Surcharges for top seats are almost certain.
- Higher seating densities. Certainly, the 787 will never be seen in an 8-abreast coach configuration. I think the 10-abreast 777 will proliferate (AF already flies it on the NYC route).

Bear in mind that I don't see these things definitely happening, but I never ventured an opinion as to whether the airline execs <b>would be</b> worried about Ryanair, I offered the opinion that they <b>should be</b>. I also offered that I think the legacy carriers are seemingly run by a bunch of idiots that missed the class on profits in the MBA programs.

This isn't about &quot;beating&quot; Ryanair, though I suspect many airline execs will look at it that way. This is about the fact that the US domestic airline industry is likely no better than break-even under perfect circumstances and that they desperately need the long-haul market to ever hope to turn a profit. Any impingement on either loads or yields calls that into serious question. Even a $20 decrease in average fares would cost AA nearly $12m on their JFK-London service. And what happens as more and more companies stop paying for business class? At the very least, they aren't going to go back to the $5k biz class fares now that they have the taste for $2k fares.

On the bright side, the legacy CEOs won't have to look hard for their next excuse for not turning a profit. They milked 9/11 for a while, then waged an all-out assault on labor costs, moved onto pricing power, tossed in overcapacity for good measure, rode the expensive oil train for a while, and now seem to be leaning towards the recession. You will excuse me if I am a bit cynical about the ability of the legacies to come out of this without a bloody nose.

Okay, I respect those recommendations, even though I don't necessarily agree with them.

But I see a strong disdain for the CEOs of the legacy carriers in your posts. My followup question is - do you feel the same for CEOs and executives of the legacy carriers for BA, AF/KLM and Lufthansa?

Those airlines don't really offer much difference than US legacy carriers in terms of customers comfort or price or loyalty programs (in fact, for BA, much worse loyalty program for discount-fare flyers). Their strategy also don't seem that different from the US ones, and I don't see much difference after Ryanair and easyjet takes up good portion of intra-Europe flyers.

Yet, those airlines have been making good amount of money for most of the years. So, what do you think about them?

---

But let me answer those questions myself. Those three huge legacy airlines of Europe also have mostly ignored Ryanair. But ONE of the reasons why they're strongly financially than US ones isn't because they have better CEOs than many US airlines, but that European airlines were more readily allowed to fall and to merge. Finally, the United States is moving towards that same - DL/NW are allowed to merge; unlike the earlier UA/US proposed merger.

Okay, let me make a comment that contradicts my earlier comments.

CEOs of US legacy carriers definitely have looked at and copied Ryanair's playbook! Like fees for checked bags. :D

The irony is that the only airline not doing the same is Southwest.

&lt;&lt;Those three huge legacy airlines of Europe also have mostly ignored Ryanair.&gt;&gt;
Disagree, Buzz, Go, &amp; BA Connect were definately a reaction to Ryanair.

The way BA now sell their European flights online at prices a lot lower than before Ryanair came into the market.

BA's UK and European network and frequency has been very much affected by LCCs

&lt;&lt;Those airlines don't really offer much difference than US legacy carriers in terms of customers comfort&gt;&gt;
DC 10's, 757's, 747-300's, to name just one small aspect, I could go on but its pointless

Geordie

Right. I shouldn't say the Big 3 in Europe has ignored Ryanair. Apparently, they are affected. But it seems like the net effect is that they're getting bigger and stronger by buying up the weaker and smaller airlines that can't compete.

Anyways, apart from slightly better meals and free booze, I don't see how service and comfort is significantly better on European airlines than the US ones. Plane type? Plenty of US airlines fly big 777s to Europe.

And I can also remind you that AF/KLM now has 10-abreast on their new 777-300s while all US airlines' 777s are still 9-abreast. Lufthansa has only recently put individual screens on any of their coach seats, while many US airlines have those for years. Try getting more than 25% FF miles when you fly a discount fare on BA, or getting a seat assignment more than 24 hours before flight time... [Well, maybe those are the reasons why they're in better financial shape than US legacies.]

DC 10's, 757's, 747-300's, to name just one small aspect, I could go on but its pointless

As I said its pointless

<i>My followup question is - do you feel the same for CEOs and executives of the legacy carriers for BA, AF/KLM and Lufthansa?</i>

No. The difference, to my mind, between the European and American CEOs is that the European CEOs have been proactive and their American counterparts are almost exclusively reactive. BA, etal were cutting European destinations even when times were good. They long ago re-jiggered the FF programs to reward high-fare fliers. They stopped being a below-market cargo service by cutting the luggage allowance. They drastically scaled back their short-haul First class, resulting in more flexible cabins. The American CEOs decide to wait until times get really bad (and the damage is already done) before pushing through emergency cuts. And, in the process, they make excuses for the cuts that should have been made as part of a long-term strategy.

Look at the relative fleets. Air France has 142 short-haul planes. Continental has 268 - and they have ordered 60 more. And I know, some of those CO planes are to replace older aircraft, but why not just chop the 60 short-haul aircraft and bulk up the long-haul side? And the Europeans were ordering when times were lean. It wasn't until the last couple of years that most of the US airlines starting ordering, and found themselves waiting longer as a result.

The US airlines are domestic airlines that happen to fly some international routes. The European airlines have transformed themselves into long-haul airlines that fly some short-haul routes. In the domestic legacy case, they have tons of routes that do nothing to support their (more profitable) long-haul service - why does CO even have a CLE hub if they are only going to have token long-haul service from it? The European carriers, on the other hand, are clearly focused on feeding the long-haul market. And even if Ryanair can start eating into that market, at least the Europeans are in a position where the fight is on their terms and on their turf, rather than being an attack on a side business that the legacies use to cover losses in their core business.

<i>Those airlines don't really offer much difference than US legacy carriers in terms of customers comfort or price or loyalty programs (in fact, for BA, much worse loyalty program for discount-fare flyers).</i>

I am probably the biggest basher of the &quot;European airlines are better&quot; nonsense that seems to pervade this board, driven by people who fly once a year and think a couple of plastic minis of cheap wine represents value. I think I have made it clear that I don't even agree with your claim of &quot;slightly better food&quot;. I routinely steer people towards Northwest's A330 because I believe it is the most comfortable plane plying the Atlantic. And I am a Delta Plat for a reason - because the US FF programs are better for cheapos like me.

I am not cheering on the Ryanairs. I don't really need to save $50 on my next flight, and like that I can check 3 bags at 70 lbs each. Regarding my point about the US legacies being below-market cargo services: sending 3 bags @ 70 pounds from New York to Denmark FedEx would run nearly $700! And I get it for free. I get lounge access, preferred seating, and 6 upgrade certificates each year. I have gone to Asia twice in 12 months, in business class, using the miles I earn. That I have serious questions about whether DL actually makes money on me doesn't really enter into my decision-making.

But, I don't need to like a product to recognize it is a good business model. And that I like a product doesn't change my assessment of their business either.