Business History Books » Business Plans » Valuejet to add service
Valuejet to add service
Question:
>BTW, am I right in thinking that in flying IAD-ORD (or is it IAD-MDW?) >Valujet is tangling with WN, however indirectly, for the first time >(WN flying BWI-MDW?).
*Very* indirectly. IAD and BWI are quite far apart. For the vast majority of the BWI market, IAD is simply too inconvenient an option (and similarly, residents of the southwestern suburbs of Washington are unlikely to trek out to BWI). The "swing" area is basically the northwest suburbs of DC — Bethesda, Potomac, maybe Rockville and Silver Spring. A significant market, yes, but IAD clearly has a fairly solid market of its own. Moreover, there is an (although admittedly small) market in western Maryland and northern West Virginia that would gladly drive down to IAD rather than fly puddle jumpers out of Hagerstown or Wheeling. I suspect that Valujet should do quite well at IAD. >Why take on WN when you could have US?
In entering the IAD-CHI market, Valujet is really going after United. United has been selling one-way tickets in that market. One-way fares can be as high as $452 on UA! Moving into IAD Could also be pre-emptive? IAD seems like the kind of airport that Southwest would eventually go after. It’s a United hub [hence a stab at United without the possibility of competing with the Shuttle]. It’s an "outside" airport that would serve as an alternative to DCA, much as BWI serves as an alternative to DCA. I would think that WN could move into IAD without cannibalizing their BWI operation. Valujet is starting to bump into WN territory. Rather than compete head-to-head, their approach may be to try and carve up the eastern seaboard before WN can expand there further. However, I agree that ATL-PIT would be a wonderful market for Valujet to go after. It has got to be a money-maker for both DL and US. >RNA
-sandeep — Sandeep K. Singhal "What I say is not necessarily what I mean" Margaret Jacks Hall, Bldg. 460 Office: 415-723-9437 Stanford, CA 94305-2140 FAX: 415-725-7411
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>> In addition, ValuJet’s DC-9-30’s fly under a certain ordinance that > prohibits them from flying far over the ocean. This comes into play > in the IAD-FLA markets. A straight flight flies far out over the > ocean, whereas ValuJet must stay near the coast (ie Savannah, > Jacksonville) on the way down to Florida, thus adding to the mileage > flown. > The question is, does the DC-9-30 have the capability to fly these > somewhat longer routes? Does anyone have numbers on this plane?
The DC-9-30 is listed as having a 1670nm range with an 80 passenger load and a 1100mile (statute mile) range with full payload. I suspect that with high density seating, ValuJet is at times running close to full payload and therefore the 1100 mile range is more appropriate for their operations. I seem to remember someone asking if they would have to move to larger members of the DC-9 family. For perspective, the DC-9-50 has a 1470 mile range with full payload and has 12.5 more feet of cabin length. -Eric Bartsch
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>: This is the first Valujet flight over 750 miles. Why is the 750 mile >: barrier important, you might ask? Well, the original business plan >: for Valujet stated that all flights would be under 750 miles. >As was noted in another thread, when a niche carrier starts to outgrow it >niche, they get into trouble… ValuJet is expanding just the way that PE >did 10 years ago — look what happened to PE… Business plans are not >absolutes, but moves like this start to ignore what helped make the >concept work as well as it has. That is dangerous ground to be on. >WN has been quite deliberate in their growth cap. Braniff, PE and several >other defunct carriers were quite aggressive in their "growth at any >risk" plans. ValuJet should take heed of past history and take a closer >look at the risks of over-expansion.
This is certainly a common problem for the "low cost" carriers. It’s interesting to try and speculate as to why this is so true. What would cause growth beyond a small marketplace to be so deadly. The other question is whether there are examples (beyond WN) of small carriers who stayed small, or grew very slowly and suceeded. What happens if you grow to fast? I’m not sure but here are some thoughts: 1) You outgrow your initial "corporate controls" What works for tracking schedules, maintanence, customer service, etc. when you are flying ten flights a day clearly needs to change when you get to 100 flights a day, and even more as you get bigger than that. 2) You hit someone elses bread and butter when you pick up a new route, and don’t make money on the route. This is especially true if you go from servining niche markets to more mainstream markets. Majors can match you for long enough to keep you from being profitable on new routes. If you are small, you don’t have a lot of profit margin from other routes to sustain this sort of fare war 3) Each station you fly to has unique risks, problems and issues. Can you get good people to run each of them, keep track of the problems and adapt to the new issues? What works in a small Florida airport may not when you are flying into a busy north east corridor airport. (Similar to 1, but different in details) 4) Do people who found companies have the right skills to grow them and consolidate them? This is a well understood problem outside of the airline industry, I’m not sure it doesn’t apply, in spades, to the airlines. The very skills that are vital in a startup are often problematic in a larger company 5) Do you simply reach a point in time when you have to start confronting the effects of being in business long enough that you go out of business? In other words, do we see these airlines go belly up mostly because of expansion, or is it that they try to expand enough to cover their debt service as it starts to pile up? 6) Do you reach a point where you start having to pay people more money, more vacation, more benefits, etc. losing your cost edge as time go on? As you pass the three or four years in business mark, I’d wonder if some of these kick in? Comments and discussion invited. – David
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> In addition, ValuJet’s DC-9-30’s fly under a certain ordinance that > prohibits them from flying far over the ocean. This comes into play > in the IAD-FLA markets. A straight flight flies far out over the > ocean, whereas ValuJet must stay near the coast (ie Savannah, > Jacksonville) on the way down to Florida, thus adding to the mileage > flown. > The question is, does the DC-9-30 have the capability to fly these > somewhat longer routes? Does anyone have numbers on this plane?
In order for an airliner to be allowed to fly more than 50nm from land it must be equipped with overwater equipment. There’s nothing different about the air over the water . . but if you have to ditch you must have the rafts and survival equipment on the aircraft (heavy to carry and costly to maintain) and the crews must also be qualified to operate that equipment. George
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>: >ValuJet will add service to Boston in mid june from dulles, and from dulles >: >to Raleigh and to Chicago then also. >: More significantly, they will also introduce, at the same time, nonstop >: service between Atlanta and Boston. This is the first ValuJet flight over >: 750 miles. Why is the 750 mile barrier important, you might ask? Well,
Some of ValuJet’s longer routes are ATL-DFW 730 IAD-FLA 900-1100 miles* ATL-BDL 860 In addition, ValuJet’s DC-9-30’s fly under a certain ordinance that prohibits them from flying far over the ocean. This comes into play in the IAD-FLA markets. A straight flight flies far out over the ocean, whereas ValuJet must stay near the coast (ie Savannah, Jacksonville) on the way down to Florida, thus adding to the mileage flown. The question is, does the DC-9-30 have the capability to fly these somewhat longer routes? Does anyone have numbers on this plane? If the DC-9-30 can’t fly these longer routes, ValuJet may have to look at other planes in the DC-9 series if they are interested in serving cities out west, like DEN, MSP, etc. — Joe Ellen Don’t Blame Me, I Voted!! Damn Yankee
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> In entering the IAD-CHI market, Valujet is really going after United. > United has been selling one-way tickets in that market. One-way fares can > be as high as $452 on UA!
ValuJet seems to be making some inroads with their $39 one way fare ($42 w/PFC) in IAD-MDW. I took flight 290 (at 9:20am from IAD) on the second monday of April (after one week of service) and on the second monday of May, one month later. The number of boarding passes issued had jumped from about 28 to 48. Much of this may be due to the price drop from $59/69/79 (21day/14day/walkup) to a flat $39. Clearly they are losing money, but at the same time, They’re getting people to try the airline. I was also impressed with the number of travellers dressed for business in ValuJet’s mix on the IAD-MDW leg on monday morning. At MDW on friday(May 5), there were at least 3 people who walked up and bought tickets in cash at the gate. They seemed to be converted bus customers and would, on the MDW end, clearly tend to be stolen from WN’s MDW-BWI. At the same time, It was clear that IAD-MDW was much weaker than ValuJet’s IAD-PBI (West Palm Beach) flight loading at the gate next door at IAD. 83 boarding passes on that one. It sure is fun with Valujet to just be able to walk from gate to gate an know exactly how many pax they’re loading on every flight–I wonder how often UA checks? UA is only partially attempting to match J7–not completely matching on ORD-IAD prices and only in very limited quantities. It has historically been a fairly thin market with AA’s ORD-DCA soaking up much of the CHI-WAS local traffic of the interest to the majors. KMC
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: This is the first Valujet flight over 750 miles. Why is the 750 mile : barrier important, you might ask? Well, the original business plan : for Valujet stated that all flights would be under 750 miles. As was noted in another thread, when a niche carrier starts to outgrow it niche, they get into trouble… ValuJet is expanding just the way that PE did 10 years ago — look what happened to PE… Business plans are not absolutes, but moves like this start to ignore what helped make the concept work as well as it has. That is dangerous ground to be on. WN has been quite deliberate in their growth cap. Braniff, PE and several other defunct carriers were quite aggressive in their "growth at any risk" plans. ValuJet should take heed of past history and take a closer look at the risks of over-expansion. | Eric Olesen | Airline Historical Archives is now the Website | | Fort Worth, Tx | NEW URL —> http:/www.metronet.com/~olesen | | "Views expressed here do not represent the airline that I work for! |
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– Hide quoted text — Show quoted text – >: This is the first Valujet flight over 750 miles. Why is the 750 mile >: barrier important, you might ask? Well, the original business plan >: for Valujet stated that all flights would be under 750 miles. >As was noted in another thread, when a niche carrier starts to outgrow it >niche, they get into trouble… ValuJet is expanding just the way that PE >did 10 years ago — look what happened to PE… Business plans are not >absolutes, but moves like this start to ignore what helped make the >concept work as well as it has. That is dangerous ground to be on. >WN has been quite deliberate in their growth cap. Braniff, PE and several >other defunct carriers were quite aggressive in their "growth at any >risk" plans. ValuJet should take heed of past history and take a closer >look at the risks of over-expansion.
One reason you get constant expansion is to keep average costs down— new employees get paid a lot less. This was one of the major causes of American’s growth, once they went to A and B payscales for the pilots. Valujet in particular has a long and low-paid probationary period for their employees. One question in my mind is what happens at the other end of all this expansion when you have to pay all your employees full wages? BTW, am I right in thinking that in flying IAD-ORD (or is it IAD-MDW?) Valujet is tangling with WN, however indirectly, for the first time (WN flying BWI-MDW?). It’s not a smart move. That’s a market that’s got low fares anyway. Why take on WN when you could have US? PIT is begging for more competition. RNA
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ValuJet is ALREADY flying Chicago (MDW) to Washington (IAD). They are advertising fares on the radio here (in chicago) of $39 one way plus PFCs on every seat on every flight thru 5/ 24.
Response:
>Valuejet will add service to Boston in mid june from dulles, and from dulles >to Raleigh and to Chicago then also.
More significantly, they will also introduce, at the same time, nonstop service between Atlanta and Boston. This is the first Valujet flight over 750 miles. Why is the 750 mile barrier important, you might ask? Well, the original business plan for Valujet stated that all flights would be under 750 miles. The ATL-BOS route marks the opening of a new era for Valujet. They is liberating itself from its original plan, and pursuing other markets. Where will they go next? >i recently read where Valuejet has plans to add 60 jets to its system over >the next 5 years.
Quite impressive, if they really do it. I would expect flights to the midwest and the rockies (St. Louis, Minneapolis, Kansas City, Omaha, Houston, Colorado Springs), together with a reinforcement of their position in the east (Pittsburgh, Newark, Albany, Buffalo, Providence, Birmingham, Norfolk, Charlotte). — |____o,___/ ____| College of Computing | | o’ | Atlanta GA 30332-0280, USA Fax: +1 404 853-0673 |
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Valuejet will add service to Boston in mid june from dulles, and from dulles to Raleigh and to Chicago then also. i recently read where Valuejet has plans to add 60 jets to its system over the next 5 years.
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: Valuejet will add service to Boston in mid june from dulles, and from dulles : to Raleigh and to Chicago then also. : i recently read where Valuejet has plans to add 60 jets to its system over : the next 5 years. I guess the price of used DC-9s that are older than me might be going up slightly… — Dharm Guruswamy – First Year Graduate Student, City Planning snail mail: 26874 Georgia Tech Station, Atlanta, GA 30332 B.A. Urban Studies (5/94), Univ. of Maryland at College Park – GO TERPS
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: Valuejet will add service to Boston in mid june from dulles, and from dulles : to Raleigh and to Chicago then also. : i recently read where Valuejet has plans to add 60 jets to its system over : the next 5 years. Does anyone know if valuejet plans to add any flights from Norfolk Virginia. We have proven that we can support flights from low fare carriers. When Calite was there traffic was up more than 30%. Now that they are gone, and fares have skyrocketed it is only natural that passenger counts have gone down. Please send us a low fare carrier!!! Rob