Talk:Hard Landing (Book)

Snippets

• And so long as Air Southwest never stepped outside Texas, it could get a foot in the door by undercutting the established airlines, setting a fare below the official price established by the czars in Washington (sometimes, starting small is exactly the advantage you have. by being only a state level airline, Southwest was not subject to federal rules and could charge as little as they wanted and fly as many routes as they wanted. instead of the controlled fares (minimum fares) and controlled routes and schedules.)

• And as the next cargo of passengers came aboard, they did so with no seat assignments, which meant that people simply stepped into one seat and then the next and then the next, in a nice, orderly, rapid sequence. (Southwest's incredible low cost and efficient formula came not from a top down enforcement. but from a staff that knew what being laid off meant, and who offered to be efficient so that everyone could remain employed. they sold one of four planes but still managed to run the same schedule because of the efficiency)

• Muse decided to offer seats aboard the late-night maintenance flight to the public. Having no idea what to charge for the flight, he settled on $10, a nice round number, about equal to the bus fare between the cities—an off-peak fare, one might say, well below the regular fare of $26. (accidental discovery of an entirely new clientele)

• In addition to matching the $13 price, Southwest offered an alternative: anyone choosing to travel at the full $26 fare would receive either an ice bucket or a free fifth of liquor. Since most business passengers were flying on expense accounts, they naturally chose the $26 flight and the free gift, and it was not usually the ice bucket they requested. For a time in 1973 Southwest was the largest Chivas Regal distributor in Texas. Southwest had discovered another lesson in airline marketing: giving the expense-account customer something for free that he could take home instead of to the office—in short, a kickback—won his undying loyalty.

• Then one day, while packing for a European vacation, Lorenzo grabbed a pile of annual reports on small airlines—pleasure reading. (if you are an industry specialist, maybe you get more out of an annual report than an ordinary investor)

• Arriving in Rio, Crandall proposed to turn the travel agents’ plan on its head. Instead of their establishing a reservations network, Crandall said, they should allow the airlines to create one—a single giant communication system reaching into the office of any travel agent anywhere, owned and operated by a consortium of the major airlines. (who controls the platform, controls the profit pool)

• Bob Crandall had killed them off. (how American airlines killed off chartering services)

• Landing assignments—slots, as they were called—had turned out to be a finite natural resource: Oregon had the redwood forests, Texas had oil, and New York had slots. (one bottleneck in the airline industry)

• well (three ways to grow an airline: 1. acquire another airline 2. open up new markets, esp by stimulating it with low fares 3. take market share in existing markets - again often by competing on price)

• Although conducted in the open, this program in every respect would be nothing more than a kickback—the payment of something valuable to an individual in order to influence his decision in spending somebody else’s money. “It’s based on individual greed,” Plaskett would later comment. (frequent flyer miles is a concept that can be applied to every bottom up Enterprise solution)

• In the decade since Southwest had gotten its financial footing, the company had never stopped making money. Southwest didn’t have a hub and didn’t want one. It didn’t want to add new cities except slowly and deliberately. It mainly wanted to fly full airplanes from point A to point B at a low cost with as many flights as possible per day—preferably by the hour. Its success was evident in its growing number of imitators, principally People Express, New York Air, and a company called Air Florida, which had recently burst on the scene. (once again, focus and deliberate growth matter)

• There were strange things happening at Braniff. Flights to Dallas would be booked full right to the last minute, then dozens of passengers would no-show; Braniff was turning away reservations, only to find its planes unexpectedly flying half-empty. Top officials at American swore that these tales were exaggerated and that if anyone at American ever used any such dirty tricks against Braniff, they were lower-level employees acting out of overzealousness. (ha! remember the Uber-ola wars?)

• Eastern’s bundle of north-south routes made it a vacation airline, with price-sensitive markets that low-cost upstarts were bound to attack. (what locations does an airline serve. important to economics.)

• Airline technicians monitor every cubic foot of atmosphere via satellite, to the point of logging each individual lightning bolt over the continental United States.

• It costs anywhere from seven to fourteen cents to fly one passenger a mile, and with nearly a half-billion passengers a year flying nearly a half-trillion miles, the pennies have a way of disappearing quickly.

• Although cars are often called the foundation of American culture, by the mid-1990s more adult Americans had flown in airplanes than owned automobiles.

• If a plane is going to take off anyway—once the fuel is purchased and the pilot paid and the interest rendered on the money borrowed to buy the plane in the first place—any paying passenger or payload recruited to the flight is almost pure profit.

• Though costly to the government, airmail soon became smashingly popular, fostered in part by the spread of telephones and other instant communication devices, which pressured businesses to speed up their paperwork. A 23¢ airmail stamp made it possible to post a document in Peoria on Thursday afternoon and have it on someone’s desk in New York Friday morning. As the economy of the late 1920s swelled on a tide of credit, banks realized that airmail paid for itself many times over when shipping money drafts and other interest-sensitive instruments. Manufacturers and distributors found that sending samples by airmail drew more attention to their products.

• The glut worsening, their fares scrupulously identical, the airlines began competing on service and amenities to a level unseen before or since. American installed a 64-key Wurlitzer piano in its jumbo jet lounges, with Frank Sinatra, Jr., at the keyboard on the inaugural flight. United staged “happenings” in its 747 lounges, featuring caricaturists, guitarists, and wine tastings.

• So American’s technical people undertook the effort on their own, creating a grand contraption of tall cylinders, each representing a different flight on a different day. The cylinders were filled with marbles, one for every unsold seat. With each reservation a button was pressed and an electrical signal sent, opening a hatch at the bottom of the cylinder through which one marble was emptied. Conversely, the cancellation of any reservation caused a marble to be electrically released into the top of the cylinder, restoring the seat to the unsold inventory of the flight. The machine was ungainly and impractical, but it vividly demonstrated a potential solution.

• Sabre was programmed to score flights according to a formula based on the elapsed time of the flight, the proximity of the departure hour to the time requested by the agent, whether the flight involved a connection, and whether the connection involved a switch in airlines. The formula left great room for judgment, however, in the weighing of these factors. American promised travel agents that the best service based on these criteria would always be displayed on the first screen, regardless of the airline providing the service. But American made no such promise with respect to the all-critical first line, where, if it happened to serve those cities, the American flight invariably appeared. American’s salespeople promoted the virtues of selling from the first screen and the first line. “Trust the machine,” they told the travel agents, and the agents did, causing American’s share of the business in the local market to increase vastly. One study found that although American flew 42 percent of the seats between New York and Los Angeles, it got 60 percent of the business booked by travel agencies subscribing to Sabre.

• Braniff’s powerful hub vividly demonstrated another inviolate rule of the airline business: Whoever has the most flights from a city gets a disproportionate share of the passengers. Frequency enhanced convenience—the convenience of flying the day of your meeting, not the night before; the convenience of arriving just an hour before your business was scheduled to begin. Frequency also preserved valuable flexibility: a business traveler could catch a later flight if his meeting ran over, or surprise the family by grabbing an early flight home.

• More than 40 years later Crandall’s people were looking for ways to reawaken such brand loyalty. “Do we even know who our frequent customers are?” they asked. The answer was not really. Before the great travel agent onslaught of the 1970s, back when businesspeople (and their secretaries) made most of the airline reservations, Sabre was programmed to search for multiple appearances of the same telephone number and periodically compile a list of the names associated with those numbers. (Surnames were too common and misspelled too frequently to be of much value in searching electronically.) The telephone area code located the individual in a particular state; American then searched driver’s license records for addresses. Through this laborious and expensive process American was able to maintain a mailing list of repeat customers totaling about 150,000.

• The airline business was a matter of “putting bums on seats,” as Rickenbacker described it

• There was a recession on, and while benefiting from the constant use of its planes, Eastern also paid dearly in fuel, airport fees, and maintenance for its high proportion of takeoffs and landings.

• An Eastern executive named Frank Sharpe, newly hired from American, proposed a no-reservation Merry-Go-Round service with a guaranteed seat for anyone who showed up. Any passenger could race to LaGuardia and step on a plane bound for Boston or Washington, any hour on the hour. The trick was that Eastern would have to keep planes standing by at all times to make certain that everyone showing up for a flight got a seat. In exchange for the freedom to fly so spontaneously, the customer, it was reckoned, would gladly save Eastern money by sacrificing his cocktails, his chicken divan, and his “social calls by the stewardess,” as noted in one account.