Beg to differ. It's true network scope has some value to some customers (though the trend since year 2000 is less and increasingly scarce, only those in the smaller and international markets of which Mr. Bethune speaks) and network/joint product production means it's also true that the network operators will always cover more markets than low-cost carriers ever will. But you have to wonder if people are beating the proverbial dead horse when the best argument to be made for a so-called winning business model goes like "If only we had the..." this, that, whatever. Instead of blaming Continental's labor compensation, among the lowest of the network carriers, didn't Mr. Bethune really mean to say, "If only the hub-and-spoke business model didn't consume so much capital, labor and energy, relegated to zero productivity with each lengthy hub turn, then we'd be making"... what did he say? Big bucks? - Bob Mann -- R.W. Mann & Company, Inc. >> Airline Industry Analysis Port Washington, NY 11050 >> tel 516-944-0900, fax -7280 mailto:info@xxxxxxxxxx >> URL http://www.RWMann.com/ This e-mail is for the designated recipient only and may contain privileged or confidential information. If you have received it in error, please notify the above sender immediately then delete the original e-mail. Any other use of this e-mail is prohibited. lafrance@xxxxxxxxxxx wrote: > [[ I agree, if you think lost cost carriers are going to remain having lost cost labor, its not going to happen. labor will always go up!]] > > Bethune Attacks Critics Of Network Carrier Model > By Adrian Schofield > September 26, 2003 > > Debunking critics who compare traditional hub-and-spoke carriers to dinosaurs, Continental CEO Gordon Bethune says the business model for airlines like his remains attractive and will be crucial to recovery of the global economy. > > Speaking recently at the International Aviation Club in Washington, D.C., Bethune said there will always be a place for "a good airline that offers good value and good service on a large network." Airlines that prosper today are those that listen to the market, he said, and the market says people still want to fly internationally and to smaller domestic destinations. > > Calling hub-and-spoke carriers the "engines of the global economy," Bethune said without the access they provide "global trade would not exist at the accelerated level and universal scope it has today." > > Bethune allowed that traditional carriers' costs are higher, but said this was because staff are more senior than at low-cost carriers that have started up in the past few years. > > Continental recently calculated its 2002 financial statements assuming it had the same revenue and network, but the labor cost structure, of JetBlue. Instead of a $350 million loss, Bethune explained, Continental would have had a $450 million profit. The difference is "directly attributable to wage rates and seniority levels," he said. > > The Iraq war and the SARS pneumonia scare drastically curbed major carriers' international travel, he noted, while low-cost carriers do not have to worry about international traffic. Some blame also lies with the U.S. government, Bethune said, as the cost of new security measures has been hard for airlines to meet. > > Bethune insisted he doesn't want government bailouts, including bailouts of its pension program, but does want government to do its part to move passengers quickly through airports. He said the Homeland Security Department should establish a goal of 30 minutes for moving international passengers through customs and immigration, similar to the 10-minute goal it has set for security screening. > > Roger > EWROPS