In message
-septe
mber.org, at 07:50:20 on Wed, 28 Sep 2016, Recliner
remarked:

Basically, a new entrant can't beat an established market leader just by
having lower prices. It has to offer something better

What's better about Aldi than Tesco, if not the prices?

It's certainly not the range of products or length of checkout queues.

Aldi is a low cost, not just a low price, chain.

Having lower costs is how they can do the lower prices. It's the latter
which attracts the customers.

Absolutely. But it's why they can have sustained low prices. A start-up
Uber competitor would have higher costs

Even if run from someone's back bedroom?

and wouldn't be able to compete on price for long.

It could compete for as long as the local drivers were prepared to swap
more business for lower fares.

An Uber start-up competitor would have higher, not lower costs.

A Uber competitor in a small section of their market would have lower
costs. No vanity projects like driverless cars, and they'd probably
expect the drivers to pay their way rather than be subsidised.

They would, and it's why their prices would be higher than Uber's.

Why does drivers not being subsidised make this new-Uber's prices
higher?

It's why Ryanair and easyJet succeed, where bmi Baby failed.

The reason BMIbaby failed was because they failed to fill the planes up.
Part of that is because as a much smaller airline they had very little
brand recognition on the Continent, where you want a lot of your
customers to be living, so that you don't get excessive tidal flow
arising from mainly UK-based customers.

Whenever I've flown easyJet or Ryanair, it's been on routes that primarily
attract Brits or the Irish, and that's what all the pax were, in both
directions.

You must not have flown to Eastern Europe very often.

And as for brand recognition, Uber will be the easy winner against a niche
local competitor.

I bet more people where I live have heard of Panther [500+ cars in
Cambridge] than Uber.

I'm no sure which part of their costs you think were significantly
higher - they had one of the oldest fleets in the air, and the other two
one of the newest. That must impact the cost.

Yes, it does, in favour of the airlines operating large, modern, homogenous
fleets. It's why true low cost airlines all buy their planes new, and don't
keep them too long. By bulk buying, they get brand-new planes, built to
their exact spec, and support services, all at the lowest possible cost.
BmiBaby had a motley collection of elderly 737s, all acquired second-hand.

So their buyer's fault they failed?
--
Roland Perry

Roland Perry wrote:
In message , at 08:45:17 on Wed, 28
Sep 2016, Neil Williams remarked:

I'm no sure which part of their costs you think were significantly
higher - they had one of the oldest fleets in the air, and the other
two one of the newest. That must impact the cost.

The easyJet and Ryanair argument is that good deals on new planes are
actually cheaper to operate overall - highly reliable, for example.

So BMIbaby's problem was an incompetent fleet purchasing department?

No. The problem was a lack of strategy. The fleet purchasing department can
only do what it is told to do, which was to buy up the cheapest 737s it
could find. That is absolutely not the way to run a low cost airline.

The former British Midland was in its death throes, scrambling around for
anything to stay afloat. Low cost airlines seemed to be the fashion, so it
tried to set up a little one on the cheap, at the same time as it was
trying to create a Virgin Atlantic mini-me in Heathrow (by buying the
failing BMed and a tiny fleets of A330s) and a Flybe mini-me regional
airline (the only bit that has kept the bmi brand). None worked.

I don't know if there was a winning strategy for BM, but the ones it tried
were all obvious losers from the beginning. It ended up being worth less as
a business than the Heathrow slots it owned. Michael Bishop and pals did
well out of it, but Lufthansa was the big loser. BA has also done well with
the surviving bits it bought on the cheap.

Roland Perry wrote:
In message
-septe
mber.org, at 07:50:20 on Wed, 28 Sep 2016, Recliner
remarked:

Basically, a new entrant can't beat an established market leader just by
having lower prices. It has to offer something better

What's better about Aldi than Tesco, if not the prices?

It's certainly not the range of products or length of checkout queues.

Aldi is a low cost, not just a low price, chain.

Having lower costs is how they can do the lower prices. It's the latter
which attracts the customers.

Absolutely. But it's why they can have sustained low prices. A start-up
Uber competitor would have higher costs

Even if run from someone's back bedroom?

That's probably a higher labour cost per ride than the highly automated
Uber incurs. How would this little operation handle fare calculations,
customer billing, driver payments, advertising, route creation and
monitoring, and all the other things that Uber slickly automates? Or are
you just suggesting a simple, local, manual mini cab operation?


and wouldn't be able to compete on price for long.

It could compete for as long as the local drivers were prepared to swap
more business for lower fares.

Not if their payments were less than the running costs of their cars.
Uber's drivers in the same city would earn more per ride, and probably get
more of them.


An Uber start-up competitor would have higher, not lower costs.

A Uber competitor in a small section of their market would have lower
costs. No vanity projects like driverless cars, and they'd probably
expect the drivers to pay their way rather than be subsidised.

They would, and it's why their prices would be higher than Uber's.

Why does drivers not being subsidised make this new-Uber's prices
higher?

Uber's subsidies are basically to allow fares to be lower than what the
drivers earn. The niche competitor, by not doing this, either has to pay
its drivers less than it costs them to run the cars (so zero drivers), or
charge more than Uber (so very few customers).


It's why Ryanair and easyJet succeed, where bmi Baby failed.

The reason BMIbaby failed was because they failed to fill the planes up.
Part of that is because as a much smaller airline they had very little
brand recognition on the Continent, where you want a lot of your
customers to be living, so that you don't get excessive tidal flow
arising from mainly UK-based customers.

Whenever I've flown easyJet or Ryanair, it's been on routes that primarily
attract Brits or the Irish, and that's what all the pax were, in both
directions.

You must not have flown to Eastern Europe very often.

And as for brand recognition, Uber will be the easy winner against a niche
local competitor.

I bet more people where I live have heard of Panther [500+ cars in
Cambridge] than Uber.

Perhaps. Does Uber even operate yet in Cambridge? And would visitors to
Cambridge have heard of Panther (which is where branding matters)?




I'm no sure which part of their costs you think were significantly
higher - they had one of the oldest fleets in the air, and the other two
one of the newest. That must impact the cost.

Yes, it does, in favour of the airlines operating large, modern, homogenous
fleets. It's why true low cost airlines all buy their planes new, and don't
keep them too long. By bulk buying, they get brand-new planes, built to
their exact spec, and support services, all at the lowest possible cost.
BmiBaby had a motley collection of elderly 737s, all acquired second-hand.

So their buyer's fault they failed?

No, the airline's lack of strategy or understanding of the low cost airline
business model.

On 28/09/2016 08:45, Neil Williams wrote:

On 2016-09-28 06:07:44 +0000, Roland Perry said:

I'm no sure which part of their costs you think were significantly
higher - they had one of the oldest fleets in the air, and the other
two one of the newest. That must impact the cost.

The easyJet and Ryanair argument is that good deals on new planes are
actually cheaper to operate overall - highly reliable, for example.

It's interesting that another low cost airline, Jet2, does it the other
way round, having a fleet of older planes.

In message
-sept
ember.org, at 08:30:06 on Wed, 28 Sep 2016, Recliner
remarked:
I'm no sure which part of their costs you think were significantly
higher - they had one of the oldest fleets in the air, and the other
two one of the newest. That must impact the cost.

The easyJet and Ryanair argument is that good deals on new planes are
actually cheaper to operate overall - highly reliable, for example.

So BMIbaby's problem was an incompetent fleet purchasing department?

No. The problem was a lack of strategy. The fleet purchasing department can
only do what it is told to do, which was to buy up the cheapest 737s it
could find. That is absolutely not the way to run a low cost airline.

The former British Midland was in its death throes, scrambling around for
anything to stay afloat. Low cost airlines seemed to be the fashion, so it
tried to set up a little one on the cheap, at the same time as it was
trying to create a Virgin Atlantic mini-me in Heathrow (by buying the
failing BMed and a tiny fleets of A330s) and a Flybe mini-me regional
airline (the only bit that has kept the bmi brand). None worked.

I don't know if there was a winning strategy for BM, but the ones it tried
were all obvious losers from the beginning.

Getting back to competitors for Uber, none would be trying to win on
several fronts simultaneously, so perhaps we can agree that BMIbaby is a
red herring.
--
Roland Perry

Mizter T wrote:

On 28/09/2016 08:45, Neil Williams wrote:

On 2016-09-28 06:07:44 +0000, Roland Perry said:

I'm no sure which part of their costs you think were significantly
higher - they had one of the oldest fleets in the air, and the other
two one of the newest. That must impact the cost.

The easyJet and Ryanair argument is that good deals on new planes are
actually cheaper to operate overall - highly reliable, for example.

It's interesting that another low cost airline, Jet2, does it the other
way round, having a fleet of older planes.

Jet2 is the current name for an old (1983) charter and freight operator,
Channel Express. Its older planes were bought second-hand, but it's now
moving to a modern low cost model, with an order for 30 new 738s last year.

Roland Perry wrote:
In message
-sept
ember.org, at 08:30:06 on Wed, 28 Sep 2016, Recliner
remarked:
I'm no sure which part of their costs you think were significantly
higher - they had one of the oldest fleets in the air, and the other
two one of the newest. That must impact the cost.

The easyJet and Ryanair argument is that good deals on new planes are
actually cheaper to operate overall - highly reliable, for example.

So BMIbaby's problem was an incompetent fleet purchasing department?

No. The problem was a lack of strategy. The fleet purchasing department can
only do what it is told to do, which was to buy up the cheapest 737s it
could find. That is absolutely not the way to run a low cost airline.

The former British Midland was in its death throes, scrambling around for
anything to stay afloat. Low cost airlines seemed to be the fashion, so it
tried to set up a little one on the cheap, at the same time as it was
trying to create a Virgin Atlantic mini-me in Heathrow (by buying the
failing BMed and a tiny fleets of A330s) and a Flybe mini-me regional
airline (the only bit that has kept the bmi brand). None worked.

I don't know if there was a winning strategy for BM, but the ones it tried
were all obvious losers from the beginning.

Getting back to competitors for Uber, none would be trying to win on
several fronts simultaneously, so perhaps we can agree that BMIbaby is a
red herring.

I only mentioned it to illustrate the point that to sustain low prices, you
also need low costs. Uber's driverless cars are ultimately all about cost
reduction.

https://www.theguardian.com/technolo...future-of-uber

In message
-septe
mber.org, at 09:19:54 on Wed, 28 Sep 2016, Recliner
remarked:

Getting back to competitors for Uber, none would be trying to win on
several fronts simultaneously, so perhaps we can agree that BMIbaby is a
red herring.

I only mentioned it to illustrate the point that to sustain low prices, you
also need low costs. Uber's driverless cars are ultimately all about cost
reduction.

So irrelevant to a small local competitor starting up next week.
--
Roland Perry

Roland Perry wrote:
In message
-septe
mber.org, at 09:19:54 on Wed, 28 Sep 2016, Recliner
remarked:

Getting back to competitors for Uber, none would be trying to win on
several fronts simultaneously, so perhaps we can agree that BMIbaby is a
red herring.

I only mentioned it to illustrate the point that to sustain low prices, you
also need low costs. Uber's driverless cars are ultimately all about cost
reduction.

So irrelevant to a small local competitor starting up next week.

Absolutely. And they won't survive long enough to have to compete with the
driverless cars, even if they arrive as early as the optimists hooe.

"Roland Perry" wrote in message
...
In message , at 17:40:24 on Tue, 27 Sep
2016, Neil Williams remarked:
What's better about Aldi than Tesco, if not the prices?
It's certainly not the range of products or length of checkout queues.

Simple price and price/quality ratio primarily, but also a smaller shop
meaning it doesn't take as long to complete a weekly shop.

You've never been in a Tesco Express, then?

A smaller range of products *can* be a good thing, provided it is very
well selected, which by and large it is.

Their product range is extremely unpredictable. Only yesterday I went in
to buy something they've had for sale for a few months, and they've
obviously churned their stock in that [soft drinks] aisle from "Summer" to
"Autumn" and it's no longer available.

They also never stock quite a few really basic things (sour cream is
something I think is on that list, and yet they sell lots of 'other'
Tex-Mex stuff).

The other thing they do, which is sort of clever but backfires, is packing
several varieties of the same thing in one tray.

So they'll have a pile of mixed trays of cottage cheese, cottage cheese
with pineapple and cottage cheese with something else [chives maybe], and
people have gone through picking out all the plain cottage cheese, leaving
a sorry pile of all those other sorts that no-one [especially me] wants.

Of course, their non-food takes these features to extremes, with much of
the stock being for sale for only a few weeks a year, and bins full of
clothing that within a day or two are entirely the unpopular sizes no-one
wants.

It is clear from the piles in the vacuum packed pasta selection that I am
not the only person who doesn't like gnocchi.

You have to go back 4 or 5 times to be lucky enough to find one or two of
the tortellini selection amongst the 100+ packs of gnocchi. (or
alternatively they are short dated - on one occasion shorter than the date
on the equivalent item in the fresh pasta selection, because they had kept
all the new packs hidden out the back waiting for the million over-purchased
packs of gnocchi to sell.)

Quite how Aldi cannot learn from this and realise that they need to order
from their suppliers in 40-40-20 ratio rather than 33-33-33 defeats me. I
thought they prided themselves on their management ability

tim