March 24, 2006

Tale of Two Fitness Clubs

Lets assume Tim has a health club that is overflowing with members and for arguements sake, there are ten exercise bikes in the club. Now I have a fitness club on the other side of the city that has no customers, I am losing money badly and I have no exercise bikes.

Tim and I are friends and he offers to help me pay my bills for the next three years and tells me that he will try and help me anyway that he can. About 20 months into the three plan, he and I both realize that there are alot of people the live on my side of the city that drive across the city to his club. We figure that he could give up two exercise bikes to get people in my area to go to my gym.

What should Tim do??

a) Sending two bikes to my club will lessen the overcrowding at his gym and people will find parking spots easier. Also my increased profits will lessen the amount he has to subsidize of my losses.

b) What if he sends the two bikes to my gym and I start to turn it around. Maybe I bring in more equipment, start taking customers from Tim and when the current deal ends we are competing against each other?


Maybe this is an over-simplification but I see some inherent conflicts in our agreement.

11 comments:

tim said...

I was just watching the news on Channel 4 and they said JetBlue is going to make Logan a Hub.

John H said...

Logan has been a secondary hub since jetBlue was created in 2001. What they are doing, is just expanding, and adding more flights, and they need some extra room for the planes....their main hub city is New York

Bill Randell said...

I know JetBlue has made a major commitment to JetBlue.. Not sure, however, how they could have been a secondary hub since 2001 when they just started flying out of Logan last year. Irregardless.


The bottom line is that MassPort runs and owns one airport (Boston) that has lots of traffic including (just one example), ten flights per day on the Embraer 190 to their hub, JFK in NYC. Remember two years back, this was our very very first recommendation to get the Embraer 190 to fly an NYC city shuttle. Tom Moore called Dave Ulmer, who visited and Tim DeSantis mad the JetBlue Road.

Someone try to explain to me why MassPort could not even try to have two flights of the ten from JetBlue's NYC shuttle diverted to ORH? Hey, forget about two flights how about trying one flight per day to JFK and back.

One flight--MassPort can not pull that off?????????????

Anonymous said...

Massport is not good for ORH. The City is not happy with them, but they don't trust their own opinion on the matter. There are better operators out there, but I don't think they even know how to look for them.

Bill Randell said...

Come on one flight per day from ORH to JFK... Do you really think that people flying out of Boston to JFK will be mad when they go from ten times to nine???

Ytown Fan said...

Bill its so much more complicated than that. MASSPORT or not. It's Jetblue's decision and they're an airline in which they come to the airport, moreso the airport come to them.

Look at jetblue's route map, its not Allegiant Air. Worcester, MA fits nowhere in there. Tell you the truth I never even heard of Worcester, MA until I found your blog. They will never downgrade a market like that.

Just from what I know...

Bill Randell said...

YNG:

How can you say it is not MassPort's decision.. MassPort owns and runs the airport and JetBlue wants in... All they have to is tell JetBlue to fly one of their 10 flights into Worcester, an airport that they manage??

You need to check the demographics for ORH on the http://www.flyorh.com.... We have a pretty good size population who by the way drive to Boston to fly JetBlue...

JetBlue could own this catchment area and take away all the people who drive to Manchester/Providence to fly SouthWest. Worcester fits into JetBlue's route map as much as Syracuse or Buffalo.

The Embraer 190 is the plane that is perfect for ORH and is to be used to feed the bigger hub-JFK.

You never heard of Worcester??? JetBlue has, you should see the full page ads they run in our local newspaper.

Anonymous said...

Bill,

-Massport does not control the airport...at the end of the day the federal government does. Jetblue can add as many flights as it wants as long as they pay their bills and follow the federally approved regs at the airport. Can Massport apply pressure? Yes, but it's useless. Why would they rattle the cage of the best thing that has happened to Logan in a few years?

Your response to this is likely soemthing like..."then why does ORH contract with Massport if they wont apply pressure?" Guess what. You're right. There is no good reason to work with them. As I mentioned above, ORH needs to get away from Massport ASAP. In some cases they are dead-set against ORH development and the city knows it, they just dont trust their own instincts on that subject and they dont know what to do about it if they did.

-The only reason JBLU flys from SYR is because Chuck Schumer asked for a favor in exhange for him lobbying Pat Murphy (of the DOT) hard for slot expemptions at JFK.

-The path to JBLU is not through Massport. Some gentle, supportive pressure from Massport (purely to keep up appearances...Massport is not outwardly anti-ORH) could be a part of number of paths to JBLU that work in concert, but it will never be the centerpiece.

Bill Randell said...

Anonymous:

O'kay, I am with you.

One last question. Why would MassPort agree to the past three operating agreement and this three year operating agreement?? They simply like paying other peoples bills.

Serious, why has MassPort signed an agreement in past, why are they under a current agreement and will the sign a new agreement??? You have some great insights--keep them coming!!


Bill

Anonymous said...

good point:
Even though they might whine about it, the ORH deficit is not much of an issue for Massport. But that is serious money to the City. And they won't find someone else to help pick up the tab...unless they psuedo-privatize (long term lease). But even that is a tough sell when not in the black, but I think there are some out there that would be open to discussing it.

Anonymous said...

I guess I really didnt answer the question. There is no straight answer only theory.

1.) $2m isnt much for Mport
2.) They actually see ORH as a potential competitor under certain circumstances. For example, Allegiant is no threat at all and was encouraged. B6 would have been though. But don't sweat that one Bill, BOS is what B6 really wanted anyway.
2.) They seem to very much like controlling all the local airports.