UND_Sioux
Well-known member
- Joined
- Aug 18, 2006
- Posts
- 58
Believe it or not regionals do not make money for the major, they are a cost. I’ve been in management and seen the numbers. Regionals cost about 20% average more seat cost. So why do they do it? The same reason an airline making money with paid for aircraft goes out and leases expensive brand new planes. EXOs are corrupt, they get kick backs on leasing company’s and aircraft company’s and yes from the regionals they do business with. They really don't care about profit, they play with the numbers and explain it to stockholders that they're more fuel efficient, frequency, bla bla bla lie lie lie. Also it's a union-busting tool that has been working great. What do they do when profits get to low? They park the the planes that are paid for and aren't making money (getting kickbacks)off of the leases and lay off employee's. That's why Airlines, like Southwest, that don't have this corruption always flurlish. You'll never see them hire a regional, why do you think AirTran quickly trashed the idea. They're a cost!
I can assure you, it's not pilot pay. A 70 seat pilot making 70k, a 120 seat making 120k, if there is a difference it's hugely minimal. It's economy of scale, if the regional model really was efficient, they would be flying around lear jets with with 4 pax a flight. Remember a 747 still has the highest profit per pax than any other aircraft, although the 777 is very close.
Look. Everybody always talks about how outsourcing is or is not more expensive. Most of you guys have no idea what you are talking about. The reason outsourcing is done is not because of the direct operating cost of the pilots, mechanics, etc...
The administrative costs of having an employee on the payroll are high. For each employee you have, you have a proportional number of HR people that deal with benefits etc..; lawyers, workers comp insurance premiums; health insurance premiums; rent on facilities for said employees, IT costs for said employees; and the list goes on and on.
When you subcontract all of the flying to a "vendor", all of those administrative costs go out the door. Remember this: it only takes one accountant to write a check to Skywest, RAH, Air Wisky, Pinnacle, etc..., but it may take hundreds to manage all the extra employees you'd have if those employees were on the mainline payroll.