Perhaps I'm mistaken, but I thought Delta already made the comment that they were not interested in renewing contracts with Republic Holdings.
The 70/90 market is the hottest commodity within the DCI portfolio. I assure you that if they aren't flown by Shuttle or Republic, they will be flown by someone. This is a certainty. The only variable is the operator, and the bait. I would expect to see more two for one deals in the works as this flying becomes available.
Not only is this flying going to open up for Delta, but I expect the same to happen at USAirways and United. Neither of these two carriers are going to bolster a dirct competitors liquidity. I just can't see that happening. I'm convinced that Skywest knows this also, and that explains their reasoning in helping to prop up United and lock in contracts with them.
As soon as Republic makes a go of it on their own, I also expect that Continental will also dump CHQ. However, there probably won't be much in the way of bid flying as a result- I'd expect Continental to cut capacity in the 50 seat market and I suspect the bulk of their cuts will come from this contract termination. There might be some scraps, but nothing of much large substance.
The days of massive RFP's, rapid upgrades, and spurts of growth are now over. The regional carriers have now patterned themselves much like the legacies and nationals. Lengthy upgrades, instability, cost issues, and longevity are the new norm here. I wonder when the regional regionals will put out RFP's for cost lock in as a hedge against labor??????????????????????
There has been no such comment except on these message boards. Delta, United, US Airways, American, and Continental have made ZERO public announcements regarding RAH's acquisitions, and what implications those acquisitions will have on future contracts.
What we have here is a case of believing a story only because it has been told so many times. Lots of people on FI are jumping up and down wishing for the end of RAH. And it would make sense that RAH could lose contracts down the road for competitive reasons. But everyone forgets that RAH has been taking money for years from competing airlines. American has paid RAH, who has in turn helped US Airways survive its financial woes for years. Delta has paid RAH, and in turn financed the acquisition of 70 seat aircraft for United. The single difference now is that RAH can set its own airfares on certain flights. Has this offended Delta? The truth is that Delta entered into a limited code-sharing agreement with Midwest, a direct-price-set-by-RAH competing airline. RAH has actually found some reward, not punishment from the major airlines. US AIrways will not pull any flying (nearly a quarter of RAH's total flying, pre-YX/F9) because of US Airway's need for cash, which RAH provides. Delta could choose not to renew the CHQ contract, but that is still years away, and there has been no word from Delta to indicate an early termintaion of that agreement.
The truth is that RAH meets the quality parameters of the major carriers they serve. I don't set those standards, so lets leave the lid on that can of worms. RAH performs well, and they do it at a cost that makes them attractive to the mainline carriers. You can say that RAH undercuts, and perhaps Bedford does, but I will agree that we are likely one of the least expensive DEPENDABLE regional lift providers. All I know is that whatever RAH gets paid, they are still able to pay the employees without concessions, and they are able to amass enough cash to purchase new aircraft and purchase other airlines, and still invest in side ventures. My point is that RAH has some wiggle room to keep the interest of the mainline carriers who contract with them, and RAH currently provides a reliable product to the contracting majors, and has not stopped meeting their needs.
Like him or not (I think the concensus is not), Bedford is good at GROWING his business. He does not take steps that would cause it to shrink. If the choice before him was either lose up to 2 dozen E170's and keep the profits coming, or keep 2 dozen planes and lose 85% of his revenue, I think it is pretty obvious what he would chose. If the flight intructors posing as regional captains on this board can see a potential pitfall, I am sure the CEO who has increased the size of his company ten fold while maintaining a profitable business can see it, too. Bedford keeps his job at the will of the Board of Directors. The Board of Directors reward well thought out business moves, not erratic decisions that endanger the entire revenue stream of that business.
ACA/Independence and ExpressJet entered into stand alone operations because they had to protect revenue. RAH was in no danger of losing significant revenue. THis was a willful decision that was well researched and well orchestrated. It may work or it may not, but the worst that will honestly happen is that RAH will have to sell off Frontier and Midwest. Frontier especially is a viable brand that has market interest, especially now that it is out of bankruptcy. Bedford would sell off these airlines before he gave up the meat and potatoes of the RAH revenue stream. Just think about it a little, guys.
