Interesting Regional Jet Analysis

[HalinTexas]

I think you missed his point, he says that they are profitable within the larger context of the network. They replaced unprofitable 737s with profitable CRJ-700s.

So you're (and he) saying only in a network can they be profitable? While it's been proven, and previously said, that B737s (and the equivalents) can be profitable without 50 or 70 seat jets. I may be wrong, but the manufacturers are still making, accepting orders for 737s and A320s while the 50 seat market is dead. There must be a reason for this.

Eventually, that "network model" can/will be unprofitable.

He's using flawed metrics. He's assuming every seat is sold at the same price generating the same yield. Likewise, he thinks costs are fixed. Yes, there is a point when replacing old B737's (-300's) with new E170's and the like will change the margin. However, those 70 seaters can become money pits as well. Under the right network, any series 737 can be as profitable or more so, than a 70-seat jet.

 

[jonjuan]

SOUTHWEST:

737s
Highest paid pilots
Shareholders make money
Domestic

WTFO

Smart management.

 

[Hamfighter]

I contend that Southwest is the only airline run for the benefit of the company and its employees. All other airlines exist for the enrichment of senior management at any cost.

 

[bluefin]

BINGO!!! you did forget to mention the customer!

 

[Mr.B]

Smart management.

Yep. Now that didn't take long did it. Yet that wind bag, management mouthpiece spent how long justifying an rjs existence when it all comes down to one thing- Incomplete at the airline executive level.

 

[Mr.B]

I contend that Southwest is the only airline run for the benefit of the company and its employees. All other airlines exist for the enrichment of senior management at any cost.

And you Sir Ham would be most percipient!

 

[thepotato232]

BINGO!!! you did forget to mention the customer!

From what I understand of the Southwest corporate culture, the airline itself is indeed run "for the benefit of the company and its employees", with the apparently unheard-of understanding that a workforce operating in such a manner will see to the well-being of the customer quite naturally, making Hamfighter's summary quite apt.

Trippy, no?

 

[Raoul Duke]

So you're (and he) saying only in a network can they be profitable? While it's been proven, and previously said, that B737s (and the equivalents) can be profitable without 50 or 70 seat jets. I may be wrong, but the manufacturers are still making, accepting orders for 737s and A320s while the 50 seat market is dead. There must be a reason for this.

Eventually, that "network model" can/will be unprofitable.

He's using flawed metrics. He's assuming every seat is sold at the same price generating the same yield. Likewise, he thinks costs are fixed. Yes, there is a point when replacing old B737's (-300's) with new E170's and the like will change the margin. However, those 70 seaters can become money pits as well. Under the right network, any series 737 can be as profitable or more so, than a 70-seat jet.

First of all, I was explaining what I understood the article to say, not my opinion. That being said, I recognize that there are cities that a 737 will not be profitable which could be profitable with an RJ. This becomes particularly true in the context of a high frequency hub model. I am sure a 737 once a day could be profitable to many markets. I also believe that in the same market an rj making 3 round trips could generate more revenue and profit than the same trips being operated by a 737.

 

[doh]

What a bunch of crap. What the hell is a "B737 equivalent?"

He's trying to create a new metric on his own, without explaining how he got there. No ASMs or RPMs. If RJ's were so profitable, there'd be scads of startups using 50-100 seat RJs without feed. There has never been a "stand alone" RJ airline model proposed on this planet that has been successful. What there is relies on feed or government support.

If the public wasn't so ignorant, they wouldn't be so afraid of props. Q400's and upgraded ATRs would rule the short haul.

If unions weren't so ignorant, they'd scope in all their regional feed at competitive rates.

If the press wasn't so ignorant, still, they'd talk more about how employees at
these regional companies, particularly pilots, make food-stamp wages.

Oh, but that wouldn't be profitable. That wouldn't serve the public with mass-transit fares. That wouldn't work.

Here's a solution. If you can't make money, shut 'er down so that someone else can! End the endless bankruptcies and reorganizations of failed business models. End the bailouts. We have 3 automakers based in this country. Two are owned, significantly, by the Gubmint. You think somebody would figure out your business model sucks and would try something else or get out. Not in today's environment. Meanwhile, Toyota, in spite of the "brake" issue is puttin' out cares all over the place. Ford is as profitable as it's ever been.
(Remember those rollovers?) Free enterprise will rule out if you let it. Cull the herd.

Every bit of that analysis is flawless! :beer:

 

[no1pilot2000]

This article must have been written by an economics professor.

I have a question for those of you who are current/past regional airline pilots. From reading past statements from people on this web site about how RJ's are becoming increasingly unpopular in todays regional airline environment. In the coming years (10 to 20 yrs.), which aircraft will become more widely used by regional carriers? Will a different type of jet be introduced to the US regional airline market or will turbo props be used more?

Any guesses or opinions?