Whats with all of the sudden trouble?

[buxflyr]

How do we go from constant hiring/cant find enough pilots, etc.... to within 2 months, several regionals furloughing, hiring stopped and bankrupt regionals possibly on the horizon?

All of this with NO major increase in oil...no MAJOR worldly events, and most of us still working with post 9/11 contracts?

WTF is going on?!

 

[Flyguy1226]

Uh... It's called the airline industry. :erm:

 

[Airscrew]

Delta

 

[RJLoser]

The airlines want to cut costs right before business gets good and they need a bunch of pilots.

 

[ex j-41]

Keep in mind that management is very reactive. They wake up one morning and see that 30 pilot have given their notice. So they give the go ahead to hire 15. So now you have 30 Captains that quit. 30 f/o's are given an upgrade. So you have 60 people off line. But all's good because you just hired 15. 10 of which are going to pass training. 30 days later management sees that fatigued calls are up. Cancellations are increasing and revenue is down. It's all labors fault. Those SOBs just don't want to work. Time to initiate "leadership by fear". Management will now threaten those that call in sick, interrogate those that call in fatigued. Junior Mann calls go out, and if you refuse you are fired. Then the economy catches up, staffing is adequate so flights start to leave on time again, bonuses go out. Other airlines start hiring again and weeeeee we are back at the top again....

 

[BrickTop]

No one listens to me.........I told you so.

 

[JustaNumber]

I believe it's the recent change in corporate bankruptcy law that is responsible for a complete change in philosophy at the major airlines.

It used to be that the bankruptcy laws were a total joke. USAir went into bankruptcy protection 3 times in almost as many years. United stayed in bankruptcy for 3 years, and its CEO had the cahones to admit he was using the process to gain a competitive advantage. The catch phrase of the past decade was "gaining market share." The airlines just wanted growth, even if they were losing money, as they figured an eventual bankruptcy filing would allow them to sort out their finances later.

Now that the bankruptcy laws have changed, many airlines are realizing that this is getting harder to do. So airlines are actually trying not to lose money on flights for a change. This means capacity reductions, without caring about the once sacrosanct "market share." And since all airlines now care about costs, they aren't worrying about a competitor swooping in and replacing the discarded money-losing flights with new money-losing flights.

So that's why all the flights are full, airfares are up almost 20% over last year, and there's still layoffs for pilots.

For the regional industry, there are additional concerns. The majors have decided that profit is the ONLY consideration now, and so they're using the capacity reductions to their fullest advantage, to get shrinking regionals to fight amongst themselves for the remaining flying. So now regionals are playing the "market share" game, while flying at a loss. Obviously this is unsustainable, and at some point something's got to give. The industry cannot survive by eating its young; there will be significant changes coming, one way or the other.

 

[zawillif]

How do we go from constant hiring/cant find enough pilots, etc.... to within 2 months, several regionals furloughing, hiring stopped and bankrupt regionals possibly on the horizon?

All of this with NO major increase in oil...no MAJOR worldly events, and most of us still working with post 9/11 contracts?

WTF is going on?!

It's the death of the 50 seaters. They've been saying its coming for the past couple years. Now that contracts are starting to end you're seeing the beginning of a long slow death.

 

[Oakum_Boy]

Problem is, managment are in denial. Paycut after paycut after paycut ala Comair. That's the way forward for most regionals, I'm afraid. Couple this with the new regs that are going to require me to "affirm" that I'm fatigue free, more days on the road, fewer legs per day....

It's all over folks. You MUST know it by now. RIP.

Yes, I think it's finally at a point where I am perfectly OK throwing in the towel. Not an awful way to spend a decade and a half.

 

[cynic]

....... So now regionals are playing the "market share" game, while flying at a loss. Obviously this is unsustainable, and at some point something's got to give. The industry cannot survive by eating its young; there will be significant changes coming, one way or the other.

You are correct except that nothing will change. Perhaps a few of the regionals will go under but that's about it. That situation can stay as it is for some time!

 

[altimaklr]

Regional jets have become unprofitable due to fuel, and at the same time the cost savings on crew and overhead versus mainline has become much more narrow... Thanks to higher wages and work rules at the regionals and lower pay at the majors. Basically we are no longer needed.

 

[Scapegoat]

Some regionals are unprofitble to themselves but not to the major airlines that uses their services. I see this new mantra of the unprofitable 50 seat jets turning into more future flying for the majors. This will not happen. There are bigger and better margins to be made from 70 and 90 seats jets at regional pay. There is still a big difference in labor costs between majors and regionals.
In the future, look for more planes to be doing longer routes. That includes 757's as well as 50 seat RJ's. Look for things to stay just about the same except for a few failures at the regional level. More companies like Allegiant, Spirit, VA and Hawaiian doing flights that UAL, AA, DAL and USA have abandon. Radical change is not in the forecast. IMO only. Waiting for the industry to prove me wrong. Hasn't happened yet.
Happy Holidays everyone. And always look out for number 1, (you)!

 

[Redtailer]

How do we go from constant hiring/cant find enough pilots, etc.... to within 2 months, several regionals furloughing, hiring stopped and bankrupt regionals possibly on the horizon?

All of this with NO major increase in oil...no MAJOR worldly events, and most of us still working with post 9/11 contracts?

WTF is going on?!

Regional pilots that haven't been around too long stick out like a sore thumb.

You have never heard the old saying that airlines hire until they furlough? It's a very true statement that reaches back decades. Different reasons through the years, but the process remains the same.

If you are in the bottom 10% of your airlines' seniority list never, never, NEVER get comfortable there as overnight you may be out of a job. If you are higher up then at least you may have some warning. It doesn't matter if you are regional, mainline, cargo or anything else.

It's just the nature of the beast. Welcome to the airline business!

 

[CX880]

How do we go from constant hiring/cant find enough pilots, etc.... to within 2 months, several regionals furloughing, hiring stopped and bankrupt regionals possibly on the horizon?

All of this with NO major increase in oil...no MAJOR worldly events, and most of us still working with post 9/11 contracts?

WTF is going on?!

They don't need you. You are worthless. Get the time and move on.

 

[altimaklr]

Skywest has a cost-per-seat-mile of about 9.1 cents
Delta is only 7.8

That is excluding fuel, which makes regional flights even more expensive per seat mile

Regional airlines have lost most of their usefulness now.

 

[buxflyr]

Regional pilots that haven't been around too long stick out like a sore thumb.

You have never heard the old saying that airlines hire until they furlough? It's a very true statement that reaches back decades. Different reasons through the years, but the process remains the same.

If you are in the bottom 10% of your airlines' seniority list never, never, NEVER get comfortable there as overnight you may be out of a job. If you are higher up then at least you may have some warning. It doesn't matter if you are regional, mainline, cargo or anything else.

It's just the nature of the beast. Welcome to the airline business!

That has nothing to do with the possible bankruptcies on the horizon. I am well aware of why Warren Buffett has advised to never invest in the airlines. I am also well aware of the subpar management that is at many airlines. Thing is.. are you aware that the only way to fix this is with regulation?

 

[On Your Six]

Skywest has a cost-per-seat-mile of about 9.1 cents
Delta is only 7.8

That is excluding fuel, which makes regional flights even more expensive per seat mile

Regional airlines have lost most of their usefulness now.

I would say atleast 50 seaters have, and some smaller props like the Saab. If the EAS money can't cover the costs, then the SAABs don't work. With oil over $90 a barrel, most 50 seaters don't work, unless you can put them in an airport like LGA that can charge high enough fares that businessmen will fly them regardless. That is the only reason some are going there to fly to GSP and GSO type cities. If those loads grow, they too will be gone and replaced with mainline planes like A319s.

Regional airlines haven't lost their usefulness, but I bet most of their CEOs are sweating it, big time. And unless you are in BK, there is little chance of any mainline pilot group giving away anymore scope. Everyone can see what has happened.


Godspeed!

The OYSter

 

[dojetdriver]

Skywest has a cost-per-seat-mile of about 9.1 cents
Delta is only 7.8

That is excluding fuel, which makes regional flights even more expensive per seat mile

Regional airlines have lost most of their usefulness now.

The sad part is, some of the UAX carriers had CASM costs of 12-14 cents before the UAL BK.

 

[CaribPilot]

Im outta here as soon as i get the chance. Surejet is a sinking ship.

 

[JustaNumber]

That has nothing to do with the possible bankruptcies on the horizon. I am well aware of why Warren Buffett has advised to never invest in the airlines. I am also well aware of the subpar management that is at many airlines. Thing is.. are you aware that the only way to fix this is with regulation?

While that sounds at first glance like it would be a good solution, I strongly suggest you read the book Hard Landings, which details the rise of the airline industry along with the rise (and fall) of government regulation. The era of big regulation was riddled with some of the most egregious corruption and ineptitude you could imagine. The industry as a result was a fraction of the size it is today, which meant that only the very wealthy could afford to fly (so it was bad for the country), and most people who dreamed of becoming pilots would never get the opportunity (which meant it was bad for your career prospects). Sure a few lucky guys got to play like royalty, but trust me, you wouldn't want to play those odds today.

Actually, the solution is to remove the chapter 11 bankruptcy process altogether. Don't allow the subpar managements of the industry to breed. Only the best-run companies (like Southwest) would survive, and you would actually want to work for them, and there would be more positions available there. So LESS regulation, not more fixes this.

 

[buxflyr]

While that sounds at first glance like it would be a good solution, I strongly suggest you read the book Hard Landings, which details the rise of the airline industry along with the rise (and fall) of government regulation. The era of big regulation was riddled with some of the most egregious corruption and ineptitude you could imagine. The industry as a result was a fraction of the size it is today, which meant that only the very wealthy could afford to fly (so it was bad for the country), and most people who dreamed of becoming pilots would never get the opportunity (which meant it was bad for your career prospects). Sure a few lucky guys got to play like royalty, but trust me, you wouldn't want to play those odds today.

Actually, the solution is to remove the chapter 11 bankruptcy process altogether. Don't allow the subpar managements of the industry to breed. Only the best-run companies (like Southwest) would survive, and you would actually want to work for them, and there would be more positions available there. So LESS regulation, not more fixes this.

Well said.

 

[pilotyip]

That has nothing to do with the possible bankruptcies on the horizon. I am well aware of why Warren Buffett has advised to never invest in the airlines. I am also well aware of the subpar management that is at many airlines. Thing is.. are you aware that the only way to fix this is with regulation?

Life was good for a few pilots under regulation. There are probably 4-5 times as many pilot’s jobs now as there was in 1977. Back in reg time it was about 90% military that went to the majors. Dereg opened up a lot of airline job to non-military pilots. To return to regulation would raise ticket prices, reduce the number of passengers, and therefore reduce the number of pilots needed. Re-reg would be very good for senior guys not so good for everyone else.

BTW if there is subpar management and someone here has all the answers, why are they not stepping up to fix it.

 

[IBNAV8R]

Skywest has a cost-per-seat-mile of about 9.1 cents
Delta is only 7.8

That is excluding fuel, which makes regional flights even more expensive per seat mile

Regional airlines have lost most of their usefulness now.

Assuming, of course, that demand in a given market matches capacity.

According to your numbers:

Skywest cost is $4.55 per mile regardless of load

Delta cost is $9.36 per mile regardless of load

A full 50-seater has a much better yield than a 1/3 full mainline aircraft.

 

[fam62c]

Fuel costs have remained higher longer than anybody ever thought they would and that's driving a change in the industry. This industry and many of the planes in it were never designed for sustained $60+ oil let alone sustained $90+. It just doesn't make economic sense for multiple airlines (or any airlines in some cases) to serve some of the markets that require smaller planes anymore. It's also becoming more efficient to have less frequency using larger planes in some markets and pull out the additional small plane capacity.

Sustained high fuel costs have finally forced airlines to do what they should have been doing all along.......focus on adjusting capacity to maintain profitability instead of fighting over market share at the expense of profit. There is a place for smaller aircraft but it's not going head-to-head against a 737 or Airbus in markets that can support the larger equipment. There are too many planes and too much capacity which means the least efficient, least versatile planes are going to have to go away and right now that is 50 seat jets and really old gas guzzling mainline planes.

 

[johnpeace]

A full 50-seater has a much better yield than a 1/3 full mainline aircraft.

I haven't seen a 1/3 full mainline aircraft since the 80s...

 

[altimaklr]

Assuming, of course, that demand in a given market matches capacity.

According to your numbers:

Skywest cost is $4.55 per mile regardless of load

Delta cost is $9.36 per mile regardless of load

A full 50-seater has a much better yield than a 1/3 full mainline aircraft.

True, but the break-even load factor on a mainline flight is significantly lower than a regional flight.

 

[Flybywire44]

Regional jets have become unprofitable due to fuel, and at the same time the cost savings on crew and overhead versus mainline has become much more narrow... Thanks to higher wages and work rules at the regionals and lower pay at the majors. Basically we are no longer needed.

Next stop 100 seat scope. Majors will always try to keep the seniority/longevity reset.

Edit: I hope all majors recognize this threat in the coming round of contract negotiations. Delta is rumored to offer an avg 30% pay increase with 100 seat scope.

 

[lookin4better]

Skywest has a cost-per-seat-mile of about 9.1 cents
Delta is only 7.8

That is excluding fuel, which makes regional flights even more expensive per seat mile

Regional airlines have lost most of their usefulness now.

Long as people realize it is/was just outsourced contract work, there should be no surprises.

 

[Sherpa]

No scope relief, things have been stagnant enough for too long. I hope there is more flying reeled in by places people want to spend their careers.

 

[rickair7777]

Skywest has a cost-per-seat-mile of about 9.1 cents
Delta is only 7.8

That is excluding fuel, which makes regional flights even more expensive per seat mile

Regional airlines have lost most of their usefulness now.

That's lying with statistics. Delta's average CSM only applies if you are going to fly widebodies into Fargo.

You would have to compare the CSM of providing narrow-body service to the smaller markets which the regionals serve...not as good of a number once you pull-out the CSM contribution from longe-range widebody ops.

To serve small/medium markets with mainline you could replace multiple RJ's with one daily (or every other day) narrow-body...but you would lose customers who need frequency for their own convenience, including pretty much all business and premium customers.

Or you could just stop the service altogether. But eventually someone would fill the hole, either via market forces or re-regulation if enough folks lost air service.