Airline Profitablility

[mnboyev]

I think the big guys have a fancy computer that runs fancy programs to ensure optimum utilization? One of them analytic algorythm type of Dell computers. They load in the parameters and it spits out the monthly schedule.

They must look at when people want to fly and then schedule flights into and out of hubs to meet the peoples customers wants and wishes.

Hubs are inefficient. Dudes sit around waiting for the next bank just as indicated the one of 'posters'. Pickin their nose and watching TV. At 13 bucks and hour or more.

The bigger a carrier gets the more waste... plain and simple. More inventory, more people, more maintenance, more more more.. what does it equal ==== Higher wages ?

 

[Publishers]

point to point

Point to point is not the be all and end all either. We could discuss business versus liesure travel and the difference it makes as to time of day, etc. etc.

Dinosaur's did not survive, the smaller quicker animals did. Sort of a lesson.

A quicker analogy:

If you want to compete with Fedex, you have to put up a system that mirrors Fedex-- an expensive proposition with everything in place before you start.

If you only want the part of the business between NY and MIA, it is easier to get into the game. If you only want to carry envelopes, you can do it even cheaper. The customer --who only has a requirement to go between NY and MIA may not notice the difference.

 

[Ty Webb]

Here is something for FDJ to consider-

Perhaps it is really your company that is "bringing down the industry" and not the LCC. It's a version of the "chicken or the egg?".

That's right. Your company dumps hundreds of seats into our markets, every day, at a loss of hundreds of millions of dollars. This makes our company lower prices even further, in order to sell our seats.

Take a look at any on-line ticket engine, and you'll see what I mean.

In a time slot where DAL competes with FL, your company dumps seats at a loss, right down to the very last seat, but in a time slot where DAL has a flight and we don't, the prices start about 200% higher, and go up as they sell out.

Now, I ask you, who is setting the rock-bottom pricing, the LCC filling up one B717 at a fare that we can make a profit on, or DAL dumping hundreds of sets at a loss?

I think I could make the argument that if your company didn;t dump seats into our markets, we could charge even more, which means my company could afford to pay me more!

Perhaps if DAL focused on doing what they do best, instead of losing money doing what they don;t, we would both be working and well-paid.

Second, what MNBoy is advocating is called a Guild. The way it works in other industries, is that you accrue seniority in the Guild. The airline doesn;t hire pilots, it requisitions pilots from the Guild.

If a company will need, say, 200 B767 crews. the Guild sends them 200 B767 crews, based on seniority in the Guild, at the standard pay for B767 crews. That way, if a company goes bust, you don;t start over.

Say something like:

Year 1 CFI
Year 2 CFII
Year 3 Part 135 C210 PIC
Year 3 Part 135 PIC or Part 121 FO small jet (<60,000 MTOW)
Year 5 Part 121 medium jet FO or small jet PIC
Year 6 Part 121 Large jet FO or medium jet PIC
Year 7 Part 121 Jarge jet FO or Medium jet PIC
Year 8 Part 121 Large jet PIC Domestic or Medium jet Int'l FO
Year 9 Part 121


or something to that effect, based upon supply and demand. You bid to change companies basically to change location and or equipment, since they all pay standard scale for the equipment.

 

[FlyDeltasJets]

Ty,

I hope that you are not seriously suggesting that it is WE who are lowering fares on YOUR routes??!!

P.S.
I don't support the guild concept, but that is a topic for another thread.

 

[Ty Webb]

Ty,

I hope that you are not seriously suggesting that it is WE who are lowering fares on YOUR routes??!!

Yep, that's exactly what I am saying, and I believe that is what Fletch was getting at, too.

We enter a market charging a price that we can make money at.

Your company responds by dumping hundreds of extra seats on that route, at prices that they lose money at.

If DAL stopped dumping seats at less-than-cost, then we could actually raise our prices to a higher profit margin.

It's a two-way street.


I doubt you will be able to step away from your situation and see the logic of what I am saying, but I can assure you that it has merit.

PS, if there was a Guild, you would still be working . . . . . . you might be a FO on a narrowbody at a different company, but you;d be making union scale somewhere.

 

[FlyDeltasJets]

Actually, many of your markets are ones in which we already had "hundreds of seats" long before you were an airline. We also had been pretty successful doing so, too. I believe that we will be successful again.

P.S.
I also believe that I will make far more money during career at Delta than I would if I had to move back behind those whom I left at previous airlines, even if it does mean I'll be out of work for a while. I don't think that the guild idea is at all realistic, but I will grant you that it would take away much of the uncertainty in this profession. I don't see how it could ever be implemented, however.

 

[Ty Webb]

Actually, many of your markets are ones in which we already had "hundreds of seats" long before you were an airline. We also had been pretty successful doing so, too. I believe that we will be successful again.

No, your company dumped hundred of extra seats on these routes AFTER we entered them . . . part of the reason that DAL loses over a Billion dollars each year on routes that give us only $700 million.

Again, if DAL didn't dump all of those extra seats AFTER we enter a market, they wouldn't be losing their a$$ on those routes, and we could actually charge more. Remeber, we have a finite number of airplanes, we can only take 117 pax at a time, period.

What we ARE charging, though, is enough to make money . . . that is why we were profitable for 3 out of the last 4 quarters and why we will probably be the most profitable airline for 2002 when we announce on 1/28 (as a percentage, not by $ amount).

P.S.
I also believe that I will make far more money during career at Delta than I would if I had to move back behind those whom I left at previous airlines, even if it does mean I'll be out of work for a while. I don't think that the guild idea is at all realistic, but I will grant you that it would take away much of the uncertainty in this profession. I don't see how it could ever be implemented, however.

The way the Guild works in other industries, you wouldn't lose your job, you would simply change to another carrier during these hard times. When things improve, you could change back. In other words, if you are a B757 FO, you would be a B757 at another carrier, and making the same pay, and when DAL requested more B757 FO, you could bid back to DAL, but you would still be making B757 in the interim, just at another carrier.

The way it would be implemented is by ALPA, and their lobbying PAC, in addition to everyones else. It would definitely be much better, but a major change like that would likely take decades, not months.

BTW, these message boards don't always make it easy to convey the "tone" of these posts . . . I have nothing against DAL pilots, I hope that all are back to work ASAP, I just don;t like being blamed for something that belongs on the shoulders of your management team. I am not saying that YOU are blaming ME, but I know thatn the "blame AirTran" sentiment does exist among some people in ATL, and I am trying to make sure everyone sees the issues from my perspective, as well.

Good luck to all.

 

[FlyDeltasJets]

Ty,

A few points:

1: Great name.

2. I will be willing to bet that I can name far more markets in which you came in and lowered the prices than you can name where we did. FAR more. Yours is the first time I have EVER heard anyone blame Delta for lowering prices. I think that history, the facts, every airline analyst in the country, our management, your commercials, and your mgt agree with me. If you disagree, we have a great opportunity to see on the ATL-DEN route.

Please don't misunderstand. That is your opinion, and I respect it. I also appreciate your tone, you have been polite, and I hope that I have been too. I just think that you are incorrect, and I think that the facts support my argument. Every market any low cost carrier has ever entered has resulted in lower fares. Every one. They are able to do so because their costs are lower. I have explained the number one reason that their costs are lower, and it has yet to be refuted using real numbers.

It is not a matter of "blaming airtran." I blame our mgt. They ignored your threat (even to the point of selling you our discarded airplanes when you started up), they stopped realizing that their employees should be their most important customer like the old Delta knew (and in turn, we would make the passengers OUR most important customer), the furloughed ME!!! etc. I know that much of the problem lies with our own mgt. I have never "blamed airtran." However, I have pointed out the effect that they and the other low cost carriers are having on our industry and our profession. I am not the first to point it out, you can read the same thing in any business publication. I have been told, however, that it somehow sounds more "arrogant" coming from a Delta pilot!

I wish you luck. I hope that we can co-exist.

3. I became a 767 pilot, and was hired by Delta long before my "guild" number would have allowed it, due to hard work (and sure, I guess some luck!) The point is, you mentioned that I would still be working under a guild system. While that may be correct, I would still have to move way back. I like my career earning potential better at Delta. I will let you know if I was right on my 60th birthday!

Also, a guild sounds good in theory, but would be so difficult to implement it is not even worth discussing. Who would pay the training costs? Where do we set the wages? Should narrowbody pay be at your rates, or ours, and if we set them at ours, would the low cost carriers survive. Wouldn't that lead to fewer jobs? Or lower pay? Should a guy who spent a career bouncing around the industry because all those DUI's prevented him from getting hired by a major move ahead of a 30 year Delta captain? What about the companies who didn't want to use the guild? Could we prevent them from undercutting us and hiring off the street? Would I have to give up my pension? Would we have to furlough off the bottom to get all of the 15 year U furloughees back on the property. Would we have to furlough a cmr new hire to get me back? Would they go for it?

There are so many more questions, but the issue comes down to this. I like the concept in theory, but I think that it is unworkable. In the meantime, each pilot rolls the die and hopes for the best. It is not completely a crapshoot, though. I left three other ALPA carriers in my quest for Delta. I could have made a career at any one of them, but I made my decision based on what I thought offered the most stability and career earning potential. Did I make the right decision? I think that I did, despite this hiccup, but again, I will let you know when I am 60.

Thanks for the discussion.

 

[Ty Webb]

Ty,

A few points:


I will be willing to bet that I can name far more markets in which you came in and lowered the prices than you can name where we did. FAR more. Yours is the first time I have EVER heard anyone blame Delta for lowering prices. I think that history, the facts, every airline analyst in the country, our management, your commercials, and your mgt agree with me. If you disagree, we have a great opportunity to see on the ATL-DEN route.

Under the "old" thinking, yes, you would be right. However, the marketplace has changed.

Initially, when we come into a market, yes, we are "responsible" for lowering prices. However, as I said before, Delta's response then is to dump hundreds of extra seats onto the route, which simply exacerbates the effect.

When our flights are full, we charge more. If the flights do not fill up, they seats stay cheap . . . if DAL dumps seats, our flights aren't full, and people are paying $79. each way instead of $149.

Do you get it now?

That's right, if DAL had simply kept on being DAL, we would be coexisting and both making money. DAL could have kept the higher-end customers and left the most price-sensitive ones to us, but instead, they would rather cut their own throats and bleed red ink, which they continue to do. See, the problem is that we are making money at this. We can go like this forever, but DAL cannot, it's impossible, so something will have to change.

DAL should actually be glad we're here and not SWA, which would have been more likely to happen if we weren;t here.

BTW, DAL has now entered every proprietary route that we have. That is part of the reason that we have gotten the "mini-me" program up and running (the RJ), so you could even say that DAL has lowered the bar for AirTran pilots, by forcing us to use AWAC instead of hiring and paying B717 pilots!

BTW, our pilots aren't as underpaid as you might think, not for operating a 117 pax airplane, we just have to work a little harder and upgrade earlier, but we do OK.

Just a little twist on some old thinking, from the folks over at Concourse C . . . . and D.

 

[FlyDeltasJets]

Well, Ty, perhaps it has escaped me, but I don't see Delta "dumping seats" into too many markets lately. In fact, it has been quite the opposite, as our mainline continues to shrink.

P.S. I find it pretty ironic that you accuse us of forcing you to use rj's!!! Unbelieveable.

I guess we will have to agree to disagree. I feel confident that the facts are on my side. However, I am sure that you feel the same. Let's watch what happens in Denver, it should be quite illuminating.

 

[Ty Webb]

Yepper, that's exactly what I am saying. Someone already gave the VPY and PNS examples of DAL dumping seats. It's an old tactic, the problem is that it doesn't work against a rival that is making money, but DAL would rather lose money and "keep marketshare". Kind of like the company that is losing money on every sale, but making up for it with quantity.

Here's another one for you . . . DAL is preparing to swamp DFW with RJ's and pulling mainline out, which is pretty much what you are saying that the LCC's do to DAL, entering the markets with smaller, cheaper planes flown by lower-paid pilots.

It should be interesting to watch the fireworks in DFW as two majors start goring each other. Maybe AMR will respond by doing the same to DAL in CVG or SLT, or by code-sharing with us out of ATL . . . now, wouldn;t THAT be a hoot!

BTW, Frontier already does ATL-DEN.

 

[FlyDeltasJets]

Here's another one for you . . . DAL is preparing to swamp DFW with RJ's and pulling mainline out, which is pretty much what you are saying that the LCC's do to DAL, entering the markets with smaller, cheaper planes flown by lower-paid pilots.

Beleive me, I don't like it when we do it either.