General Lee
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AirTran and Air Wisconsin Divorce
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Re: It's all in the [I]yield[/I], baby.
The problem is the yield is going to Airtran because our RJs provide an inferior product at a higher cost. While CMR may post an operational profit, BTW mainline is profitable for operations also, CMR does not pay all of its expenses, DAL does.
"Delta chief financial officer Michele Burns said Delta pays for all but operational costs for a Comair passenger, with such costs including the debt for new airplanes, marketing and distribution and other costs.
But she said the company could not say whether Delta makes money on Comair passengers, adding that such statistics were considered for the entire network"
FlyComAirJets said:
The problem is the yield is going to Airtran because our RJs provide an inferior product at a higher cost. While CMR may post an operational profit, BTW mainline is profitable for operations also, CMR does not pay all of its expenses, DAL does.
"Delta chief financial officer Michele Burns said Delta pays for all but operational costs for a Comair passenger, with such costs including the debt for new airplanes, marketing and distribution and other costs.
But she said the company could not say whether Delta makes money on Comair passengers, adding that such statistics were considered for the entire network"
Tim47SIP
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Where are the Pax?
General,
I agree with Fins that RJs do bring more profitable passengers from cities that do not have LCCs----like Peoria--and I have stated many many times in the past that this is our strategy----Song flies cheaper pax nonstop to FLA from the NE, and the RJs bring in premium passengers from smaller cites to fill our 764s in ATL to FLA. But, what about all of those larger cities--like DEN, ABQ, SNA, OAK, PHX, etc to DFW----why are those competing with LCCs and bringing less pax to DFW to connect. No wonder we downsized there---we don't have enough connections now to suport more mainline planes.....
I fly those routes you are talking about. The problem I see is that the flights are not full. Mostly around 75% or so average. Yes they are long, and I am sure the pax would certainly enjoy larger aircraft. But untill Delta can muster up the number of pax it needs to start replacing us on those routes, it is just the way it has to be. The only other option is to run one mainline flight per day to fill the plane, but those same pax would take another carrier with more frequency.
Take a look at VPS. Airtran moved out of there 2 years ago to PNS. Delta maintained frequency with RJ's and ATR's. They added one, then two MD80's. There are now 4 MD80's in there plus all of the ATR and RJ routes. Many people from PNS are traveling to VPS to fly on those MD80's, RJ's and the ATR's instead of Airtran because Delta has kept the costs competitive and maintained a greater frequency. Also, PNS to ATL now has 6 MD80's and 2 RJ's, but PNS to DFW has dropped it's 2 MD80's for several ERJ's and RJ's. With numbers increasing (some of our 50's are going to be replaced with 70's), eventually those MD80's will be back. We now have 4 flights a day from VPS to DFW with RJ service. This was done to relieve the ATL to VPS conjestion. It worked intitially, but the aircraft are filling to the point of possibly another MD80 in here next year. I know, I fly those routes there four times a week. When the other routes can again accomodate larger aircraft, it does not take a rocket scientist to decide that mainline needs to fly those routes.
General,
I agree with Fins that RJs do bring more profitable passengers from cities that do not have LCCs----like Peoria--and I have stated many many times in the past that this is our strategy----Song flies cheaper pax nonstop to FLA from the NE, and the RJs bring in premium passengers from smaller cites to fill our 764s in ATL to FLA. But, what about all of those larger cities--like DEN, ABQ, SNA, OAK, PHX, etc to DFW----why are those competing with LCCs and bringing less pax to DFW to connect. No wonder we downsized there---we don't have enough connections now to suport more mainline planes.....
I fly those routes you are talking about. The problem I see is that the flights are not full. Mostly around 75% or so average. Yes they are long, and I am sure the pax would certainly enjoy larger aircraft. But untill Delta can muster up the number of pax it needs to start replacing us on those routes, it is just the way it has to be. The only other option is to run one mainline flight per day to fill the plane, but those same pax would take another carrier with more frequency.
Take a look at VPS. Airtran moved out of there 2 years ago to PNS. Delta maintained frequency with RJ's and ATR's. They added one, then two MD80's. There are now 4 MD80's in there plus all of the ATR and RJ routes. Many people from PNS are traveling to VPS to fly on those MD80's, RJ's and the ATR's instead of Airtran because Delta has kept the costs competitive and maintained a greater frequency. Also, PNS to ATL now has 6 MD80's and 2 RJ's, but PNS to DFW has dropped it's 2 MD80's for several ERJ's and RJ's. With numbers increasing (some of our 50's are going to be replaced with 70's), eventually those MD80's will be back. We now have 4 flights a day from VPS to DFW with RJ service. This was done to relieve the ATL to VPS conjestion. It worked intitially, but the aircraft are filling to the point of possibly another MD80 in here next year. I know, I fly those routes there four times a week. When the other routes can again accomodate larger aircraft, it does not take a rocket scientist to decide that mainline needs to fly those routes.
General Lee
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Tim,
I don't want Delta Mainline to replace all DCI flying. Places like Peoria will never be replaced. There are some routes that can only support DCI RJs---and they still bring in great revenue--usually at a higher premium since there are no LCCs that serve there. I am sure the fares out of Peoria are NOT cheap, and even a 75% load factor probably makes that service profitable for Delta. What I have been saying is that we cannot compete head to head with RJs and LCC mainline service. We will lose on that one. Look at the West Coast. We fly RJs from DFW to DEN(competes with Frontier), DFW to PHX (competes with America West), SLC to PHX (competes with Southwest and America West), SLC to BOI (competes with Southwest), etc...and the East Coast is going to get more and more competitive with Airtran growing and Jetblue getting EMB-190s soon. There will be plenty of over lapping routes where our smaller 50 seaters or 70 seaters will have to compete with nicer Airtran 717s--and the fares will be very low--limiting what we can charge---and limiting the profit potential for 50 seaters, and then 70 seaters. I never said we should park them etc...We have a lot of routes that the 50 seaters and 70 seaters can be uses on and probably do very well. I like the 70 seater route from CVG to Billings that will start soon. That will give those people the option to fly east from Billings on someone other than Northwest thru Minneapolis. I think that is a smart way to open up new routes and see if they are successful. But, what about the DFW--JFK service on the CR7? That is ridiculous. That is not your fault or my fault--that is a Marketing problem. I guess we cannot find more than 70 people a day to fly between those two large cities....They are both hubs too, with a lot of possible connections from DFW to our INTL hub at JFK.....I am not blaming you Tim or any DCI pilot, I just can't believe what is happening sometimes...Take care.
Bye Bye--General Lee
I don't want Delta Mainline to replace all DCI flying. Places like Peoria will never be replaced. There are some routes that can only support DCI RJs---and they still bring in great revenue--usually at a higher premium since there are no LCCs that serve there. I am sure the fares out of Peoria are NOT cheap, and even a 75% load factor probably makes that service profitable for Delta. What I have been saying is that we cannot compete head to head with RJs and LCC mainline service. We will lose on that one. Look at the West Coast. We fly RJs from DFW to DEN(competes with Frontier), DFW to PHX (competes with America West), SLC to PHX (competes with Southwest and America West), SLC to BOI (competes with Southwest), etc...and the East Coast is going to get more and more competitive with Airtran growing and Jetblue getting EMB-190s soon. There will be plenty of over lapping routes where our smaller 50 seaters or 70 seaters will have to compete with nicer Airtran 717s--and the fares will be very low--limiting what we can charge---and limiting the profit potential for 50 seaters, and then 70 seaters. I never said we should park them etc...We have a lot of routes that the 50 seaters and 70 seaters can be uses on and probably do very well. I like the 70 seater route from CVG to Billings that will start soon. That will give those people the option to fly east from Billings on someone other than Northwest thru Minneapolis. I think that is a smart way to open up new routes and see if they are successful. But, what about the DFW--JFK service on the CR7? That is ridiculous. That is not your fault or my fault--that is a Marketing problem. I guess we cannot find more than 70 people a day to fly between those two large cities....They are both hubs too, with a lot of possible connections from DFW to our INTL hub at JFK.....I am not blaming you Tim or any DCI pilot, I just can't believe what is happening sometimes...Take care.
Bye Bye--General Lee
The only reason you are going to see Escambia and Santa Rosa liscense plates at Mobile, Panama City, or Fort Walton Beach is because every Pensacola flight is sold out - often for days at a time. As one who commutes out of PNS, it is a nightmare at times because the load factors are so high. Since AirTran was lured to PNS by the PNS Chamber of Commerce (due to Delta's airfares being obscene), PNS's number of passengers has increased by 33% while Mobile, Panama City, and Fort Walton Beach have dropped correspondingly.
If you're a high cost carrier like DL, the only way you can support mainline in any given market is to have a large enough marketshare that you are the preffered carrier for business travelers (who contribute a higher yield).
That's why in places like PNS and VPS (which are relatively small markets), DL can fill up MD88's profitably even in the face of competition from Airtran. DL controls anywhere from 50-60% of the market in PNS and VPS which makes mainline viable. Even before Airtran came to PNS, DL flew 7 MD88s' to ATL (now DL flies 7 MD88's + 2 CR7's).
However, look at a market like BUF. DL faces competition from Airtran just like they do in PNS, but BUF is a purely RJ station for DL despite that fact that BUF is a substantially bigger market than either PNS or VPS. Because DL is such a small player in the BUF market, they don't get the lions share of the business travelers. So, DL was forced to downgrade the market to RJ's which ironically have a higher CASM than mainline, but require far fewer butts to fill.
This is partially why DL can't operate a mainline plane between DFW and JFK. AMR is the dominant carrier in DFW and even at JFK, AMR is larger than DL. So AMR gets the bulk of the business travelers on this route and DL gets the leftovers. These leftovers aren't enough to profitably fill an MD88, so it gets dumped to the CR7.
Airtran, with much lower mainline costs, doesn't rely on business travelers as much (although they still need some). Airtran can actually make money or at least breakeven on many leisure travelers. Airtran can make money even if they don't control the majority of the market.
Now with that said, I think Airtran will have a hard time keeping a few of the smaller markets now that they are dumping the RJ's. I wouldn't be surprised if ICT and TLH get the axe within the next year or two. It's going to be a struggle for Airtran to make money in these markets and eventually I think they'll find more profitable places to send the 717.
That's why in places like PNS and VPS (which are relatively small markets), DL can fill up MD88's profitably even in the face of competition from Airtran. DL controls anywhere from 50-60% of the market in PNS and VPS which makes mainline viable. Even before Airtran came to PNS, DL flew 7 MD88s' to ATL (now DL flies 7 MD88's + 2 CR7's).
However, look at a market like BUF. DL faces competition from Airtran just like they do in PNS, but BUF is a purely RJ station for DL despite that fact that BUF is a substantially bigger market than either PNS or VPS. Because DL is such a small player in the BUF market, they don't get the lions share of the business travelers. So, DL was forced to downgrade the market to RJ's which ironically have a higher CASM than mainline, but require far fewer butts to fill.
This is partially why DL can't operate a mainline plane between DFW and JFK. AMR is the dominant carrier in DFW and even at JFK, AMR is larger than DL. So AMR gets the bulk of the business travelers on this route and DL gets the leftovers. These leftovers aren't enough to profitably fill an MD88, so it gets dumped to the CR7.
Airtran, with much lower mainline costs, doesn't rely on business travelers as much (although they still need some). Airtran can actually make money or at least breakeven on many leisure travelers. Airtran can make money even if they don't control the majority of the market.
Now with that said, I think Airtran will have a hard time keeping a few of the smaller markets now that they are dumping the RJ's. I wouldn't be surprised if ICT and TLH get the axe within the next year or two. It's going to be a struggle for Airtran to make money in these markets and eventually I think they'll find more profitable places to send the 717.
Tim47SIP
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46 DOOD
PNS's number of passengers has increased by 33% while Mobile, Panama City, and Fort Walton Beach have dropped correspondingly.
I fully agree with what you are saying and did not mean to imply that Airtran was doing poorly as a result of Delta. On the contrary. But I can tell you unequovocally that VPS and PFN did NOT reduce by that percentage (maybe initially when Airtran first moved out). They have increased dramatically. The station manager in VPS (before he passed away a few weeks ago) told me that the loads have picked up dramatically as a result of traffic from PNS. The increased flights from DFW and CVG to PFN and VPS were to relieve the ATL to VPS routes. But with increased traffic from PNS, these routes have not relized the difference in capacity with all of the extra seats from CVG and DFW routes. We have more flights out of VPS and PFN than we ever had. This might also be true because of what the previous poster implied that a certain amount of individuals dont want to travel to PNS and it is simply more convenient to go out of VPS (and vise versa). It may also be because Airtran may be operating at full capacity on those routes and Delta is the only other way out. I just dont know.
Ty
This doesn't make sense . . . PNS to ATL has 13 flights, instead of the 9 that VPS offers . . . with greater frequency.
Sorry, I did imply something that I didn't mean to. You are correct. PNS is way bigger than VPS in terms of population. I guess what I am getting at is that VPS numbers are growing steadily even with Airtran doing so well in PNS. VPS will NEVER move more pax's than PNS. It is just an alternative to PNS. I know that VPS wants Airtrans back because they did provide a great service. Fortunately, Delta kept the ticket prices in line with Airtrans and the business is booming. I can only speculate that Airtran will offer even more frequency and service in PNS which Delta will have to contend with.
Gen,
We are both on the same sheet of music. I understand now what you are talking about in terms of direct competion with the LCC's. You are absolutely correct there. But I really cant see an alternative at the moment other than just simply matching equipement or size on those routes. But the problem here is flying the aircraft around less that half full with a great loss of revinue. I was using VPS as an example of what happened there in terms of 1) maintaining presence (with just DCI), 2) building market share, and 3) mainline moving into those markets replacing DCI. As far as launching direct competition with the LCC's, that is not really what we did in VPS (maybe indirectly), but your right, the RJ's are not the equipemnet to lure Pax over to our side. I just really don't know what a good alternative could be.
PNS's number of passengers has increased by 33% while Mobile, Panama City, and Fort Walton Beach have dropped correspondingly.
I fully agree with what you are saying and did not mean to imply that Airtran was doing poorly as a result of Delta. On the contrary. But I can tell you unequovocally that VPS and PFN did NOT reduce by that percentage (maybe initially when Airtran first moved out). They have increased dramatically. The station manager in VPS (before he passed away a few weeks ago) told me that the loads have picked up dramatically as a result of traffic from PNS. The increased flights from DFW and CVG to PFN and VPS were to relieve the ATL to VPS routes. But with increased traffic from PNS, these routes have not relized the difference in capacity with all of the extra seats from CVG and DFW routes. We have more flights out of VPS and PFN than we ever had. This might also be true because of what the previous poster implied that a certain amount of individuals dont want to travel to PNS and it is simply more convenient to go out of VPS (and vise versa). It may also be because Airtran may be operating at full capacity on those routes and Delta is the only other way out. I just dont know.
Ty
This doesn't make sense . . . PNS to ATL has 13 flights, instead of the 9 that VPS offers . . . with greater frequency.
Sorry, I did imply something that I didn't mean to. You are correct. PNS is way bigger than VPS in terms of population. I guess what I am getting at is that VPS numbers are growing steadily even with Airtran doing so well in PNS. VPS will NEVER move more pax's than PNS. It is just an alternative to PNS. I know that VPS wants Airtrans back because they did provide a great service. Fortunately, Delta kept the ticket prices in line with Airtrans and the business is booming. I can only speculate that Airtran will offer even more frequency and service in PNS which Delta will have to contend with.
Gen,
We are both on the same sheet of music. I understand now what you are talking about in terms of direct competion with the LCC's. You are absolutely correct there. But I really cant see an alternative at the moment other than just simply matching equipement or size on those routes. But the problem here is flying the aircraft around less that half full with a great loss of revinue. I was using VPS as an example of what happened there in terms of 1) maintaining presence (with just DCI), 2) building market share, and 3) mainline moving into those markets replacing DCI. As far as launching direct competition with the LCC's, that is not really what we did in VPS (maybe indirectly), but your right, the RJ's are not the equipemnet to lure Pax over to our side. I just really don't know what a good alternative could be.
Ty Webb
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Wow, intelligent discourse returns to the message board. I'm impressed.
Thanks, guys, for some interesting insight.
I think it proves that there is room for the products offered by AirTran and Delta.
Here's to the DAL furloughees geting back in the saddle, and the Airtran guys getting a real, live "major airline" contract in 2005.
Thanks, guys, for some interesting insight.
I think it proves that there is room for the products offered by AirTran and Delta.
Here's to the DAL furloughees geting back in the saddle, and the Airtran guys getting a real, live "major airline" contract in 2005.
General Lee
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Ty,
I will agree to that.
Tim,
Well, at the moment we don't have any new orders for anything other than RJs (adding to our debt)---and until we get some pay cuts on the pilot side here, we probably won't hear anything about any new 100 seaters. I guess the RJs are better than not having competition against Airtran--but the passengers might notice eventually. I think there is a difference between the size of aircraft---and the only planes we could bring back that are still in the desert are the MD-11s.....The only other thing I had that bothered me about the RJs were the longer flights, and I have tried to explain my feelings on that. Anything over 2 hours is tough on pax, but there are some routes that probably could not support anything larger...I can understand that too. Also, as the cities in the panhandle grow---like VPS, PFN, and PNS--maybe again we can fill them with MD-88s from DFW....
Medflyer,
I know AA is larger in DFW and JFK---but our European destinations at JFK are a lot larger than AA's. And, DFW is one of our small hubs--with potential to bring lots of people from Texas, and the Southwest. We should be able to fill more than 70 seats---and we should probably advertise better in those areas.....We also probably have a lot of pilots trying to commute to JFK for those European flights----many senior DFW pilots who were displaced off of the DFW 757/767 bid INTL out of JFK---but I know, that isn't a reason to have an MD-88.....
Bye Bye--General Lee
I will agree to that.
Tim,
Well, at the moment we don't have any new orders for anything other than RJs (adding to our debt)---and until we get some pay cuts on the pilot side here, we probably won't hear anything about any new 100 seaters. I guess the RJs are better than not having competition against Airtran--but the passengers might notice eventually. I think there is a difference between the size of aircraft---and the only planes we could bring back that are still in the desert are the MD-11s.....The only other thing I had that bothered me about the RJs were the longer flights, and I have tried to explain my feelings on that. Anything over 2 hours is tough on pax, but there are some routes that probably could not support anything larger...I can understand that too. Also, as the cities in the panhandle grow---like VPS, PFN, and PNS--maybe again we can fill them with MD-88s from DFW....
Medflyer,
I know AA is larger in DFW and JFK---but our European destinations at JFK are a lot larger than AA's. And, DFW is one of our small hubs--with potential to bring lots of people from Texas, and the Southwest. We should be able to fill more than 70 seats---and we should probably advertise better in those areas.....We also probably have a lot of pilots trying to commute to JFK for those European flights----many senior DFW pilots who were displaced off of the DFW 757/767 bid INTL out of JFK---but I know, that isn't a reason to have an MD-88.....
Bye Bye--General Lee
Ty Webb said:
Ty thanks for the good wishes for the DAL furloughed pilots, but I'm going to hijack this thread for a bit.
What exactly is the status of your negotiations? Are you in section six at this time? Have you exchanges openers? What is the pilot groups expectation? I doubt it will be concessionary, but what is the benchmark your pilot group is shooting for?
FLB717
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FDJ2,
Our Negotiating team has been assembled and is getting ready to start the Q and A of the Pilot group to get an understanding of our interests. As far as what those are your guess is as good as mine. But I would imagine at least COL plus a amount, much greater language strength and an increase in the B Fund. But that is only MY guess. The contract is amenable at the end of March 05 and I would expect to be in negotiations by the late fall early winter if not earlier.
Our Negotiating team has been assembled and is getting ready to start the Q and A of the Pilot group to get an understanding of our interests. As far as what those are your guess is as good as mine. But I would imagine at least COL plus a amount, much greater language strength and an increase in the B Fund. But that is only MY guess. The contract is amenable at the end of March 05 and I would expect to be in negotiations by the late fall early winter if not earlier.
Fly-By-Cable
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