Comair/ASA rumor....

[Skull-One]

I've already *DONE* that. If you had read the previous posts you would see that the absolute high end of cost savings for our operation would be in the neighborhood of $3M per year (realisitcally closer to $1.5M).

We use our MX and flight crews. Everything else is done by ASA/COMAIR. The savings from gate agents and rampers is non-existant (we don't use ours!). The total compensation package for flight crews and MX works out to no more than $3M/year difference.

The factor in all this that is standing out is the airplane. The Embraer is cheaper in every area than the CRJ. Cost to acquire alone saves around $7M a copy. Multiply that by 20....30....50 airplanes and that is some serious coin. Employee compensation is negligible by comparison.

 

[~~~^~~~]

Crew costs run 11 to 14% of direct operating costs on a 50 seat jet. Also, the E-145 is about $170 less a block hour than the CRJ. The ERJ burns less fuel, goes slightly slower. The CRJ "catches up" cost wise on longer legs where its speed makes up for the fuel burn.

The other part of the CHQ equation is that, again, I reiterate, that your company does not have a realistic cost structure on the operations side, yet. It is not just the pilots that are at the bottom end of the industry pay structure. The infastructure to run an airline the size yours hopes to grow to costs big money (hence the IPO). Eventually these costs will be incurred.

What concerns me about the airline industry in general is that operators will begin flying with an unsustainable business model. With paper thin margins upstart airlines depend on below average wages, attractive equipment leases and government grants (how did CHQ build their hangar space). Eventually something happens to increase costs, or decrease revenues, and the house of cards falls.

Atlantic Coast is facing this with the United mess. Now they are making the bold move of going it on their own. If they can get codeshare agreements and have the other airlines market and distribute their tickets they might make it. If Delta, United and American do not play along, ACA is history in 24 months.

CHQ has their own version of the "United Mess" in play with American and US Air. Unfortunately, I am not sure CHQ management understands the costs involved with jets for jobs. For example -
Who pays for training? What are the seat protections? What if a US Air pilot does poorly in CHQ training, are they on probation, or is it a guaranteed pass?

Right now CHQ does an amazing job with the resources they have. A big part of that is the work performed by the flight crews. How hard will US Air crews work for CHQ (republic) when they have no stake in the outcome of the CHQ business?

In all the areas these upstarts stretch their resources, the most critical is the pilot group. If pilots are willing to do more with less (outstation maintenance, dispatch, on time performance) then the airline thrives. If the airline takes pilot loyalty for granted and the pilots withdraw enthusiasm, then it is all over as soon as the cash runs out.

I have no frame of reference for measuring pilot enthusiasm at CHQ. Their pilots seem a pretty happy bunch, despite their wages. However, with the jets for jobs deal, I would not take pilot loyalty for granted at CHQ. When jets start flying with disgruntled US Air furlougheees who are unfamiliar with the equipment and jealous CHQ pilots see their best jobs taken by another employee group, it seems a situation ripe for employee morale problems. With a shoe string operation to begin with - I'm simply not optimistic about CHQ's future unless management takes care of their pilots.

 

[Treme]

Do nut underestimate that pilot group and its pilots Fins.

I still contend that Chautauqua is the single greatest threat to the continued expansion and long-term viability of ASA/Comair.

 

[~~~^~~~]

Treme: I don't disagree with you. With ALPA blocking our attempts to gain "Connection" scope, it could be any nameless 135 operation that just got a 121 certificate and a few RJ leases. CHQ has just got big enough to be noticed. It could be anyone.

In fact, you want to buy a Navajo with me and start flying ATL-MCN-VLD and back? We could let Captains fly for free, let FO's pay for Multi Time and use DUATS for dispatch. The City of Atlanta would be glad to have a new competitor at the airport and would probably lease us Northwest's maint hangar for $5 a year and give us a huge tax credit for bringing jobs to the City. Next year we will sub lease ACA's RJ's and expand to Orlando.

Sure, our business model is not sustainable, but we are managers. We can pay our salaries out of the loans we get to start our business, declare corporate bankruptcy two years later and keep the cash. Then start up a new business with a new name and tax ID and go all over again.

 

[~~~^~~~]

Do nut underestimate that pilot group and its pilots Fins.

I do not underestimate their pilots - the opposite is true - I think their management has underestimated their pilots. Human nature is human nature - when the best jobs go to US Air pilots, I expect there will be problems.

By the way...

"Don't misunderestimate me" George Bush Jr.

 

[DDpaysoff]

"34 percent of nothing is still nothing"

CHQ is in MCO, to maintain market share in a hub that can not operate at sufficient margains to sustain profitability. PERIOD. CMH, was a low cost opportunity to gain market share and protect DAL's second most profitable hub, CVG w/ predatory pricing. DFW, I have not quite figured out, but last I checked the flights CHQ is operating are low yielding former Brasilia routes that really can't compete w/ AMR eagle anyway.

I flew w/ a guy last week who made just over $50,000 as an F.O last year. There are not many, but they are out there. That's probably more than some of your captains are making. Keep in mind salary and overall compenstation package are two totally different things. When you factor in the 401K, Company funded retirement plan, Comprehensive medical package and salary now you get to see the big picture. Not, that I disagree w/ everything that you are saying, I think you are right on about some things.

However, in a market that DAL can operate at favorable margings, the wholly owned's will do the flying. I don't have time to get into it, but to keep it short if DAL was so profitable w/ CHQ flying wouldn't you actually be on some high yielding routes, instead of leftovers and a lot of subsidized flying?

Your low cost structure should not affect any growth at CMR/ASA. This CHQ flying has been going on for a year, and my company has grown by 380 pilots since last JUNE despite our "cost stucture".

Best of luck w/ your contract negotiations! I am sure you will receive full support from our group.

DD

 

[Skull-One]

If there were not a Comair/ASA to do the higher yield flying then we would probably get it. More accurately, if there were no high-yield flying there wouldn't be a Comair/ASA at its current price structure. DAL would whipsaw everyone down to a sustainable price level. It makes no sense to put a high-cost airline on a low-yield route...nor does it make sense to put a low-cost airline on a high-yield route at the expense of a high-cost airline.

The problem being that pilots are only 15% of the cost but we're also the easiest to slash...if you are the easy target you get picked off.

I still contend that our total benefits package is not that much inferior to those at ASA/Comair. We have 401(k) matching, medical and dental, etc. etc. etc. etc.. That is not the difference in getting a contract. If ASA or Comair had Embraer Jets I dare say CHQ would never have gotten a codeshare with DAL. We got it because of our equipment above and beyond all other factors. IOW, we were fortunate to have the right plane at the right time.

As for being sustainable, we've been doing this for more than thirty years. That's pretty sustainable. Our profits have been going up every year. I see no reason for CHQ to suddenly go into the red unless we pay pilots $150/hour or something...
Just my $0.02.

 

[Treme]

You gloating Jason?

What kind of response are you expecting from the Com/ASA pilots?

I dont think you're going to change a lot of minds. The fact is that I would guess that there is not a single Com/ASA pilot that wants Chautauqua around.

Your existance limits growth and expansion opportunities at their companies.

What exactly are you trying to gain by posting here? Everyone is well aware of the danger that your company and its cost structure poses.

 

[Cadillac]

Our Equipment

Slight detour in this great discussion,

Many Chq pilots bring up the low cost of the Emraer Jet and its low costs to operate as their basis for getting/keeping contracts.

Does anyone know if these less costly jets will fly as long as the Canadair/Dornier jets, or will they begin to fall apart sooner? Will the low initial cost catch up to them in MX and replacement in say, 7 years?

And if mesa is getting all of these new contracts with such low bids, how are they planning on doing so with CRJ's? It can't all be justified with their low pilot salaries, or can it?

 

[DoinTime]

If the ERJ was a better bird, cheaper to aquire, cheaper to operate, and lasted just as long then by far, everyone would be flying the ERJ. Take a look around.....this is not the case.

 

[~~~^~~~]

I was around when ASA was making its decision on an E120 replacement. The DO328J was popular due to its short field performance, but unpopular due to speed, range and cost. The E135/145 series were popular due to operating cost, but the cabin was thought to be undesireable to pax and it would require separate mx and training facilities. The CRJ was the most expensive option, but it was fast and had a cabin that the airline thought a premium fare passenger would like. Probably the single biggest determining factor was the fact that we already had RJ's and could save a ton in training and mx costs.

I researched some old materials from the Paris Air Show and came up with direct operating costs of $1,324.91 for the CRJ-100 and $1,403.27 for the E145. These match well with figures I have seen recently that I can not post in a public forum. The fixed costs of the aircraft were $2,798,814 for the CRJ and $2,420,189 for the ERJ. Taken in total, the cost per seat mile (before depreciation) on the ERJ was $.22 and $.23 on the CRJ.

Bottom line, there is not much difference in the bottom line. The difference is in the operation and if CHQ scales up, they will have to spend more in the infastructure of their airline. I also think their pilots will try to raise their standard of living in this next contract and we ASA pilots support them in their endeavor.

 

[Skull-One]

No Gloat Zone

You gloating Jason?

What kind of response are you expecting from the Com/ASA pilots?

If I were gloating I would be saying, "We are the best in the business and you guys suck." I'm not. I think most pilot groups are comparable in terms of quality. Comair and ASA folks are d a m n e d fine people. There is no doubt about it. CHQ's pilot group is, IMHO, one of the best in the business itself. But that alone isn't why we get the contracts we have been. I still contend it is our airplane. Short term at the very least, our airplane is cheaper to acquire.

I am not gloating at all. Far from it. I have many friends in this business at ASA and Comair. We went to flight school together or I learned from them at the Academy. I have no desire to hurt these people or brag about my good fortune at their expense. This is a candid discussion, not a bragging session. I'm simply posting my thoughts because that's what a *DISCUSSION* Board is for. I'm not in this to be jerk, just being frank with my (uninformed) opinions.

Look, we're in a slow economy. Carriers that operate on lower costs thrive during bad times and suffer during good. The boom times for Comair and ASA are not over, just in a temporary lull.

Just remember....going off the point some...Comair hasn't always been owned by Delta. They were an independent contractor once just as we are. The day could come where CHQ/ASA/CMR are the WOs being whipsawed by REPUBLIC and MESA. One never knows in this industry.

I wish everyone the best, no matter what color the tail on their airplane is.

 

[Skull-One]

If the ERJ was a better bird, cheaper to aquire, cheaper to operate, and lasted just as long then by far, everyone would be flying the ERJ. Take a look around.....this is not the case.

It is a better bird, but that is a seperate argument. =)

You have way oversimplified your case here. The CRJ had a headstart on the ERJ by several years. Companies that bought the CRJ have sunk a lot of money into training crews and building infrastructure to support it. In their case it makes no sense to dump the CRJ for the ERJ because the savings on the latter won't make up for the expense of switching fleet types.

The ERJ is much cheaper to own and fly, and it is a purpose-built airliner. Even the oldest ones around are doing just fine performance-wise.

I'll oversimplify my argument just for fun. CRJ vs. ERJ... It's like comparing an F-14 to an F-18. The former is faster and sleeker and costs more in every department. It also breaks more. The latter is slower and more efficient, but it's more modular, breaks less often, and is easier to fix when it does. It's also cheaper.

If the CRJ were the better bird, Embraer would not have sold nearly 700 ERJs, with more coming out of the factory every single day. Canadair had a monopoly on the Regional Jet, but Embraer one-upped them. I think it is that simple.

As for costs, I can tell you from casual observation that the CRJ burns a lot more gas than the ERJ. That alone is a huge factor in the cost differential.

$0.22 vs $0.23 doesn't seem to wash, but that's still five percent cheaper.

 

[Treme]

I dont get it then Jason,

You really did not answer my question. What is it that you're trying to express to the Com/ASA pilots by your participation on this thread. I've re-read the entire thing and I dont see anything you've said that is anything more than glorified cheerleading for Chautauqua.

What is it that you're trying to say?

 

[Skull-One]

How much more clearly can I state it? Everyone else in this thread has followed my argument, why can't you?

We did not get a DAL contract because of our slave wages. We got it because of our airplane (and the fact that we have a decent product to go with it): it's cheap, capable, and we have delivery positions. It's that basic...

Stop blaming our salaries for our recent successes in adding flying. That is unfair and incorrect.