Delta Air to Unveil Plans For a Low-Cost

[Old Crow]

Not to be negative or pessimistic, but... "Young and Bouncy"? I think the days of Southwest style hiring are gone. If you offer someone minimum wage to work for anyone, you're going to get a minimum wage profile person. A person who has a GED or only highschool education could care less for Delta. They just want that check on Friday. Travel benefits...? What good are they when you work all the time and even more so, you can't afford to eat when you get there on that 19,000 salary.

Bottom line as always, "You get what you pay for."

 

[canyonblue]

I think the days of Southwest style hiring are gone.

I believe we still do "Southwest style hiring". But then again were still Southwest!

 

[acarpe3448]

Since being furloughed from Delta I am pretty far out of the loop, so I do not hear much gossip at all. I think that Delta Management must have grander ideas for this new LCC than just a NE-Florida-Midwest shuttle. With the 757 being used I think that you will see Delta using the new LCC all over the country, including the long haul coast to coast stuff. I sure hope that the new LCC is not going to be used to just replace current mainline flights, but to increase mainline flying. I think we have lost enough to DCI and it frightens me to think about what will happen when Force De Majure is declared over! A huge part of DCI's growth will have to be given up, because you know that the Delta Pilot's are going to ensure that planned percentages are upheld. If we do see some growth from this new LCC, I hope that some of our pilots, all of our pilots, are able to be recalled! Don't get me wrong, I appreciate the fact that I have my $10 an hour job Managing a Mail box Etc, but I prefer to get back to work at Delta ASAP! Happy Holidays to all of you!

 

[General Lee]

First of all---"young and bouncy" is what I am like----I'm in my mid-thirties and I love my job. Good enough? Thanks.

Canyonblue,

Well, Southwest has been having problems with those famous 15 minute turns latley, huh? Security checks really screw up that process. Your whole game plan had to be changed, and a lot of frequency was dropped because you couldn't have service from LAX to OAK every 15 minutes. All I know is that we have been practicing on 757's in LAS some new quick boarding techniques, with dual PAX entry---front left and aft left entry. They want to clean and turn the planes in 30 minutes, which can be done when Flight attendants and pilots (??) help clean the plane. (hey, the pay is still really good for the pilots.....) Anyways, the game has
changed for everyone, even Southwest, which hasn't been in the top 5 for on time arrivals lately. And, our frequent flyer program is a hell of a lot better------Hawaii and Athens are some good choices, along with all of the Skyteam destinations. People will see the difference. When prices are equal, then other things start to matter---like frequent flyer miles (for the business guy) and airport lounges (especially with the possible new codeshare).

RJCAP,

I am not trying to be the "all knowing Delta pilot" so stop putting yourself down. You really don't know much about the Delta Express outfit, unless you flew it? I did. We had a good operation--with the wrong airplane. The 737-200 was slow, and a gas guzzler, and had no entertainment. But, the planes were always packed---with load factors in the 90's. A 757 will be stuffed also, but it will make more money for Delta--and have a movie to distract people that they are stuffed in there like sardines. We turned those 737-200's in 30 min every turn, but never used the planes after 12 am. The 757's might be flying allnighters thru LAS----which helps pay the daily lease rate and hence makes more money for Delta. The pay difference between 737 and 757 pilot maybe $30 an hour, and 1 passenger could easily pay the difference for both pilots. (the 757 will carry 79 more passengers) Anyways....the operation will be packed like the old Express, but make more money, which is good. Time to go now.

Bye Bye---General Lee

 

[Sierra-Hotel]

General Lee

Please don't bash my airline! Okay we haven't made the top 5 in OTP in the last couple mos......I like to think of SWA as a lean mean fighting machine. When it gets indegestion (security delays) that we get hiccups (delays). I think we stopped doing 15 min turns when I started here 2 years ago.....In any case we routinely do 25-35 min turns. As for you claims that our passengers will be flocking to Delta.....I find that laughable. I see the same passengers week to week. They enjoy flying our airline because of the price and quality of service we give here at SWA. As one passenger stated to me "I don't care if your late,but at least the employees at SW treat me with respect". We've done a lot in the last couple months to further streamline our operations and hopefully we will reclaim our #1 rank. You posted that now the pilots and F/As will now be helping out to clean up the cabin......I'm sorry to tell you but the flight crew here at WN have been doing that for the last 31 years. I'm really not trying to flame you,but I find that other airline employees tend to be very critical of SWA and their employees because we actually get along with each other and do whatever it takes to get the job done. Maybe if USAir,United,American,and Delta fostered that type of thinking they would not be in the dire financial straits they find themselves today.

 

[General Lee]

Oppsahh,

You are a really funny person. Why would you leave at 3am on one of our planes? You don't seem to understand, do you? Nope. Hello? The airplanes would be flying ALL DAY, and into the night? I guess you have never seen airline schedules out of LAS at night, huh? After flying two or three cross countries in one day, the plane arrives in LAS---full of gamblers---at around midnight from MIA or MCO (which Amwest and National did bringing in lots of pax) and then leave at around 1am---going East again---with plenty of broke gamblers----arriving early morning and allowing the plane to fly to Florida or where ever.
Do you understand now? I hope so. Can you turn a 757 in 30 min? I bet they will try----and who says we cannot do well as a LCC? Delta Express did fine---90 percent load factors, it's just we couldn't profit becasue our planes was too small and old---which sucked fuel. The 757 carriers more people and is fuel efficient---and can have movies to entertain people. What kind of people would fly for 19K a year? Ever been on a commuter or regional jet? Those flight attendants are usually happy to have a job and usually not old and mean like some of the mainline flight attendants (not all of them). How much do you think Jetblue Flight Attendants start at? I'll tell you---$16K a year and not many benefits-----and they live in $$ NYC. They seem to be doing well over there. Delta couldn't find hospitable people to work on the LCC? You are wrong, and now you know it. The job market is wide open, and they will interview to find fun people. Our President Fred Reid said he believes the LCC market will reach 1/3 of PAX flying within 5 years---and we have to do something to try to get a piece of that---and we will because we have a lot more assets than most majors, and we have more money to try.
I flew Delta Express---and it felt like a different airline---but the flight attendant, mechanics, everyone else other than the pilots were paid mainline rates. Now, it will be different---the planes will have more seats and more fuel efficient---and it will work.

Oppsahf, am I jealous? Heck no---I fly heavy 767-300's into Bermuda and make a great wage. I wouldn't trade what I do with anyone-----got it?

Sierra Hotel,

Can I bash your airline? Well, you bash mine. Great, you have repeat customers, yippy---so do we. I see the same passengers also all the time when I go to Nassau and San Juan---places Southwest probably won't go. A lot of our passengers love our frequent flyer program because it allows them to go to fun places like Rome and St. Thomas. We carry a lot more passengers than both you and Jetblue, and alot of our losses right now are one time charges (accounting practices), and when the economy comes back---and it will----people will realize that flying from BWI to LAX on your 737-700 isn't very comfortable---even with super friendly flight attendants---and go for our mainline product, which is more comfortable. Delta is losing money, but we have plenty to burn, and things are starting to turn around. (Fares are creeping up, especially for the holidays)
Ever been to ATL?---oops you don't go there. ATL is always packed, and they do a great job moving airliners there. Laugh away all you want Sierra Hotel, but when you see the LCC 757 at LAS or MCO or see one of our 767-300's or 400's, Caution Wake turbulence----it might be bumpy!

Bye Bye-----General Lee

 

[Sierra-Hotel]

I just hope DL mgmt knows how saturated the Las Vegas market is. SW and HP have that market sewn up.......if you think Delta's new LCC is gonna have a chance there,go talk to the N7 employees. I know we are considered to be the "red headed stepchild" of the industry,but you know what.....we don't care! On of the problems of today is that some airlines promise more than they can deliver....at SWA we promise:smiles,seats,snacks,and a safe arrival to your destination,and for the most part we deliver on that promise. Honestly I hope whatever you folks do works.....but I just want to point out the message Delta gave to their employees:Layoff 2,500 F/As but are hiring off the street for F/A spots at their new LCC. That's the reason why employee morale is so low at these companies.....I don't have to worry about that here, I have all the trust in the world in Herb,Colleen,and Jim's ablity to make decisions that will benifit this company without screwing over the employee group. In any case I just wanna remind you,General Lee:Each and Every airline that has made it a point to go after SWA has parked their airplanes in the desert.....even Delta Express. Just food for thought.

 

[Jeff G]

The airplanes would be flying ALL DAY, and into the night? I guess you have never seen airline schedules out of LAS at night, huh? After flying two or three cross countries in one day, the plane arrives in LAS---full of gamblers---at around midnight from MIA or MCO (which Amwest and National did bringing in lots of pax) and then leave at around 1am---going East again---with plenty of broke gamblers----arriving early morning and allowing the plane to fly to Florida or where ever.

This is exactly how redeyes work. JetBlue has been doing this almost from the get-go. But that's only one or two planes. What will you do with the other 25 or so that will be sitting around all night?

Do you understand now? I hope so. Can you turn a 757 in 30 min? I bet they will try----and who says we cannot do well as a LCC?

I'd like to see you turn a full 200-seat single-aisle airplane in 30 minutes. We can't get times much under 40 minutes at busy stations, with 162 seats and two boarding doors. Throw in a dozen wheelchairs and you're really in trouble. You'll probably end up seeing consistent 45 minute turns. If you get your times much under that, we'll be happy to steal your methods.

LUV can turn airplanes faster in part because of no assigned seating and in part because of low load factors (average in the 60's) on smaller airplanes (122 or 137 seats). It doesn't go as fast if you have full, larger airplanes.

How much do you think Jetblue Flight Attendants start at? I'll tell you---$16K a year and not many benefits-----and they live in $$ NYC. They seem to be doing well over there.

Well, no, I told you. JetBlue doesn't pay bottom basement wages. A first year line holder earns an average of about $2600/mo, and you can be a line holder in less than six months. That's not bad even by mainline standards. They're getting a raise, too, so it may actually be higher now. They don't have a pension, it's true, but they do have a 401(k) (so no pension underfunding issues) and profit sharing (13.5% of pay last year). BTW, many of our FA's commute so not everyone puts up with "$$ NYC". (Free unlimited flight bennies, too.) We also have the best FA jumpseat policy in the business. (We carry a whole lot of Delta FA's because they often can't fly on their own airline, or, gasp, prefer not to ). So, rumors to the contrary, we're not starving anyone.

But it's not the pay, it's the attitude. We hire for attitude, and so will you. You're going to attempt to have two different cultures at Delta. I hope it works for you, but that's a lot harder than starting from scratch.

 

[General Lee]

Ok, here I go again.

Sierra Hotel,

Do you know why Delta Express parked planes after 9-11? Because of Southwest? Get over yourself!! It was because that was where our bottom junior 400 guys sat---in the FO seat on Express 737's. When we had to furlough, we could not selectively choose who was to go. We had to park the planes because we didn't have any FO's to fly them. Get it? Delta Express was beating Southwest and Metrojet---we had more passengers than you did up and down the East Coast----yes we did--I saw the numbers. Our load factor on Express was the best in our system-------over 90%. I flew it, and we were always packed---and we flew to some cities that Southwest did not go---like EWR, BOS, BDL---and we will continue with the 757's and this time have a chance at a profit---and who will challenge us on those routes? Jetblue? The challenge us at JFK to Florida---but we still pack our planes because we have 19 767-300's fly in each day from Europe, and they help feed our flights from JFK to Florida. My brother just flew on Jetblue from SYR-JFK (He said he liked the experience) and connected on Delta to Amsterdam. He said there was a group tour of 70 old folks also connecting on Delta to Rome. All I have to say is Thanks!!!!!!

Jeff G,
Again I thank you for the above. Until you guys do international, I believe it will happen more often. So, a lot of your folks commute free to JFK. Hmmmm. They better on $2600 a month wages in NY. I thought all of your seats are full. It might get tough to commute eventually, and then they might not be as happy. Yes, there is a lot of grief by some of the unfortunate flight attendants who might get furloughed, but they had a chance to get a union, and they did not. Delta tries to make the ATL based flight attendants happy by giving them better trips out of ATL, and over 10,000 are based there, so if you make them happy---no union. You can gauruntee though that they will be interviewing, even furloughed FA's, and that if they aren't happy looking etc, they won't go there. You are right about loading a 757 in 30 mins would be tough, especially with wheel chairs etc.
But, we easily did it on the 737-200, and all we can do is try----and people have said that they are experimenting with new boarding procedures---stuff that United did on the Shuttle---that might expedite the process. And, the 757 is a fast plane, and will make up the difference in the air, trust me. (all we have to do is state the arrival time and add 20 min each time---easily making it on time---if we determine the route will take 3hrs---make it 3hrs 20 min in the schedule---then we have extra time---also to get food for the pilots..)

Would LAS be a challenge? Probably, but maybe not. All of national's gates are at our terminal in LAS. America West and Southwest have established themselves there, but so did National. But National never had deep pockets and didn't have International feed. Southwest and National shared markets in Reno, Chicago Midway, LAX, SEA, and that is it. Delta's LCC would
hit East Coast cities that Southwest has not touched---BOS, JFK,
PHL, MIA and FLL, PBI, etc. nonstop from LAS. Sure America West goes to some of them, but ther is room for a couple carriers on each, and National flew 7 million people in 3 years---which could be done again. Also, las Vegas has 22,000 hotel rooms available each night---and that will never change. And, there wouldn't just be 2 allnighters from Vegas a night Jeff G, there could be other city pairings for allnighters----like SNA to JFK, or OAK to FLL---who knows? Not you.

We have some smart guys running this airline. Even though I wish they treated the labor a little better sometimes, I think they have the resources, along with McKinsie Consulting, to figure out a good strategy. You guys will just have to wonder what will happen, and I don't think they are doing this in the blind. Think about it! They are paid in Delta stock, they don't go for risky stuff unless they know what will happen.

Bye Bye---General Lee

 

[General Lee]

Oppsahh,

You are nuts! Do you see what you are saying? After 9-11 ther was a large scare at Delta, as well as other airlines probably, and they decided to start furloughing. They decided on 400 for the initial number. How would they reassign pilots? How? Other planes were still flying with their original pilots. And how long would it take to train 400 pilots? Figured it out yet genius? They had to furlough via senority-------and Express paid the least (better than your 5 year FO's at SW), so they were gone. The November 1st, 2001 furlough had the bottom 400. See? Are you there yet? We parked 25 737-200's. (most are back now going to CVG eventually) Got it?

Also, when you said Southwest would be doing the allnighters also if profitable. Well, we used to fly a lot of allnighter out of LAS each night-----to MSY, BOS, JFK, MCO (I flew a 767-300 allnighter from LAS-MCO once), TPA, CVG, DFW, and ATL. We probably will do it again with a lower cost structure at the LCC. Businessmen like allnighters so they can get a jump on business or get some sleep. And, it helps paying off our daily lease rate on each aircraft.

Also, I was wrong about BDL---Southwest does go there, sorry.

Delta's new LCC may surprise everyone, and maybe it will fit right in there and take a large chunk of the Low Cost market. We have to try, and we have smart guys working on it, and we have the ability to do it. We'll see how it works, but don't count us out already.

Bye Bye--General Lee

 

[General Lee]

Oppsah,

I didn't mean to put you down, I just get frustrated sometimes. I want everyone to do well, and I hope the LCC works. I hope everyone gets what they want and all the furloughs come back.

Bye Bye--General Lee

 

[Jeff G]

So, a lot of your folks commute free to JFK. Hmmmm. They better on $2600 a month wages in NY. I thought all of your seats are full. It might get tough to commute eventually, and then they might not be as happy.

The seats mostly are full, and that hasn't changed. But we've still got four jumpseats, and it's not often you have that many commuters on a given flight. Fortunately, we mostly just add frequency when flights fill up, so that leaves more options for everybody. We'll put you and any FA's on the two cabin jumpseats, too, by the way. Just show your ID at the gate. You just can't sit up front anymore, unfortunately. Our people can, though.

But, we easily did it on the 737-200, and all we can do is try----and people have said that they are experimenting with new boarding procedures---stuff that United did on the Shuttle---that might expedite the process.

I'd love to see you succeed here. Like I said, we'd love to steal your best ideas.

And, the 757 is a fast plane, and will make up the difference in the air, trust me. (all we have to do is state the arrival time and add 20 min each time---easily making it on time---if we determine the route will take 3hrs---make it 3hrs 20 min in the schedule---then we have extra time---also to get food for the pilots..)

There's an art to scheduling, though. Pad the schedule too much and you hurt productivity. Fast turns mean nothing if the plane usually ends up sitting there for an hour anyway. But if you don't pad enough your operation starts to fall behind if you start running late. The speed of the airplane doesn't matter if you get a two-hour gate hold. Your schedule has been prebuilt with that speed in mind. Also, the more you use the airplanes, the worse you're impacted downline with any delay. Welcome to the world of LCC.

BTW, run the numbers. How long are you really in cruise? For a 2-3 hr leg, about 70% of the flight. If you fly 0.85 vs. 0.75, you still only save 10 minutes or so. And again, your planners will count on something close to 0.85, so any time to make up will be minimal. Believe me, I've tried. For instance, I wanted to make up time on a transcon, fully four hours at altitude in cruise. The computer wanted only 0.77 because of a strong tailwind, vs. a typical 0.79. I dialed in 0.81 (0.82 is redline) and the computer predicted only 5 minutes of time savings but more than 1000 lbs more burn. It's not worth it. Your mileage may vary, but going really fast in cruise may not make up as much time as you think. Remember, profit sharing. Oh that's right...

And, there wouldn't just be 2 allnighters from Vegas a night Jeff G, there could be other city pairings for allnighters----like SNA to JFK, or OAK to FLL---who knows? Not you.

And not you either. But you did answer my question. Thanks.

 

[Ty Webb]

Seats at a loss- make it up in quantity!

Any LCC pilot knows that you don't make up time in the air . . . you make it up on the ground. And therein lies part fo the problem for DAL.

CAL, DAL, USAir, UAL . . . all have tried LCC's and all have failed. It's not a matter of having more seats, or more fuel economy. It's things that your management can't even grasp, your high-priced consultants can;t define, and your pilots won't accept, but it will sound good to your shareholders, at least for a while, and will get them off of Leo's back.

In the end, ithough, when it becomes clear that it was a losing proposition, it will probably come back to bite him in a huge way, and they will call for his head.

I also have to chuckle at DAL's ridiculous plan to stop AirTran from taking market share- namely, charge the same thing as AirTran, and dump a bunch of seats on the market. . . . only problem is, we are making money at these prices, while DAL is losing hundreds of millions doing it . . . now, they want to make it up in quantity. . . . Good Luck!

 

[General Lee]

Jeff G,

I am not trying to be hostile, I am just frustrated sometimes when people speculate and do not really know the outcome. Leo Mullin has proven himself a good and smart leader, and won't lead us down the wrong path. Our Express operation was not a total failure, it mainly broke even---it just had the wrong type airplane on it. A lot of people are not privy to this LCC info, and most have signed confidentiality agreements. Why? I don't know, but maybe they have something good. They have had time to look at the other failures---like CalLite, Metrojet, and even our breakeven Delta Express, and they are probably tweaking the formula. They already are making changes in pay for most people, pilots will probably be soon, and they have chosen the right plane I believe. Marketing will be agressive, and they will go after Jetblue mainly, and Southwest to an extent. Should you be weary? I don't know, but good competition will not help your bottom line. You offer a great product (My Brother said so) and it is up to us to try to do the same.

I know that padding the schedule might decrease productivity, but it depends on the airport. Places like BOS or JFK may take forever to take off in those congo lines, and that will be taken into consideration. But, if we are running late, Delta often let's us increase our cost index in the FMS, allowing a little more thrust for time. And, considering fuel in that situation, nobody hedges fuel better than Delta----over 75% of our fuel is hedged.

I am glad that you guys allow a lot of jumpseaters, even ours. I would love for our company to do the same, and they would if it were up to me. We are just happy we have a cockpit jumpseat or backseat for pilots-----we didn't have that until 96 I believe.
That is what it should be like at all airlines----and I am sure many of our people fly on Jetblue and appreciate it. Our 757's do not even have a flight attendant jumpseat---not even for our flight attendants. (Other planes have many---like 767 and 777 etc.)

I hope I am surprised an pleased with our new LCC---and I hope the name isn't goofy. It ought to be interesting at the least, and we will supposedly hear more about it next week.

Bye Bye---General lee

 

[General Lee]

Ty Webb,

You are right about making up time on the ground, and that is why the new LCC will not be going to our big hubs. It will be point to point, from airports like FLL to places like SNA or OAK. The traffic hassles are not as bad as other airports. And, Air Tran has not been "banking tons of cash" at ATL, and I read an article that said Delta has been giving you a run for your money. Now you are getting RJ's, and using the 717's to take us head on. Good. I think competition is good, and it keeps Delta from pairing away frequency. And, if you have read any of the press releases about the huge losses, you will take note that there have been a lot of "special charges" that are one time charges designed to make it look as bad as possible, probably to get Congress to help out with security. Remember Ty, we have $5 billion in unencumbered assests that can still be mortgaged. That can last for a long time--really. And, we are putting extra cost cutting programs in there. When the economy comes back, watch out---we will have a mainline with Intl heavies, a LCC with 757's, and 1000 RJ's. You will have 100 or 120 717's, and 10 RJ's. Caution wake turbulence.

Bye Bye---General Lee

 

[Ty Webb]

Ty Webb,

Air Tran has not been "banking tons of cash" at ATL, and I read an article that said Delta has been giving you a run for your money. Now you are getting RJ's, and using the 717's to take us head on. Good.\You will have 100 or 120 717's, and 10 RJ's. Caution wake turbulence.

Bye Bye---General Lee

I don't know if we are "banking tons of cash", but I will tell you this- we are making money . . . . both of the last two quarters, and for all of 2002 . . . . and that is while taking delivery of 2 new airplanes every month since I have been here, and hiring the pilots to fly them. We also have plenty of cash, but we don;t fritter it away competing with DAL. We're running a business, not a charity.

Look for an announcement of larger aircraft before the end of the year, but look for them to be utilized on routes where we can make money. See, our strategy is to make money where there is money to be made, not to piss it away competing for customers we can't afford to serve, which is what the LCC sure sounds like to me.

 

[mad691]

You may be interested in the following written by a SWA pilot. I don't necessarily agree with all of it, but it makes for interesting reading. He faults labor AND management for failing business models. Here are a few sample paragraphs focusing mostly on labor:

"The mainline airline pilot captures money from really only one source (hard pay and benefits), but his airline attempts to capture multiple income streams outside of mainline flying (RJs, IT, and alliances). By design, the SWA Model is the exact opposite. The SWA pilots capture money from multiple sources (hard pay, profit sharing, and stock appreciation), while the airline only generates income from one source - flying passengers in the back of B737s.

When the mainline pilot's company makes money from "partnering" with RJ carriers, does he benefit? No. (There is a management notion that RJ flying generates more mainline flying, but this downturn truly proves that theory is bunk.)

Does the mainline pilot get money when his airline joins wordwide alliances? No. His union gets to form a new committee and travel around the world to participate in "pilot alliance coalitions" but with little benefit to the mainline pilot.

When an airline forms and funds information technology (IT) subsidiaries (Sabre, Apollo, Orbitz, etc) do any of the benefits flow to the mainline pilots? No.

Does SWA management use airline generated funds to finance RJs, code-share alliances, IT efforts, or to pursue any other endeavors? No. They buy 737s and pay down debt.

Mainline pilots justifiably have only one religion - hard pay. The SWA pilots have nearly a billion dollars tied up in SWA stock in one form or another. Each dollar increase in SWA stock is worth millions to the SWA pilots. (One analyst states that some airlines who make it through the present downturn will see up to 300% appreciation in stock value)

Fighting hard only for hard pay may be a valid strategy for the normal mainline pilot, but that does not necessarily mean it is the wisest strategy for SWA pilots.

Four days after 9/11, Southwest made a $180 million payment to the employees profit sharing accounts. Simultaneously, the mainline carriers started declaring "force majeur" and announcing furloughs.

Since labor at mainline carriers rarely participates in stock appreciation, they are actually unintentionally pitted against the investor. The more labor gets (wages); the less the investor gets (profits) and vice-versa. The SWA Model - evolving from the beginning - was designed to make labor and investor more congruent. If investors get rewarded (more profits), the pilots participate with profit sharing and stock appreciation.

One of the fundamental flaws in the airline industry is an undercurrent struggle between labor and investor. The byproduct is that labor is ignorant of investor's needs and investors often see labor as screwing up their investments. Not surprisingly, this often produces disastrous results for both parties.

Delta plans to acquire over 500 RJs to be flown by Comair, ASA, Skywest, and ACA pilots. By the end of 2005, every major carrier will have between 1000 - 5000 pilot jet jobs at their regional carriers. Currently mainline pilots fly none of these regional jets (although that seems to be changing at USAir). If these pilots had made different decisions, all their furloughed pilots could be flying with many of those 1000 - 5000 RJ pilots below them on their seniority list. The next time a mainline pilot mumbles about SWA wage rates, ask them why they have been such capitulating wimps by letting their managements outsource their jet jobs. (ALPA is currently being sued by a second regional carrier for failing to properly represent them - big surprise!)

Some managements are indeed scoundrels, but most are rather simple-minded:they look for ways to be profitable. If they cannot make money flying big airplanes, they are going to try and make money flying small airplanes. Mainline airlines have priced themselves out of the market and management has to turn to other income streams, such as RJs."

 

[AlbieF15]

Interesting and good article...

Likely to be flame bait here, but from my "Pollyanna" perspective, I have often wondered why labor/union negotiating has to be so US verses THEM.

One thing JetBlue and SWA have done very successfully is lash the pilots to the ship in the form of stock options and profit sharing. If the ship does well, then the investors are happy...and so are the pilots. Now...the latest stock market downturn and mulitple corporate scandals illustrate why someone should NOT have all their eggs in one basket, but by putting a certain percentage of compensation in the form of stock, stock options, or profit sharing, it seems like both union and management could find some win-win outcomes.

I know, I know...I'm from Mayberry and this is a pipe dream. We are told to say "my union negotiates for me" whenever someone from management says "what about XXX". Still, I can't help but wonder if on our next contract if we had some sort of profit share/stock option link if ultimately the gap between Mgt and labor might shrink just a bit...

 

[VaB]

ultimately the gap between Mgt and labor might shrink just a bit...

Albie,

Nice thought, but I guarantee that most guys here during '97 aren't going to make nice, if ya know what I mean. I hope I'm wrong, but there are some angry, smited feeling fellas running around out there. By the way, I wasn't here then, so that's just my opinion.

Later

 

[mad691]

This is my take on LCC. First you have to give Delta credit because they are at least trying to compete. They really have no choice. Better change with the times or you will perish. Pan Am, Eastern, Braniff, you get the idea. Delta is in better shape they most. Even though Northwest has more cash on hand(actually cash and not encumbered assets) Delta has a better balance sheet than most. So General Lee is right. They can last a long while. The only problem with that scenario is that are those encumbered assets really worth anything? Maybe and maybe not. How many banks at the moment are going to give Delta or any carrier any money and use 737-200s, MD-88s, MD-11s and any other aircraft that are paid off as calatoral to get money. I suspect not too many. Look at UAL, 2-3billion in encumbered assests,can't even get a loan based on that. Thay have to go to uncle sam to guarantee the loan.

Now lets talk about LCC. Delta has delta express part 1 today. At the time when they set it up it looked like a good idea. And I suspect it was working when the economy was booming. Metro jet , CON lite, United shuttle, all were set up within a company to go after LUV. Back then Jetblue and Airtran weren't on the radar screen(well VJ/Airtran weren't a real threat back then). So basically you have the majors going against LUV with there low cost unit. General Lee said nobody really knows that DE part 1 really made money. Well I can tell you that it didn't. Why? Because if it did they would have expanded even more by now. Well How do I know? Just theory really. Maint. costs, fuel costs, gate space, landing fees, overhead stays the same. The difference, pilots take a pay cut. None of the other labor force takes any form of a cut. So basically none of the costs change except the pilot group. So now you say well what else can management do. Utilize those airplanes more. instead of the average 8-9 hours day, you bring it up to maybe 10 hours a day. Now remember how the saying goes, airplanes don't make money on the ground. So that helps a little. Throw in 25 minute turns a you have yourself something. Throw in a nice frequent flyer program that can take all over the world as General Lee said because remember LUV doesn't go to Spain and you have yourself DE part 1. All of the low cost units had the highest load factors in the industry. Metrojet had an average load factor in the 80s. Thats really good. DEpart1 had(i don't know now) also 80s load factor. Lets talk about the 25 minute turn. 737-200 has 117 passangers right? So lets say each passanger checks in 1 bag. 117 bags is pretty managable number. So basically the quicker you get the passangers off the quicker the turn will be. Fuel, baggage, and catering are really a none issue. Remeber LUV has been doing this for 30 plus years. They invented the quick turn. I think DE part1 held its own until 2001 when the economy started to slow. Better than any other low cost unit. when Sept. 11th happened the first thing that almost all the carriers did was ditch the low cost unit. Metrojet gone. United shuttle gone. Delta cut DE part 1 in half. So that says something. But they never got rid of it. they just cut it. Maybe General Lee knows something we don't?

Lets talk about DE part2. We really don't know what its going to be called so we will leave it at that. rumor is its going to be 757s all coach configuration. So we will go with that. Now the first thing that comes to mind is Virginia Ave needed help. None of the important people made good decisions about how to go after the low cost guys. Leos not a happy guy. He has a code share threat from UAL/U and the low cost carriers who had only 7% of the market now have 14% of the market. So they have to pay money to hire outside firm see if they can get a handle on this. One of things the firm does is fly on all the low cost carriers. LUV, SWA, Jetblue, ATA, Frontier, and Airtran. They come up with a plan and now Leo and his team will announce this plan soon. the question comes up why 757s? Well the 757 has the lowest operating costs of any narrow body aircraft. Thats a good idea. All coach configuration. Thats good. More seats, you can spread your costs out a little more. This is all good. I would assume that the frequent flyer program will be the same, thats also good. Heres the problem. Again the over head is going to be about the same. This time the reverse the labor costs. Pay the pilots the same and everybody else gets a pay cut. Fuel costs stay the same(may go down a little because 757 is alittle more fuel efficient). Maint costs stay the same, landing fees go up because the airplane is heavier and leases on the gate stay the same. There is one very important thing here you can not measure. Thats called customer service. One other important item here is good employee moral. Delta at one time was the customer service king. Great employees, great moral, **CENSORED****CENSORED****CENSORED****CENSORED** they bought 767 for the company. Thats impressive! I don't think any other airline has done that. But times have changed. 15000 employees gone, so moral is not what I call very good. And if they hire outside employees and not offer jobs to the furlough employees moral will be really crappy. lets talk about CASM. that is king. CASM is everything when you are a low cost carrier. Lets compare CASM. As of 3rd qtr of 02 . Jetblue leads the pack at 6.5 cents a mile, SWA is 7.5, Airtran is 8.2 cents, ATA is 6.7. If you take out the charters ATA does, the CASM for scheduled service is 8.5 cents. What factors play in this? Well, quick turns, a/c utilization, stage lengths, how many employees it takes to turn an airplane, etc. Very important stuff. Jetblue flys there airplanes 14-16 hour a day. SWA has 11- 12 hours a day, Airtran is up to 11 hours also. they all do quick turns, they get more out of there employees per hour basis than Delta ever could. And the most important thing all of these low cost carriers have is good customer service. With out it, they all would disappeared a long time ago. The proof is in the pudding. Look at jetblue and airtran. Both have expanded ten fold. AND been profitable. All airlines can expand, but to do it and still make a profit is something. As far as the 757s doing 25-30 minute turns. That will be something. 200 people plus 200 bags, unload and then board 200 people and 200 bags all in 30 minutes. That would be impressive to see. Will it work? Who knows. Time will tell. Those red eyes that AWA, and Jetblue do, I think that will help Delta keep the hours up on the airplane but to go against southwest in Vegas is crazy. Vegas is twice the size of MCO as far as flights go. look at ATA they have 757s. I don't think they can do 25-30 minute turns on there 757s. Well, time will tell on this one, if it works, the others will follow. If it doesn't Delta will bleed bad. Remember, the average fare for swa, is about 89.00 and the make money, airtran last quarter was 72.00 dollars, i forget what jetblue was, probably low 99-105 range, and still made money. That will be a hard act to follow.

Of course I could be wrong(but I did stay at a holiday inn last night)....