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Delta cutting International flights 3%

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If cost structure doesn't equate to pricing flexibility, what does?

Stage Length Adjusted CASM Ex-Fuel @ 1000 miles:

Spirit.......................................................6 cents
Southwest................................................7 cents
American and Delta..............Approximately 10 cents
United................................Approximately 11 cents

That's the part that most don't understand Howie.

We still have a very low CASM because of....

% of owned aircraft outright. Minimal leases and the interest associated.
The same A/C type. Huge cost savings of mx/parts/training (ie, one sim type)
Low cost of credit because the company is 'investment grade', because of the above.
None (as in zero) cost associated with crews bidding to other equipment. Think about the savings here for one minute. 10 people go to training at DL with ONE retirement.
 
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Sure but go head to head on the same type jet and we'll see how it plays out. One fleet type makes a crapton of difference but load a whale accross the ocean, just the fuel to get it to altitude, adds to our costs. Labor costs are the highest at SWA yes? Or am I wrong?
 
More Airlines to follow ....United , American LH AF KLM BA
The cancer from Middle East is here and we need to stop it or we are going to be screwed

You hit the nail on the head. The state subsidised airlines from the ME represent a major threat to the US legacies going forward. EK alone has 80 A380's, 46 77W's, and 115 777x's yet to be delivered. They just announced Orlando, 2nd daily Boston, and 2nd daily SEA with many more to come. North America is one of the major destinations going forward. In the next few years expect to see Emirates connect Asia with the US west coast.

It's going to be hard for DAL/UAL/AA to compete with an airline that pays A380/777 CA's 220k/year and ground staff slave wages. Not to mention all the subsidies.
 
If cost structure doesn't equate to pricing flexibility, what does?

Stage Length Adjusted CASM Ex-Fuel @ 1000 miles:

Spirit.......................................................6 cents
Southwest................................................7 cents
American and Delta..............Approximately 10 cents
United................................Approximately 11 cents

Volaris 5.4 cents. Hoping to see them parked in that open gate at Hobby!!
 
You hit the nail on the head. The state subsidised airlines from the ME represent a major threat to the US legacies going forward. EK alone has 80 A380's, 46 77W's, and 115 777x's yet to be delivered. They just announced Orlando, 2nd daily Boston, and 2nd daily SEA with many more to come. North America is one of the major destinations going forward. In the next few years expect to see Emirates connect Asia with the US west coast.

It's going to be hard for DAL/UAL/AA to compete with an airline that pays A380/777 CA's 220k/year and ground staff slave wages. Not to mention all the subsidies.

It will be very hard. But everything has a cycle in aviation and the ME carriers can very easily go the other way. Easy come, easy go. If the Emir watches his $ do anything less than spectacular, he'll send into other industries. (Frankly, should have done tech or medicine) He may be forced to do that if the alpa effort succeeds. 380s may not have much of a secondary market value... So if you're emirates and you can't fly your shiny new subsidized jets anywhere... And you can't sell half of them... Hmmmm. Things can change very fast
 
It will be very hard. But everything has a cycle in aviation and the ME carriers can very easily go the other way. Easy come, easy go. If the Emir watches his $ do anything less than spectacular, he'll send into other industries. (Frankly, should have done tech or medicine) He may be forced to do that if the alpa effort succeeds. 380s may not have much of a secondary market value... So if you're emirates and you can't fly your shiny new subsidized jets anywhere... And you can't sell half of them... Hmmmm. Things can change very fast

You know what time it is...? Right! Time for another Michael Boyd (sigh!!!) comment!

Here we go:

(link)

The Middle East Airline Subsidy Controversy?
Enter The Clowns. Exit The Credibility.
In any debate, when one side or the other is caught relying on dimbulb, inaccurate data, or making claims so stupid as to insult the intelligence of a doorstop, it can be lethal to that side?s credibility, regardless of the strength of their position.
It just happened to (or more correctly, was inflicted on) mostly two airlines ? Qatar and Emirates, and also on smaller Etihad. And without their participation, either. In a very real sense, they are now victims of bad data.
It?s About Alleged Unfair Government Support. Period. As widely reported, US carriers are claiming that certain Middle Eastern airlines ? Qatar, Etihad and Emirates ? are getting de facto financial support from their governments, giving them an unfair competitive edge in carrying traffic to/from the US over their hubs to places across the globe.
As a result, the US carriers maintain, these accused unfairly-subsidized carriers should not be allowed open skies status to serve US points.
The Middle Eastern carriers aggressively disagree with that assessment. The US government is now investigating the arguments and data on both sides. The debate is in full swing, and the truth will out.
Help Like This, They Don?t Need. This last week, however, the credibility of the Middle Eastern side may have been badly mauled, thanks to the ?helpful? intervention from some outside gadfly ?supporters? who are trying to hijack the controversy to make it a forum for all manner of parochial and non-related allegations about the evil nature of the US airline industry.
It?s the usual second-agenda genre, kvetching on the sidelines. To the detriment of the credibility of the Middle Eastern carriers involved, they?ve now independently published a ?formerly secret? government report that ?proves? that it?s actually US airlines that have been feasting out of the government trough.
It seems that some entity purporting to represent US business travelers (?) discovered a bombshell Federal Report (!) supposedly revealed by Wikileaks, that once and for all sheds the Clear Light of Truth on the hypocrisy of the US airline industry.
Using this data as ?proof?, they?re claiming that US carriers are trying to kill off the entire Open Skies program, as part of a wider sinister plan to keep a stranglehold on the American Consumer.
Of course, those are cards not in the deck, which apparently this bunch is trying to stack, so they can piggyback their own second-agendas on the media coverage.
And those second-agendas are so transparently angry and semi-crackpot, that they shed no positive light on the very airlines they claim to support.
The core and only issue at hand is the question of government subsidies that these specific carriers are accused of receiving. Period. If that?s eventually determined by the feds, the benefits of open skies should be withdrawn from the carriers involved. If not, it?s back to business.
The debate is not about the concept or the existence of the open skies program itself. It is simply that US airlines are questioning a specific situation.
But since US carriers are so evil, it?s okay to accessorize the debate with bogus data and non-related babble, with the assumption that the feds and the media have the intelligence levels of moss rock.
This formerly secret document, they claim, points out that these airlines have been the recipients of $150+ billion in taxpayer largess ? yes, subsides! So, that means their complaint against Emirates Etihad and Qatar is bogus.
Let?s take a look:












Now, do note that the table is labeled, ?Federal Direct Spending on Aviation? ? not ?Federal Subsidies to Airlines.?
One really has to have an MBA in gullible to believe this is credible. Don?t miss the fact that some of this ?secret data? are almost a century old. What the US government spent back when the Kaiser was still running Germany, and virtually no scheduled airline industry even existed, is a tenuous ?proof? of airline subsidy today. It?s April Fools day a week late.
But, that?s probably considered by this bunch (if it?s actually as large as a bunch) as just nit-picking. What is astounding is that some people in the media actually take this obvious nonsense seriously.
It takes some serious intellectual dodging to tell the world that FAA spending money on maintaining equipment ? including the billions at general aviation airports ? is a airline subsidy akin to tax breaks, low-interest loans and fee-waivers.​
Real credible ? the money paid eighty years ago to Colonial Airlines, or Varney Speed Lines, or Transcontinental & Western to carry the mail, is clear proof that today?s airlines are flying around on the public dole. And, of course, the money for airmail operations paid to the Post Office in the 1920s is part of the subsidy, too, according to these wizards.​
And Essential Air Service ? the truth is that it?s a community subsidy that airlines can ? and most don?t ? voluntarily bid on. But that don?t make no nevermind ? it?s a full subsidy supporting greedy airlines because they say it is.
That VOR in rural Ohio, and that runway overlay at some small rural muni airport ? those are subsidies to airlines, too, according to whatever weird logic these guys are using.
By the way, the cost of the national weather service is, according to how they twist this information, a subsidy to the airline industry. So, a winds aloft report is an evil support mechanism to American Airlines, see.
Did somebody lose chain of custody on the drug test?
Middle East Carriers Had Best Move Fast. If this stuff is being pushed in any manner that intimates that these airlines are involved in it, they need to move fast to disassociate themselves with this garbage. They can produce a whole lot more compelling data, one can assume, than a chart revealing how much the US post office spent on air mail in 1928.
A semi-literate high school kid can see through this silly intellectual burlesque, and those airlines had best get their public relations people to make sure they?re not associated with this amateur act. If they so much as even refer to this ?report? in their filings with the feds, they will dash any chance of being taken seriously.
Are There Any Intelligent Life Forms Out There? It gets worse. Incredibly, to read their ranting doggerel, some of these consumerist squirrels are vaguely implying that US carriers are also trying to block foreign carriers from entering internal US markets.
This, of course would, according to people who don?t know diddly about airline economics ? or US law ? bring enormous new competition into the US, and relief to smaller communities that are losing service.
Right. Japan Airlines and Air Asia and Ryan Air are just hankerin? to jump into the lucrative and underserved Lansing-Chicago market, were it not for the US carriers keeping them out.
This is about trade. Loopy secondary agendas claiming that US airlines are hindering new competition ? particularly the looney-bin claim that they?re stopping foreign carriers from operating within the US ? don?t have anything to do with the specific claims being made by US carriers in this case.
When it comes to intelligent debate, however, it?s a lost cause.
It?s matching wits with unarmed people.
 
Good points by Boyd.

The only place we [US] give up the highest ground on competition and level playing field is with regard to SWA. Love Field and Hobby are examples of uncharacteristic, protectionist behavior our govt has allowed (if not created). And those same "consumerist squirrels" Boyd refers to are behind it.
 
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The larger question Spaulding is where is the international growth for a company like Delta when this all settles out? verses say a company like SW?

Quite honestly, I don't see a lot of short-term growth opportunities for international flying at DAL, at least until other currencies make-up ground on the dollar. Delta's Mexico and Caribbean network is already mature, and our memos site primarily a pull down in the Middle East and Asia.

Down the line, I could envision more pilot positions on A330/A350 aircraft flying passengers from the US direct to more points in Asia than current larger types pushing most folks through Narita.
 
We have soundly put our stake in the current size and fleet mix. Management praises the JVs and codeshares when the economy blows over there and then when things are turning around, they blame the strong dollar. There's always an excuse....
 
We have soundly put our stake in the current size and fleet mix. Management praises the JVs and codeshares when the economy blows over there and then when things are turning around, they blame the strong dollar. There's always an excuse....
Bill, for once we agree. There is always a reason why the airline isn't growing. There's always an excuse as to why we can't do X,Y and Z and for years the pat stand by answer by management has been financial. There always seems to be a carrot that is unattainable. But recently, all the far off financial pipe dream carrots are being fulfilled.

It's the same at SWA. For years the carrot at SWA has been 15% ROIC. In 2014 Southwest achieved 21% ROIC. Forecasts for 2015 and 2016 are 31 and 32% respectively and 2017 is expected to top out ABOVE 35%! Yet, there is still no talk about meaningful expansion. International flights are reported to be doing well ahead of projected numbers but no mention of accelerating growth.

Sooner or later, all the airlines have to decide to grow when the money is rolling in. If the business is firing on all cylinders and making huge profits, at some point the logical move has to be expansion in order to continue forward with the momentum!
 

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