Delta Terminates Mesa Contract!!!

[Andy]

...and at the same time increasing unit revenues. When you pull a MD88 out of a market and put a CRJ900 in, the cost of the ticket generally increases on decreased supply.

You will always have some business travellers that pay whatever it costs for last minute travel.

The retired folks and families of four on priceline.com tickets will most always fill up an airplane to sunny destinations, but rarely pay the costs to actually get them there.

The problem is half empty 50 seaters going to cities which are only a 30 minute drive to a major hub. Particularly those cities which have welched on their marketing agreements to pay for jet service.

I see the RJ's doing MD88 flying, the MD88's doing 757 flying, 757's doing 767 flying etc.... Eventually we will have agreed to outsource almost all domestic narrowbody flying and that really stinks. On the other side AirFrance / KLM and others are happy to do our International operations.

ALPA needs to get religion about scope!

The downguaging that you're referring to assumes maintaining the same frequency. It also does not take into account what happens to the 777 when it's replaced with a 767.
The 777s would need to be sold. United dumped a bunch of 747s on the world market (and I think 777s, but am not positive). They went dirt cheap. Fortunately, there was a market for them. What if a bunch of the majors start dumping their widebodies? No, that's why I think frequency will decrease this time around.

Let me give you one city pair example. United on PHX-LAX. There are 5 daily 50 seaters that fly that route. 250 seats.
What if United went to 3 70 seaters and dump the 50 seaters?
Now we've got a hole where the 70 seaters were flying. Plug in 2 A319s - still cheaper than 3 RJ70s. Plug in 1 757 into the market served by 2 319s.

This is an incredibly complex puzzle where I am using very simple examples; the airlines use supercomputers to build their schedules. I can't give you a 'solid' example across multiple guages while sipping a beverage (hey, it's 5 o'clock somewhere) that will not have holes in it.

And yes, alpo does need to get religion about scope. However, I'm convinced that alpo's run by these guys: http://upload.wikimedia.org/wikipedia/en/3/3a/Stoogelogo.gif

 

[~~~^~~~]

Andy:

I'm not saying the larger airplanes are getting dumped, quite the contrary - they are going further out to make Delta a Global Airline and that strategy is working.

But, instead of 15% growth international and 10% shrinkage domestically, we should be seeing growth in both areas commensurate with GDP and other factors (around 3.5% yearly in normal conditions). Instead if we had the numbers on how much Delta Air Lines won domestic narrowbody flying has decreased we would have LEC meetings with 2,500 in attendence.

We should have rational growth in both areas. More people are flying, they just are not flying mainline.


Jon:

You are scaring me. Pretty good crystal ball you have there. In fact, that is exactly what they say....

But if the ALPA was run by the Three Stooges, they would all have mustaches.

Don't anyone get me wrong, I am a true blue union loyalist, but think they need to reorganize so they can determine and execute a national strategy.

 

[contrail67]

Mesa shares tumbled following the carrier's report that Delta plans to terminate a contract with the company due to issues with the number of flights it completed.



I have been a victim many times by their cancelled mess, cannot imagine the frustration on the passengers part.

 

[Andy]

We should have rational growth in both areas. More people are flying, they just are not flying mainline.

OK, THAT's the fundamental disconnect. You see an increase in passenger traffic. I disagree; I think that there is going to be a large dropoff in passenger travel. Think post-911 squared.

As for the 3 stooge link, that was me. Excellent point on the mustaches; too bad I stink at photoshopping.

 

[IronCityBlue]

Wishful thinking DAL newbie, but don't worry you'll be making the big bucks flying a 777 or a 787.

When scope finally does collapse completely the senior Captain sitting next to you who just voted himself a big pay raise will explain to you how you didn't really want to fly those little planes (MD-80, 737) any way. Too many legs in a day, crappy overnights, etc. No, one leg a day and GOOD beer in London or Frankfurt, that's the ticket.

You have done an excellent job pointing out the idiocy of mainline pilot groups though recent history. That's exactly how it happened. Furthermore, that's exactly how it could happen for larger aircraft.

To carry your example to its endless conclusion, SkyWest, in 20 years, will do all flying for Delta and United (and Midwest and others) because at some point the last group of mainline pilots will sell out all that exists for one final payday push.

You think this will happen, and clearly want it to happen. That's fine. Go for it. If the mainline pilots are that stupid, you 100% deserve to do all the flying. Not only that, they will deserve to lose it. You can dance on their graves and they will have no right to complain. In fact, every mainline pilot will owe you a beer because of the big payday your years of future toil has provided them.

But mental "mathercise" aside, you have admitted that it is not your decision. It is up to the mainline pilot groups, not you. The same goes for the shiny large RJ's you currently fly. Your company's ability to continue to outsource them depends on two crucial things: mainline pilots continuing to allow that outsourcing, and your company's ability to always be the cheapest RFP of the year (month, week, etc).

But thanks for the prediction anyway. Nice pom poms by the way.

 

[~~~^~~~]

OK, THAT's the fundamental disconnect. You see an increase in passenger traffic. I disagree; I think that there is going to be a large dropoff in passenger travel.

If you look at the charts the line has remained right at 4% over the past 20 years now. While the legacies have shrunk they have been back filled by the SWA's, AAI's, JetBlue and DCI airlines in the grand scheme of things.

The flying has not gone away, we simply have negotiated & managed our way out of it. Boeing has good reports on the subject and they see no changes to their 20 year long growth line between 2.9 to 4.9%.

 

[maxblast72]

Just curious, how many 50 seaters at Mesa are going to be affected by Delta's decision to drop this contract?

 

[GogglesPisano]

Resolution: At least 50% of the MEC members and neg committee members at the legacies should be staffed by bottom-third FO's.

Can I get a "Seconded?"

 

[Yuppyguppy]

You guys with Big Jet Syndrome are mathematically challenged (1 MD-80 = 145 seats / 2 CRJ200's = 100 seats ) A given city could be served by 2 MD's a day or 6 RJ's with the same number of seats. Which do you think the marketing types would prefer. Want to trim capacity, cut one or two flights and retain frequency. One flight per day won't cut it. No legecy has the domestic narrow body capacity to take back RJ flying if they wanted to and they don't want to. All the legacies are focusing on growing international, that is where they make their money and REDUCING domestic capacity. Delta is not going to buy any more MD's, more likely they will park the one's they have. Money is tight, they will spend it where they can make the most money i.e. 777's.

The future won't look like the past and my crystal ball says in the future of domestic narrow body flying will all be outsourced to the regionals. In ten years the legacies won't do any of it.

Yep John your right...I told you to stop drinking you fool. Did you get your crystal ball from J.O.?

 

[~~~^~~~]

Just curious, how many 50 seaters at Mesa are going to be affected by Delta's decision to drop this contract?

How many do they have? That would be the correct answer.

Today, MAG Management announced, via press release and SEC filing, that Delta Airlines has served MAG with a Notice of Termination Due to Breach with regard to the 35 fifty-seat ERJ operated by MAG as Delta Connection.

MAG has serious financial problems. They had to post a 90 million dollar bond in the Hawaii litigation where they destroyed evidence (big no no) and the Aloha litigation is just getting spun up, which will likely follow the path of the Hawaii suit. MAG's island operation has always been a money loser and the Chinese appear to have backed out of the deal with Kunnenpeg (sp?). The Chinese are hard for anyone to do business with anyway. United is yanking flying and they have debt obligations of $150,000,000 due in the next 10 months.

When the lawsuits start flying in the numbers MAG has to contend with the end is usually close behind. At best management is distracted from running the company. At worst, the lawyers' billing just eat up any cash that is left to fund the day to day operation.