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Your post about low wages is one that is brought up frequently by the casual observer, but is off the mark.
First of all, it has been refuted many times that jetBlue pays at, or above, industry wages for an airline that's only been in business for three years. Now every pilot coming on board at jetBlue knows what they're buying into. We've been told by many inside the company that we can expect pay and benefits to mirror what is found at SWA under a mature pay and benefits scenario.
With all due respect, who cares how long you have been in business. Your employee wages and benefits are lower, and they ARE having an effect on the profession. The evidence of this is everywhere, but mostly in company negotiations.
Is it industry leading? No, but for the business model that jetBlue pursues, it is properly established, and anything but "low."
This is an important point. For you to say that jetBlue brings down industry wages is invalid. You can't compare wages that Delta pilots earn to wages earned by jetBlue pilots. The reason is simple,while both airlines operate under a 121 certificate, they are vastly different in how they serve their markets,evidenced by their vastly different business plans. One (Delta) bases its business plan its ability to generate high revenues, while the other (jetBlue) bases its plan on maintaining low costs primarily through efficiency and high utilization of high cost assets.
That is patently untrue. They do not achieve low costs "primarily" through efficiency. They get their low costs partly through efficiency, but "primarily" through labor costs. Look it up.
For you to compare wages at Delta and jetBlue on a one for one basis is to compare apples and oranges. This rationale would also apply to regional pilot wages as well. Of course no one expects them to paid major airline wages.
While we may fly the similar airplanes from the same airports, we operate on entirely different tracks, driven by different operating priorities established by our respective business models.
I think that you are overestimating the differences between the two airlines. We both fly people from the same airports to the same airports on the same size airplanes.
What you fail to understand about jetBlue's ability to make money is that it is driven by outstanding efficiency. This is evidenced by its perrenially high gross margins. For 2002 it was 16.5%. When you look at jetBlue's fleet a couple of things standout in stark contrast to the rest of industry.
First, jetBlue flies its airplanes almost 13 hours per day (12.9). Second, jetBlue earned over $635 million dollars in revenue for 2002 with an average fleet size of 30 airplanes. That comes out to revenue per aircraft basis $21.2 million dollars. When you compare this to the industry gold standard, SWA, jetBlue maintains a sizeable advantage over them in these two categories (>than %25). Add to this greater average seat size, and speed over the B737NG) and that racks up some serious ASM generating capacity for a relatively small fleet size.
You are very efficient. I commend you for it and have never denied it. However, our revenue per employee is higher, our revenue per airplan is similar. You do not corner the market on efficiency. More importantly, any advantage you may have in this criteria is not nearly large enought to explain the difference in CASM. You have almost a 3 cent advantage here. That is huge, yet many seem to want to understate it.
At $45-50 million per airplane, the highest capital cost to an airline are its airplanes, not its employees. Once again, when compared to SWA, jetBlue is able to generate comparable ASMs with 25% fewer aircraft. Not only does that mean fewer airplanes, but less fuel, less employees, less maintenance, less overhead, etc., etc., etc.
Now that's what jetBlue's advantage is over SWA. Just imagine what it is over a hub and spoke carrier like Delta.
While airplanes may take the greatest initial capital outlay, employee wages are still more expensive. For comparison purposes, in the third quarter, your costs for aircraft rent was .45 cents per ASM (half what you paid for fuel, an airlines second largest expense). Your cost for depreciation and amortization was .31 cents per ASM. Compare that to 1.87 for employee wages and benefits and you will find that you are greatly mistaken when you say that airplanes make up the greatest cost. I am not trying to be rude, but please read your 10k. I think that it will better explain what I am trying to say.
Now Delta wants to field its own low cost alternative in Song. This creates a problem for Delta management based on my earlier statement above. If Delta wants to play in this new arena, it must change its basis from revenue generation, to cost efficiency.
Delta has always competed on a cost basis, as opposed to U, UAL and AMR. DAL, CAL, and NWA always were cost conscious, which explains why they are hurting less than the others. Song will be an extension of that philosophy, not a departure from it. Delta was the most cost conscious in the industry even before Neeleman was born. You are incorrect when you assert that they concentrate more on revenue generation.
What side of the fence will DALPA fall on? They will not be able to have their cake and eat it too. Industry wage deterioration is not the fault of jetBlue, but your own airline's (read: management) decisions to alter their business models and undercut the contractual commitments made to you during a period where the airline operated under a revenue generation scheme. The implementation of Song now puts that in question.
Once again, your portrayal of Delta's business model is incorrect. Just because someone undercut our costs does not mean that we are not cost conscious. My take is that SONG will be a success. Time will tell.
Is it right or wrong? I don't know the answer, but I can tell you its far more complicated than you suggest, and certainly not the fault of people flying jetBlue A320s around this country.
