Jetblue's Cost Structure - Good Article

[skykid]

General, I like the new Song paint and am sure the direct tv will be cool. Besides that a 30-40% pilot pay cut, work rules more like flying the FARs, and keeping those 757 flying 3 or 4 hours more a day will get you in competition with the low cost carriers. You seem to be focused on what is happening right now, or 6 months from now. I'm sure the Delta management reps negotiating with your union are thinking about what will keep Delta competitive several years from now. The irony that I'm sure isn't lost on your management is that the relatively good postion Delta is in today could cause you guys to miss the restructuring taking place everywhere else. Just look at your language in all these threads - we don't have to give THEM anything/we might give them a small percentage but we could walk and not negotiate and then drag out the next round of talks/we have a grievance to get the furloughees back. Unless you are in the minority and most of the other pilots don't share the us vs them mentality, you are set up to watch the LCCs and regionals take more of your flying.

 

[General Lee]

Skykid,

The difference between Delta and the other Majors, when it comes to the LCC's, is that we already have a plan and are going for it. As far as the pay, we are negotiating right now for a slight pay cut, but will extend the contract two more years. They will take it or leave it, and they most likely will have to take it. They owe some big money in 2005 and are in no position to say no and not get an extra $250 million a year from the pilots. The grievances have worked, we won our last one. The last 250 guys furloughed on the War Emergency will come back. Why? Anyone can see that the war is over (atleast Bush stated that on the carrier), and the loads are back. An arbitrator is bound to see that. The Dalpa people I have talked to said they had the proof and were ready to file, which they did. The difference between Song and the other LCC's is that Song has Delta's massive technology base to help it do well. "Delta Technologies" is a separate corporation with a large building next to our GO in ATL, and they make life easier for Delta and Song with advancements in certain aviation technologies that are too hard for me to explain. We also use Delta to hedge fuel for Song at lower prices, and have cut all non-union wages and some benefits for those employees to make it cost competitive. (they should have had a union, darnit!) Only the pilots are paid more than LCC's--and our 757's at Song carry 40 or so more people per flight, which makes up the difference. (although, we will probably take a 10-15% paycut, which should atleast bring it down a little closer)
Back at Delta Express, the pilots were paid less than mainline pilots, and everyone else (flt atten, mechanics) were paid mainline rates. It is switched now, and that saves us money. The planes will be used more often each day, and the turn times have been faster than normal---down to 50 min turns for a 199 seat aircraft. Allnighters thru Vegas will be introduced, and we have lots of open gates there waiting to be used for allnighters---to increase the daily utilization of each 757. There will be 36 757s at the end of the year, with 70 or more waiting.

Overall, it is going to be interesting to watch, but I think they have a good idea on how to compete. The pilot salaries will come down, but they will still be higher than any LCC's, which is good because someone has to keep the bar raised.

Bye Bye--General Lee

 

[skykid]

It will be interesting - good luck to you and all my friends at Delta!

 

[hngryflyr]

"The difference between Delta and the other Majors, when it comes to the LCC's, is that we already have a plan and are going for it."


Hmmm. I disagree. I think Delta has taken some of their 757's, changed the paint, copied another airlines product, launched on the same routes and are hoping to "compete". But on the mainline they haven't changed a thing...minimal...and you tell me, are they profitable yet? Other majors are completely over-hauling their business plan, pretty much changing the whole way they do business while keeping the same name. These carriers may quite possibly be in a far BETTER position than Delta in the coming years because of it. It is painful...but necessary. So General, while you wear around your Delta pajamas, drink from your Delta coffee cup, and watch your Delta clock tick...be careful this whole mess doesn't sneak up on you. You spend countless characters reiterating what we all see DAL doing currently. But in the grand scheme of things, longterm, Song won't solve anymore problems than it will create (IMHO). Powers far above us want this, the contracts slashed at each and every carrier. Delta is no different, and unless they also overhaul, they may suffer a similar fate regardless of loads, the war being over, etc. The war is still on my friend...we just change locations. In our current economic situation, I don't think Delta's fight is with any airline...except maybe their own.

 

[General Lee]

Hngry,

I like your statement:

"So General, while you wear around your Delta pajamas, drink from your Delta coffee cup, and watch your Delta clock tick...be careful this whole mess doesn't sneak up on you. You spend countless characters reiterating what we all see DAL doing
currently. But in the grand scheme of things..."


First of all, I think that was pretty funny. Give me a break. Also, I could bet that you have never even really been up close to a Song plane or the Song training center in ATL. It really isn't the same. They are doing their best to try to separate the brand names (maybe for future divesting??) and make it different. We did make them, according to our contract, put "Operated by Delta Airlines " on the side of the 757, though. You really have no clue about Song and do not really know the differences. The people have to "audition" to get hired, and a lot do not. No senior old hags there. I guess the intereiors are the same as mainline, right Hngry? WRONG. The put in a little more leg room, are putting in TV's at each seat, and have the other entertainment ideas--Song play lists, email, and sell gourmet food. Sounds like mainline, right? WRONG. Just the same mainline planes with a new paint scheme, right? WRONG. They have different boarding procedures that might be used by mainline eventually. The only thing that is the same is the Delta pilots coming on board with Delta uniforms. That is it. You should actually go see it for yourself instead of bashing it right off. You might like it, and if you fly on one you can get frequent flyer miles on DL/CO/NW---something Jetblue?airtran?southwest cannot offer----just think---six legs watching TV on Song and you get a free trip to Honolulu, Shanghi, Venice, or Cancun.

Bye Bye--General Lee

 

[FLB717]

Hey Gen,

Yup Delta is a treat to us (AirTran). But we have just recently carried our 1Million+ a month passengers. While you may do that is a few hours or a day I find it interesting that we now carry more pasengers than Comair or ASA (not both combined) in the same time. Delta has tried a thousand plus times to kill us like a bug, but we still scurry around. In reality as far as I see it if Delta would just be a good neighbor (not willingly loose millions (PNS) to compete we could both live rather well together. Ok Ill put down my crack pipe now. My point is we are in ATL, JB in in NY and both are in Florida. If Delta lost Florida you would be screwed. While we all can talk trash or say this or that I have ONE question no body seems to answer. What is the break even load factor on Song? And what is the current load factor. Everything else is moot. It doesnt matter if you are DAL, CMR, AAI or JBLU or SWA that is the real point. Hope you have an answer Im really curious

 

[FlyBoeingJets]

I for one am not tired of hearing about the success of Jetblue, keep it up guys!

I don't mind hearing about it too....BUT I am tired of the Rah! Rah! Rah! Go Big Blue! No one has ever been this good!

If Southwest guys are drinking the Koolaid then Jetblue is drinking Blue Koolaid. Why is it that news from NY is always more important and relevant?

JetBlue looks so good because the the older airlines have been afflicted with idiotic or greedy management. And sometimes short sighted and often greedy labor. But only time caused/proved that. JetBlue is very low on time. I believe JetBlue has a more honest, capable CEO, but what will happen after he leaves and a banker like Leo Mullin takes over????? What will happen when too many stock options causes a stagnant/declining stock price??? What if a JetGreen or JetPink come onto the scene? Will JetBlue then be reviled as a bad old airline?? Will unionization happen??

But I do agree, right now it is a great place (from the outside). For everyone's sake (insider/outsider) I pray it stays that way.

 

[General Lee]

FLB717,

I honestly don't knw the exact break even load factor etc. for Song, but I have heard that "It is doing very well." What that means I do not know? But remember, they put the Song flights on proven routes that will do well, like PBI-BOS. The recent addition of SJU--MCO and FLL-LAS will be more interesting to watch. Also, they have not installed the new whiz-bang TV system yet (OCT I believe), so that will amaze people (like at Jetblue) and that might bring them back for more. The key fact that will help us in NYC is that all three major airports will be used, which is a distinct advantage over Jetblue-----people in Manhattan know the drive is closer to LGA and EWR.

AIrtran is doing well at ATL and that is great. Since Jetblue started 3 daily busses to LGB and Airtran started Ryan A320's, we have added a lot more service----we will have 22 daily flights from ATL--LAX, ONT, and SNA. Thanks to Airtran and Jetblue--Delta has been forced to compete. Yes, the fares are lower now and that could hurt, but all of the flights have larger planes and more volume---and not all of those people are just going to ATL--a lot are now connecting onto other places. As our costs come down (new kiosks, lower wages for non-union employees, lower pilots costs by 10-15%, lower gas prices etc) the more profitable it will eventually get. We shall see.

Bye Bye--General Lee

 

[Eagleflip]

I have to agree with FlyBoeingJets on this one. I too am a bit overwhelmed with the rah rah nature of the press we at JetBlue are getting. That, combined with a couple of posters who, shall we say, do not have much perspective, give the impression that we're all a bunch of would-be do gooders who are too hyped on our own press.

In reality, most of those I speak with at JetBlue are humble to be part of this company, happy for it's success, and hoping for the industry slump to end sometime soon. While there are plenty of things within JB to be proud of, I take no solace in the fact that 11,000+ of my fellow pilots are on the street. I, just like other pilots at JB, acknowledge that we JB types are lucky beyond all comparison at this point. Yes indeed, it is a wonderful place to work.

Given the inevitable business cycle, things will eventually cool off. I suppose the incessant good press given to JB gives me the willies because at some point business, load factors, or just the general buzz will begin to level off and then where will we be? Will we be perceived as just another airline? I hope not, and I'll do my best not to let that happen.

John Travolta gave an interview just after Pulp Fiction came out and said that he kept his perspective by remembering a quick mantra: "I was never that good and I was never that bad..."

I simply hope that today's exuberance does not lead to unrealisitic expectations for the future. Until then, I will just try to keep my fellow crewmembers on an even keel and our passengers safe and happy.

That's a strategy we could all use, eh?

 

[General Lee]

Well said Eagleflip.

Bye Bye--General Lee

 

[jetblue320]

Song and TV's????

We keep hearing how Song is going to have live TV but have you done your homework? First off, Direct TV has already declined an offer from Song to provide service. Direct TV is a service, you can get the signal from PrimeStar or countless others. What Song does not have, and doubtful if they will ever get, is satellite equipment. They have monitors, wiring, but the only place to get a satellite antenna (a necessary piece of hardware) is from the only company who has one approved by the FAA. I think that company is called Live TV (wholly owned by none other than jetBlue).

Food for thought.......

 

[skykid]

I don't think tv is a big deal anyway, maybe an added bonus but price is driving the market.

 

[trueblue]

To Eagleflip

Eagleflip,
Your JB post, as all of your posts, was the best reply I've read to date...full of honesty and above all, humility. I second the fact that JB is indeed a wonderful place to work, but not for a second have I forgotten where I've come, where others in our shaken industry are, and where many more will go. While most of us enjoy a sip or two of blue-aid from time to time, very few of us are arrogant enough to believe all the hype and all coronation of the press. We're only as good as our last flight and are indeed very fortunate now and hopeful to remain as fortunate in the future. For others out there, we are NOT the NY media; instead, only trying to do our personal best in a very challenging time. Keep up the good work Eagleflip and hope to fly with you soon.
Guapo

 

[fracflyer]

From General Lee:

"and if you fly on one you can get frequent flyer miles on DL/CO/NW---something Jetblue?airtran?southwest cannot offer----just think---six legs watching TV on Song and you get a free trip to Honolulu, Shanghi, Venice, or Cancun. "

Actually, you can't earn NW or CO miles on Song. From NW's website:

Earn WorldPerks Miles on Delta Air Lines Beginning June 18, 2003, WorldPerks members can earn WorldPerks miles when flying on Delta flights, including those operated by Delta, Delta Express, Delta Shuttle® and Delta Connection®. SongTM flights are not valid for mileage accrual.

 

[FLB717]

Deltaiods,
Im sure Song is doing well just like Delta Express right? That was real good. But the question still remains what is the loadfactor and the break even. With all the knowlege you Delta boys have could you find out? Kid Napp someone? Our intel says your loosin your butt on it but Id rather ask you.

General,
Yeah your right a lot of people do connect from LAX and LAS and just like you we can do that, to about 39 cities. We have our feed network now we are going for the long domestic traffic. No surprise tho.