Latest ASA INFO????

[bvt1151]

BVT, I'm just curious. Exactly how much advertising do you think $74,000 will buy? All the marketing that DAL does benefits us as much as it benefits them, and OBVIOUSLY they are not passing much of that expense on to ASA and CMR. THAT IS WHAT PEOPLE ARE TALKING ABOUT!!!

atrdriver

Niether Comair nor ASA advertise in significant amounts, nor did they when they were separate companies. For instance, before ASA was bought by DAL, they only spent an average of $100,000 per quarter in advertising. Nobody questioned whether Comair or ASA were profitable before they were bought.

The fact is, advertising does not affect a contract carriers revenues. Remember, we're paid regardless of how many people fly. Delta is advertising the seats that they own on CMR and ASA, which is entirely outside the scope of a contract carrier's financials.

Unless a contract carrier has its own reservations (like Comair used to), you're not going to see significant advertising numbers because, frankly, they don't need to advertise.

Some other regionals 2004 Q1 advertising expense:

Skywest - 1,182,000
ACA - $1,018,980 (includes Indipendence ads)
Horizon - $464,000
Comair - $74,000
ASA - $72,000
American Eagle - $20,480
Coex - $4,360
Executive Airlines - $40
Trans States - $0
Pinnacle - $0
Air Wisconsin - $0

This is explained in further detail on another thread. You'll have to search for it since I can't remember which one it was off the top of my head.

 

[atrdriver]

atrdriver,


What DL marketing?


Bye Bye--General Lee

I'll grant you they don't do all that much, but in ATL there are TONS of billboards, they sponsor the Braves and the Falcons, you will occasionally see USA Today ads, very occasionally see a TV ad....and I guarantee you that the $74,000 that are listed in the CMR and the $72,000 for ASA won't buy much marketing AT ALL.

atrdriver

 

[General Lee]

atrdriver,


I know, I live in ATL. I was joking. A lot of this current advertising has just sprung up. For awhile there, there was nothing, and they even took down the Delta sign in lights near Georgia Tech---going 85 South near Dowtown, I think they replaced it with a Heinekin billboard. That was a prime spot, too.
I am glad they have started to get some advertising out there.... But they are late.


Bye Bye--General Lee

 

[sweptback]

It is. Medflyer, the DOT numbers are unauditted.

You say this like there aren't SEC penalties for false reporting or anything.

 

[FDJ2]

You say this like there aren't SEC penalties for false reporting or anything.

It's not an SEC report.

 

[atrdriver]

You say this like there aren't SEC penalties for false reporting or anything.

Why would the SEC care what numbers were given to the DOT? The SEC is concerned about securities filings, DOT isn't...

atrdriver

 

[MedFlyer]

It's not an SEC report.

True, but the DOT has even greater powers than the SEC to penalize airlines that misbehave. The DOT has the ability to shut an airline down, the SEC does not. Of course, it's highly unlikely that the DOT would shut down a major airline over financial reports, but the power is there.

 

[FDJ2]

True, but the DOT has even greater powers than the SEC to penalize airlines that misbehave.

It's not misbehavior, the numbers themselves are advertised as unaudited for a reason and the DOT could careless.

 

[FDJ2]

Unless a contract carrier has its own reservations (like Comair used to), you're not going to see significant advertising numbers because, frankly, they don't need to advertise..

It's all part of the mainline subsidy.

 

[FDJ2]

BVT, I'm just curious. Exactly how much advertising do you think $74,000 will buy?

Good question, the answer is not much. It's all part of the benefit of being a contract carrier. Someone else pays those costs aswell as many others and guarantees your revenue. Independence CASM went up 66.7% year over year to 19.9cents/seat mile from only 13.2 the year before once it took responsibility for all it's costs, which included a 240% increase in marketing. RASM dropped 8.6% and overall passenger revenue plumetted 15.2%. Independence saw a net loss of $27.1M in the second quarter as an independent carrier as opposed to net income of $45.7M for the same period last year. My guess is that as a contract carrier ACA was posting double digit profits, not so today.

We could all speculate on the ASA/CMR unaudited numbers, but if they were to branch out from the protected umbrella of a contract carrier, I doubt they would do any better then Independence.

 

[atrdriver]

We could all speculate on the ASA/CMR unaudited numbers, but if they were to branch out from the protected umbrella of a contract carrier, I doubt they would do any better then Independence.

Which is my point exactly.

atrdriver

 

[bvt1151]

DOT numbers are audited and by the DOT and fines are levied if incorrect data is reported. Its in CFR 241. Look at the DOT dockets sometime to see what kind of penalties are levied.

Comair and ASA's numbers are very accurate. They do not come from Delta HQ, but rather their own respective HQ's. The argument that low advertising expenses means numbers aren't accurate is moot. The advertising expenses are so low because they are accurate. I can't believe you're pointing at numbers that make up less than 1% an airlines operating expenses, and saying all numbers are innaccurate. Even if Comair and ASA were required to pay there "share" of advertising, whatever that is, it would still be well below $1 million. Comair and ASA are profitable after all expenses are included. period. Those expenses include all depreciation, landing fees, fuel, interest, leases, and rental fees from use of "outside equipment" (DAL facilities). These are not "free", like so many have tried to claim.

Its like trying to explain accounting to kindergarteners.

 

[atrdriver]

Even if Comair and ASA were required to pay there "share" of advertising, whatever that is, it would still be well below $1 million. Comair and ASA are profitable after all expenses are included. period. Those expenses include all depreciation, landing fees, fuel, interest, leases, and rental fees from use of "outside equipment" (DAL facilities). These are not "free", like so many have tried to claim.

Its like trying to explain accounting to kindergarteners.

Do you really believe that DAL only spends $3 million on marketing? And what about all the expenses of using DAL's baggage system in ATL? I don't know about CVG, but in ATL all connecting bags are handled by DAL employees. I am not saying that ASA and CMR aren't profitable, because I believe that they are...I am saying that DAL doesn't pass along all the costs that we incur from using their reservations, marketing, baggage handling, and all the other resources that they provide.

And as far as providing false numbers to DOT, how do you explain that ASA reports "out" times as when the door closes, not when the aircraft moves? The plane can leave the gate area 3 hours late, but as long as the door closes on time that's how it's reported, and the DOT is fine with it...real accurate...

BTW, I got all A's in college accounting classes

atrdriver

 

[bvt1151]

And audits are performed and when those numbers are considered innaccurate the airline is heavily fined.

But Comair does all of their own sorting in CVG, does DAL pay for that? I do know that DCI pays for each DAL outstation they use. Whenever they need to call DL Mx, the DCI carrier gets billed.

IndyAir is a perfect example of where costs would be if there was no code-share. Unfortunately for Indy the problem isn't expenses, its revenues. Even with Indy's cost structure (which both Comair and ASA have proven to be well under) CMR and ASA would be well into the black.

The point is, even if you add in all the numbers you claim makes all the difference in the world, Comair and ASA would still be making money hand-over-fist. Basic economics explains why they don't add those numbers.

 

[FDJ2]

DOT numbers are audited and by the DOT and fines are levied if incorrect data is reported. Its in CFR 241. Look at the DOT dockets sometime to see what kind of penalties are levied.

Comair and ASA's numbers are very accurate. They do not come from Delta HQ, but rather their own respective HQ's. The argument that low advertising expenses means numbers aren't accurate is moot. The advertising expenses are so low because they are accurate. I can't believe you're pointing at numbers that make up less than 1% an airlines operating expenses, and saying all numbers are innaccurate. Even if Comair and ASA were required to pay there "share" of advertising, whatever that is, it would still be well below $1 million. Comair and ASA are profitable after all expenses are included. period. Those expenses include all depreciation, landing fees, fuel, interest, leases, and rental fees from use of "outside equipment" (DAL facilities). These are not "free", like so many have tried to claim.

Its like trying to explain accounting to kindergarteners.

BVT, the DOT numbers are unaudited and do not include the real costs of doing business. Delta can allocate costs and revenue as it sees fit and charge as little or as much as it wants for its rentals and still be in complete compliance. In the real world, Independence had an increase in sales and marketing for the quarter of $12.8M, that's significantly more than the 1% of total costs you wrongly claim. You don't even know what ASA and CMR's advertising burden is. I wonder why? Independence also is now responsible for its own fuel costs. From the Independence SEC filing: "Under the terms of the Company's agreements with United and Delta, those parties had the risks and benefits of changes in fuel prices, and the Company (ACA) was not exposed to fluctuations in fuel prices. " As a result of no longer operating under the mainline umbrella Indepence fuel costs skyrocketted 26.9%. What do your DOT numbers tell you about ASA/CMRs fuel costs? Fuel costs for DAL will cost an extra $650M this year. With about 1/3rd of DAL block hours flown by DCI how much of that cost will show up in your useless DOT numbers you are hanging your hat on. We can also talk about maintenance costs at Independence which increased 22.2% per ASM now that it is an independent carrier. Combine that with a precipitous drop in revenue and it's not a pretty picture.

Once you graduate from kindergarten perhaps you'll understand.