Majors OWNING 50 Seat RJs in LCC Environ

[BluDevAv8r]

Bludevav8tr,

The problem with your explanation is that you overlook business passengers' hatred for uncomfortable RJs. The Wall St. Journal Weekend edition just had a large front page article about how the majority of business travelers will try to find a way to NOT fly RJs--especially long distances. Some of them do not have a choice in some markets, but when they do--they often go for the mainline sized jet. I recently stated that a businessman told me that his travel person at his company has a standing order to avoid all RJs for any company business. So, for the lucrative business traveller that usually has to pay a higher fare for unexpected travel---the 717s really do win. And with the lower fares coming----larger planes will also have to carry more leisure passengers to just break even.

They can "hate them" all day long but until the CEO's and their revenue management notice and experience a "booking away" tendency from their customers, they will continue to deploy RJ's. You are using an emotional response to a rational financial situation. Try looking at it from a more logical and concrete position and not simply, "passengers hate the RJ."

For every article that talks about passengers hating the RJ, I'm sure we could find enough people to praise the convenience and other positives of the 50 seat jet.

-Neal

 

[General Lee]

Neal,

Try to look at it as a revenue generator. The RJs are currently bringing in good loads for Delta, but with the lower fares, we need more passengers to cover the costs. We also need more passengers that are willing to pay walk up fares. Those people are business people, and they are more and more trying to avoid RJs. That is a fact---not emotion here. I never said that RJs weren't good on every route, just the ones with DIRECT competition with LCCs. Those routes are growing everyday with the rapid expansion of LCCs, and absent of lower crew costs (which are on the way)--the only other solution is the addition of seats. Routes like CVG to Sioux Falls are perfect for RJs---due to the lack of direct competition with LCCs and the higher fares. Can you see my point? Southwest doesn't have RJs, and Airtran is getting rid of their's and sticking with an all mainline sized fleet. Jetblue will have 100 seaters---which really can't be classified as RJs. That should tell you something. But, they will never go to places like Sioux Falls or Dothan. (not yet, anyways) My point covers the routes with direct competition and lower fares, not the other cities.

Bye Bye--General Lee

PS--I know guys at Expressjet and they love that ERJ and like doing Halifax one night and Verecruz the next. I think your company is well run, and I hope you get your contract finished soon.

 

[XRMEFLYER]

You can't take someone's opinion and leave it at that. You have to discount it, when it is correct.

When it is correct huh? You pretty much summed up my argument for me on that one. You fancy yourself some kind of industry guru and it got old a long long long time ago listening to your opinions. So yes, I do enjoy and will continue to take some measure of satisfaction in shining the light on your "expert analyzes."

remember this--Delta does pay for most of Comair's expenses and it would not be as profitable without the help

I'll try to remember! I am sure you will remind us again and again. You remember this- Just because you say it with conviction does not make it so.

AMF

 

[General Lee]

X-ream-me,

You are correct---and you also think you are ALWAYS correct. Look in the mirror--you slam me for the same things you yourself do. If you think I am wrong, that is fine with me---that is your opinion. I try to give examples and give my opinion--yet you slam me. You never give any concrete examples yourself. You are the hypocrite. And, this is an OPINION board and interview board. If you don't like what is being said---turn it off. I have admitted when I was wrong also.

Bye Bye--General Lee

 

[Turbo]

I know that many of the "big five" auditing/consulting firms refuse to put their business folks on LCCs, and this has remained the case even in our recent depressed economy.

Without a doubt, there exists a market for LCCs. And in a depressed economy the LCC market share will predictably grow larger.

My parents live in Ft. Wayne, IN. Y'all let me know when Southwest or JetBlue starts flying in there. Until then, I'll be riding on a 50-seat RJ whenever I go there.

The simplistic views that are so often offered on this board fail to see the larger picture. For many, purchasing an airline ticket isn't simply a function of price. Also considered is destinations, frequencies of flights, possible upgrades, frequent flyer perks, assigned seating, terminal convenience, ammenities, and simple brand loyalty, among others. I'm sure you can think of more...

 

[XRMEFLYER]

I try to give examples and give my opinion--yet you slam me.

Stop I'm getting all misty eyed. Dry those tears Sally and take your beating like a man.

You are the hypocrite.

No you are! No you are! Nuh-uh you are! You are a bigger one!

If you don't like what is being said---turn it off.

And miss out on all of this fun? No thanks, I think I will stay and continue to pummel you regularly. It can be so therapeutic!

 

[~~~^~~~]

We also need more passengers that are willing to pay walk up fares. Those people are business people, and they are more and more trying to avoid RJs. That is a fact---not emotion here.

General :

I'm one of the guys that pays walk up fares ( the nature of my business doesn't provide the opportunity to plan travel in advance ) and all I care about is getting there, getting done and getting home. On what, or on who, I don't care. If I had the luxury of choosing, I would not pay walk up fares and if given the choice between an RJ that gets me closer, or 15 minutes less time travelling, I'm picking the RJ.

Of course, the best deal going is to avoid you guys all together and take an M20J, or F33. No airport security, hardly ever need a rental car, faster and fun!

More to the point of this thread - you guys are upset that Delta has so many RJ's and you wonder what the World would be like without 'em - just remember the numbers for CVG in 2000 while Comair was on strike. I think that cost $640,000,000.... Now imagine ATL in the same condition and you also see Delta with a one month liquidity reserve.

Of course, ALPA does not seem to mind RJ's as long as they are flown by mainline guys making less money than I do. A dollar is a dollar, so maybe you can work something out to take my job, just like your buddies at US Air.

Good luck!
~~~^~~~

 

[SDF2BUF2MCO]

Let's look at another scenario:

120 passengers want to fly from ATL to IAD. Of those, 50 are full fare passengers (business passengers) and 70 are leisure customers (mom, pop, and the kids). Should we use a 717 or an RJ?

Well, at first blush most would think we should utilize the 717 since you can get a high load factor with the 717 and it has more seats so of course, you can make more revenue with the 717, right? Yes, that is true...higher revenue than with an RJ. But what if I told you we could get a higher yield with the RJ and thus, more profit per trip segment?

Yes, that is what I said. More PROFIT with the RJ than with the 717, despite the fact that the 717 brings in more revenue on a total trip basis and has lower costs on a seat mile basis. But...it has lower revenue on a seat mile basis as well.

Here is how - Those 50 full fare passengers are willing to pay a full Y fare and as such, more than cover the CASM of either airplane. However, the 70 remaining passengers barely cover CASM, if at all, with their 3 week advance restricted fare. Thus, these 70 low fare customers are "anchors on the ship," dragging down the average fare and thus, the yield. So as CEO, your goal is to maximize the bottomline. Yes, you can fly the 717 and bring all 120 people, with a margin of X. But if you fly the CRJ, leaving behind mom, pop, and the kids (and taking the business traveller only), you are improving yield and thus, flying that segment with a margin of X+Y, with Y being the incremental yield associated with not dragging down the average fare from bringing the low fare people.

This is CAL's strategy (much to the dismay of the mainline pilot), but it works better than flying bigger airplanes than the market dictates.

-Neal

Duke Aviator, this is interesting but can you give a dollar figure to this example? That is, what kind of costs are you anticipating in utilizing a RJ and the subsequent revenue as well as the scenario with the 717. Thanks.

 

[BluDevAv8r]

Duke Aviator, this is interesting but can you give a dollar figure to this example? That is, what kind of costs are you anticipating in utilizing a RJ and the subsequent revenue as well as the scenario with the 717. Thanks.

I didn't want to use specific cost numbers as I am not sure that they are relevant to the general point of my exercise and methodology. What I posted above is exactly why CAL uses RJ's on some traditional "mainline" segments such as IAH-MCO and CLE-DEN. They also use the RJ as a means to pick up any excess traffic at odd times of the day, such as 11am, in these markets.

You are asking about dollar figures. Can you be more specific in what you want to know? I can list general assumptions and make up a scenario but I'm not sure it is necessary. I think the point is well illustrated without using explicit numbers but just thinking generally in terms of the power of the all important metric of yield. I am trying to steer some away from their views that its all about "spreading cost over more seats" and revenue generation, etc. One can have more seats all day long with lower unit costs, but if the demand isn't there, it is pointless.

-Neal

 

[Heavy Set]

Xremflyer,

You are a class act. I happen to like General Lee's insight into the DAL mainline pilot perspective. You bring nothing to the table except jerky one-liners....

Way to go Einstein...

 

[SDF2BUF2MCO]

You are asking about dollar figures. Can you be more specific in what you want to know? I can list general assumptions and make up a scenario but I'm not sure it is necessary. I think the point is well illustrated without using explicit numbers but just thinking generally in terms of the power of the all important metric of yield. I am trying to steer some away from their views that its all about "spreading cost over more seats" and revenue generation, etc. One can have more seats all day long with lower unit costs, but if the demand isn't there, it is pointless.

-Neal

You'll have to forgive my simple mind, my brain is geared more towards operations.....
What I was wondering if, for example, if you used a 717 and had a 120 passengers (50 biz fares at $500 per, and 70 leisure at $250 per for a total of $42.5K - this is after airport taxes - in revenue). Let's say the expenses for both coming and going are $35K which leaves a $7.5K operating profit. On the RJ you get the 50 biz folks at $25K and your expenses $20K. Better yield, but overall profit dollars are lower. Just wondering if I'm using the correct logic/concept even though the numbers are not correct.

 

[Pez D. Spencer]

Our cost per flight target is less than $3000.00, far from 20K.

 

[XRMEFLYER]

Heavy,

You probably would like generally's "insights." I am happy for you and may you long continue to enjoy them.

I do not and will continue to crush his fragile little ego early and often.

As for your taking exception to my methods, well then I suggest you grab a tube of vagisil, apply liberally to the affected area and get over it!

 

[Heavy Set]

Again, example of a class act... Perhaps you could add something new to the discussion every once and awhile instead of your lame one-liners...

Seriously, you're making yourself look bad and you are wasting our time...

 

[XRMEFLYER]

Blame it on the Delta mainline pilots and their refusal to take MASSIVE pay cuts.

Add something new huh? Do you mean like this little pearl of wisdom you threw out a few minutes ago on another thread?
Looks a lot like the "one liners" you are snivelling about.
You don't occupy the moral high ground on this one fat boy so hurry to Walgreen's and get some medicine for that infection before it's too late!

 

[General Lee]

Fragil ego? Yeah right. I can take on any subject with you and win---and that is a fact. But, I guess you are the Alex Trebec in all of this---deciding what is correct and incorrect. You are an idiot. Being jealous sucks for you, doesn't it? Yes, yes it does. Have a great night. I will. (You are on the moral high ground? yeah, right---you lose)

Hey, I have a good one liner like Ex-ream-me:

"Hey private, why don't you go to Rite Aid and buy some lip balm so you can get ready to kiss Lawson's fat pooper......." Perfect. (for Xream-me)

Bye Bye--General Lee

 

[XRMEFLYER]

Fragil ego? Yeah right. I can take on any subject with you and win---and that is a fact. But, I guess you are the Alex Trebec in all of this---deciding what is correct and incorrect. You are an idiot. Being jealous sucks for you, doesn't it? Yes, yes it does. Have a great night. I will. (You are on the moral high ground? yeah, right---you lose)

Yawn...

 

[Heavy Set]

Ha! You're a genius. Give me another creative put-down (like the Walgreen line).... You've missed your calling - you should be comedic writer.

 

[XRMEFLYER]

Give me another creative put-down (like the Walgreen line)....

Are you still here? Shouldn't you be out treating that yeast infection?

 

[BluDevAv8r]

You'll have to forgive my simple mind, my brain is geared more towards operations.....
What I was wondering if, for example, if you used a 717 and had a 120 passengers (50 biz fares at $500 per, and 70 leisure at $250 per for a total of $42.5K - this is after airport taxes - in revenue). Let's say the expenses for both coming and going are $35K which leaves a $7.5K operating profit. On the RJ you get the 50 biz folks at $25K and your expenses $20K. Better yield, but overall profit dollars are lower. Just wondering if I'm using the correct logic/concept even though the numbers are not correct.

Generally speaking, you are understanding what I'm saying, yes. But the example that I was imagining was more that the leisure fares are dragging down the overall yield to a point that it might even be negative. I gave a bad example above. I perhaps should have used a better example where the 717 isn't full. Perhaps 40 business fare and 40 leisure...where the leisure fares drag the yield to negative, so the smart thing to do is just take the 40 business and 10 leisure on the RJ to keep a positive yield on that segment. Clear as mud, right?

-Neal