more ACA furloughs

[General Lee]

Below me,

You funny man--real funny man! Good luck with your career.
Your first post is awesome. Have a great day and thanks for contributing.


Bye Bye--General Lee

 

[Below Me]

General good luck with your career also. we will all need it the way things are going. I'm glad you saw it as a joke cause it was.

SCAREFACE "keep up the bad work Mel"

 

[General Lee]

Below me,

So far I have been very lucky and I feel FAIRLY confident that Delta will still be around in the future----but still keeping my fingers crossed. Atleast your posts are getting better and more sincere-----have fun with this board---I do.

Bye Bye--General Lee

 

[j41driver]

Let go?!? Where's that coming from? They're on the ACA seniority list right?

That's exactly what I was thinking.

 

[dogg]

ANTI- MATTER,
let me apologize for appearing callous..... And I do truly hope that ACA can become a real airline. But, at that point, when profitability is dependant on actually charging a fair price for a ticket and selling enough of them to have a profitable load factor then I will have proved my point.

It gets very old hearing from pilots at ACA, SKW, AIR WIS, MESA, CHQ etc. etc. about how profitable they are and how all the mainline carriers are doing it all wrong.. But at ACA, SKW, AIR WIS, MESA, CHQ etc. etc. you are simply in the airplane movement business. You are not an airline that makes its money and only makes its money by selling plane tickets. Youre entire existence in a subsidy . Plain and simple. Without it you are gone like dust in the wind..

So start your LCC. And pay for the jets and pay for the res agents and pay for the marketing and pay for the all of the costs of running an "airline" and not just an "airplane movement company" and then I will sing your praises. But again you will now be an "airline", see my point. So long and no hard feelings............

 

[w4mch]

So start your LCC. And pay for the jets and pay for the res agents and pay for the marketing and pay for the all of the costs of running an "airline" and not just an "airplane movement company" and then I will sing your praises. But again you will now be an "airline", see my point. So long and no hard feelings............

Dogg,

While you are essentially correct in that the "branded" regional airlines are just contract carriers to the majors, this wasn't always so, and is a result of the major airlines tinkering with the reservations systems to show on-line connections ahead of time based connections in the years just after deregulation. This single action (led by AMR) caused, in the example of ORD alone, for Air Wisconsin/MVA to become United Express, and Britt Air & Simmons to become AMR Eagle. Up to this time, we regional airlines did fly under our own codes, did have reservations, did have marketing, price management and all the other trappings of a "real" airline.

What is happening in the case of ACA is that the sleeping bear of big UAL has awakened under bankruptcy and reailzed that the regionals were getting fat off of the express contracts. Now UAL is trying to get "their" money back, and ACA balked at the low ball contract that was offered.

We do have a history of yield management, market/schedule planning from our risk sharing UAX operation from 1991 to 2000. We do have a great majority of our own stations & ramp facilities, we do own our own gates at IAD and many other locations.

All we are saying is given the threat of being replaced as a UAX carrier for refusing to lower our margins to the point of placing our company at risk, we are simply choosing to replace the "main line" flying we now support with our own in house "main line" flying. This is just capitalism in motion. No hard feelings implied.

Thank you for agreeing to sing our praises if we make it. There are a lot of people here that are going to try real hard to do just that.

 

[dogg]

w4mch,

I too remember all of the "code share airlines" from the old days and have actually worked for a couple of them. But for us, the big investment was a Saab 340 and metroliners were the workhorses. The advantage with the code share was tremendous for us allowing us brand name recognition etc... however we did not receive a cent in assistance in purchase, support etc...and we took all the risk for operations and did not get paid for half full airplanes. So our success was 99% our own doing.
I just wonder if a code share airline could truly afford RJ's, given their exceptionally high finance costs and start up costs and their high seat mile costs. And I have to wonder even more what business bankrupt airlines such as UAL and U have still doing fee for departure.. It is all backwards right now and the coming shakeout will do everyone some good. So for you guys that have the expertise and the ability and the experience to run a true airline, success will probably come your way.

It just seems that the whole RJ revolution began the day that Fee For Departure was created and with its impending demise it will be very interesting to see what comes of the RJ fee for departure airlines.
When it is all over, I think that the airline business will be a much better place to work than it is today. It may be smaller with fewer jobs but it will be better

 

[w4mch]

Dogg,

ACA has financed the CRJs since '97 without any direct financial help from UAL, other than being able to show the banks how fat our contract was. The fee for departure flying did not begin until late 2000, and I agree with you that it is a failed business model (from both sides). Prior to FFD, we had a 60 to 70% self feed (pax never connected to mainline) while still flying blue & grey colors.

It is interesting to note that our best margins were in the year leading up to the FFD flying when we ran at least 5 rt's a day to every city we served, and hourly service in several big markets.

UA now claims to be "loosing money" on the UAX operation, but they now have total control of the markets & frequencies. Simply put, they aren't interested in providing any service that does not directly feed the coast to coast or overseas flying out of IAD.

That is their right under the current business plan, but not every passenger from SAV is coming to IAD to go on to San Fran or London. We will be concentrating on small & medium city connections with the RJ's, and major city connections with the as of yet un-named big jets.

My big fear is just as you said, the CRJ is not a cheap plane to fly. However, it is the hand of cards we are holding at this point in the poker game. The trick is to serve markets that are too small for anyone with bigger planes to be profitable in with any reasonable frequency, and to have long haul connections ready for the pax from smallville to hop on leaving IAD in addition to connecting a lot of smallvilles through the hub.

Gee, it's like doing what we did for UAL prior to 2000, but without UAL!

w4mch

 

[surplus1]

I just wonder if a code share airline could truly afford RJ's, given their exceptionally high finance costs and start up costs and their high seat mile costs.

You seem to have missed (or for some reason you're ignoring) that the RJ was "launched" by a code share airline that managed to afford the finance and startup costs, despite warnings from everyone that it could not. Not only did they try it, they did it with enough success to grow to 100 of the things before they were gobbled up by their code share partner.

It just seems that the whole RJ revolution began the day that Fee For Departure was created and with its impending demise it will be very interesting to see what comes of the RJ fee for departure airlines.

I don't want to misread you but I wouldn't say that the RJ revolution began with "fee for departure", I think it began with Comair's launch of regional jets. I would say instead that's its demise began with "fee for departure". Comair's refusal to accept the fee for departure concept is the exact reason why the RJ pioneer was acquired in what was truly an "unfriendly" takeover. The FFD concept has been bad for the big carriers and bad for the regionals. ACA is right to try to get out of it. The real risk is that they may be too late.

My guess is that if ACA had refused fee for departure when it was launched, it would have suffered the same fate as Comair, i.e., acquisition by its code share partner (UAL had the bucks back then). Comair didn't want to be acquired, but knew that it couldn't last long with fee for departure. I think that assessment was correct. Unfortunately, it was too small to prevent the DAL takeover that resulted and was therefore prevented from going its own way. Today, UAL doesn't have the money to prevent ACA from going its own way and also doesn't have the money to pay the old "fees", or even the new fees that would put ACA at risk. By the way, neither does USAirways. This will ultimately result in difficulty to come for companies like SKYW and AWAC. Those formerly well-run operations will soon join the ranks of Mesa and its peers.

The apparent boom at Mesa, SKYW and CHQ is the product of the cost-cutting syndrome. The trouble is you can't keep cutting costs and bidding low until you become permanently unprofitable. What those carriers seem to have gained by low balling their employees isn't going to last for long. The next time the "fees" are cut by their bankrupt controllers (UA and US) they'll find themselves on the same course to Chapter 11.

Fee For Departure can only be described as a failure. Putting "control" of regional airline operations into the hands of major airline management wasn't smart. They don't know how to run the legacy dinosaurs in todays market and they never knew how to run a successful "regional" carrier.

So far Delta is holding its own with Comair and ASA, but the truth is they have virtually destroyed the efficiencies that once made Comair the 2nd most profitable operation in the world (Singapore was #1), and ASA ranks a notable last in performance. We are now doing things that Comair would never have done of its own volition and the performance, flexibility and efficiency that was once our hallmark and pride, as well as the souce of profitability, is gradually being destroyed by the big fish that owns us.

CAL has done well with the wholly owned COEX/XJT, but the results of the spin off, when complete, may change that. On the other hand the subsidiaries of USAirGroup and AMR (Eagle, ALG, PDT, PSA) are wallowing in the imposed stupidity of the mainline pilot unions. Mesaba and Pinnacle may not be too far behind, and for the same reason.

I hope your prediction of better days to come (presumably for the legacy carriers) will be realized, but truthfully I hope more for the success of ACA. There is room for another AirTran and I hope they'll be able to fill it.

 

[w4mch]

surplus1,

100% correct!

I was with ARW when we were bought & sold by UAL back in 92/93. At first we thought it was the holy grail, then quickly saw a friday the 13th style nightmare. That mess was all about ORD slots.

When DL bought you guys we sat over here and watched, fearing you guys would take over the world, but then nothing happened. It was all about control and protecting their own turf.

We will soon be free of this mess at ACA. Funny how the industry is coming around full circle.

Best wishes to you comair guys/gals, and thanks for saying NO to the race to the bottom.

w4mch

 

[surplus1]

w4mch

Well. my friend I see that JO has added fuel to the fires. There is little doubt that we "live in interesting times."

Good luck! On this one you're going to need it.

 

[dogg]

Surplus,
I was waiting for your arrival in this discussion. ComAir , ASA and CO EX were the exceptions in my mind as they appear to be successful wholly owned airlines that seem to do much point to point flying where their pax never see a DL or CO mainline jet. I am curious what the profit levels from the pre-WO days were and what the percentage of jets to turbo-props were at that time. Of course the other Question is how deep is any sort of stand alone profit that ComAir or ASA make buried in the Delta financials. I am fairly sure however that an RJ can not compete with a 737 in the same markets when you remove the difference in crew cost.....Time will tell for all and these are truly going to be interesting times. Peace

 

[surplus1]

Surplus,
I was waiting for your arrival in this discussion. ComAir , ASA and CO EX were the exceptions in my mind as they appear to be successful wholly owned airlines that seem to do much point to point flying where their pax never see a DL or CO mainline jet.

I can't speak for ASA or COEX, but Comair was successful before it became a DL subsidiary and was actually don't more point to point than it is today. That is one of the reasons it was acquired, it was getting "too big for its britches" in the eyes of DL. It also never participated in "Fee for Departure" and refused to do so.

Recently DL has chosen to put a large number of CMR flights into the ATL hub. Perhaps this is good for DL, but the on-the-ground ineffeciencies of that venue are literally destroying the performance and efficiency that had be Comair's forte. I doubt we would have done that if the real Comair still existed.

I am curious what the profit levels from the pre-WO days were and what the percentage of jets to turbo-props were at that time.

Prior to the acquisition, Comair was the 2nd most profitable airline in the world. The return on investment was in the neighborhood of a consistent 24%. Before the buyout I made more money investing in CMR stock that they paid me to fly. Today there is no CMR stock and many of us (investors) lost a great deal of money thanks to Delta. Win some lose some, I guess.

Comair's business plan called for an all-jet fleet from the day that the first RJ was acquired. The Delta purchase actually delayed that transition. However, it was not Delta's idea to go all jet, it was Comair's. I think we had about a dozen Brisilias left in FL at the time of the acquisition. They lasted until after the strike.

Of course the other Question is how deep is any sort of stand alone profit that ComAir or ASA make buried in the Delta financials.

So "deep" that it is virtually impossible to determine. Comair no longer has and stock. Delta has a "consolidated" financial statement, which includes CMR and ASA. How the numbers are juggled from time to time is up to Delta. They have the ability to make Comair (or ASA) unprofitable at will. All they have to do is switch the allocation of routes in a way that will make the subsidiary of their choosing profitable or unprofitable. If Comair was operated as a "separate entity" and if Comair management could control what Comair does, I have little doubt that it would be as profitable as it was before the purchase. These multi-tiered corporate structures are designed to obscure and they are very good at it. That's a reality of being "owned". Comair exists on paper, but Comair is really an integral part of Delta, a "shell" corporation that can be used or abused at will.

In the future, I have little doubt that you will see the same type of number crunching with respect to Song. As a wholly owned subsidiary, Delta can do whatever Delta needs to do to make Song profitable or unprofitable. I predict they will use it against the mainline pilots in ways that the latter have yet to imagine.

I am fairly sure however that an RJ can not compete with a 737 in the same markets when you remove the difference in crew cost.....Time will tell for all and these are truly going to be interesting times. Peace

I don't quite agree with that. It is true that the very high compensation package on the mainline aircraft do affect the overall profitability, but there is much more to it than pilot pay. Don't forget the overall "burden" of the entire Delta mainline infrastructure.

The RJ was not designed to compete head to head with larger narrow body aircraft in markets that can support either aircraft type. It was designed to compete on "thin routes" where traffic is insufficient to support 737/DC9 size aircraft with the frequencies that the customer desires.

Ticket pricing is another factor that affects the ability of the equipment types to "compete" with each other. As an example, lets look at a route like MCO-MSY and compare the 50-seat RJ to a SWA 737. SWA can offer low fares that appear at first glance to make the RJ uncompetitive. That however, really depends on the ability of SWA to fill the 737. A CMR can offer some of its seats at a matching fare (which on face value fools the customer) and the rest at higher fares. SWA may require a 65-75% load factor on the route just to break even and can only generate enough pax to make the trip twice a day. Comair can do the same thing with a much lower break even load factor and provide 4 to 6 flights a day. This will syphon off just enough passengers to make SWA unprofitable on that route. Every time you take 25 pax off the 737 it loses money. The same 25 pax may allow CMR to break even, especially since all of the 25 won't be flying at that super low fare. The customer will pay the extra bucks to be able to go when he/she wants to as opposed to being forced to make SWA's infrequent schedule. That is of course simplified, but the concept makes the RJ very competitive. That is exactly why you see a CMR running 6-8 flights per day on a given route. It is true that 2 MD88's could fly that route and make money, if there were no RJs. But it is also true that folks might not want to travel when those MD88's are available. They will travel if they can choose their own time. All that is part of what we call "yield management" and no major airline can survive without it today.

The carrier must be able to provide the service at the time the passenger wants to go. It is true that the CASM of the RJ is higher than the CASM of the MD88. It is also much higher than the CASM of a 767. However, flying a bunch of empty 767's will not make money. Flying a bunch of full RJs will. It is up to management to determine which market requires which aircraft.

At present, the only obstacle to management being able to do that realistically is the mainline type scope clause. This is an airtificial restraint designed to protect the higher compensation packages of mainline employees at the expense, in many cases, of the company's profitability. Any business must be able to respond to consumer demand. The more flexible its ability to respond, the more profitable it should be. When that flexibility is removed for the wrong reasons, you wind up with USAirways.

Using unreasonably low compensation packages at regional carriers to subsidize unreasonably high compensation packages at majors doesn't make good business sense and ultimately results in what we have come to call "the race to the bottom". Regardless of our opinions, we will eventually reach the bottom, but that won't make the RJs go away. It will simply drag down the top until equilibrium is achieved again.

On the other had I would argue that realistic scope clauses would provide management with the required flexibility while at the same time minimizing the need to "race to the bottom". If we pilots ever figure this out, it might well restore some stability to what we do. It sort of reminds of the fable of the goose that laid the golden eggs. In their rush to get all of the eggs, the mainline pilot groups may well have killed the goose itself. Since the mainline groups do not appear willing to modify their stance unless forced to do so by the bankruptcy of their employers, we are where we are.

Wish I was smart enough to guess where it will all end.

 

[FDJ2]

[QUOTE


Prior to the acquisition, Comair was the 2nd most profitable airline in the world. [/QUOTE]

What percentage of your passengers were DAL code or connecting onto DAL prior to your acquisition?