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More Boyd-isms for Delta and RJs...

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On Your Six

Well-known member
Joined
Mar 8, 2004
Posts
4,507
The RJ Glut

Based on initial (and aggressive) steps taken by both Northwest and
Delta over the last week, it's becoming clear that when the music stops,
a whole passel of "regional" jets won't have any place to sit. Except
maybe in the desert.

Delta is aggressively adjusting its schedule, and it appears it's using
the chapter 11 opportunity to pare down the number of RJs in the system.
Lots of point-to-point RJ flying to Florida is going away, and RJ
departures at SLC are being cut by 20%. More at this week's
Airports:USA™ Forecast Flash.

Four Engines Are Nice. Until You Get The Bill. Northwest intends to
cancel leases on all 35 of the four-engined Avro RJ-85s that are being
operated by Mesaba. While this airplane is eons different from the CRJs
and ERJs that are fixin' to get parked, the reason for the action is the
same as what's being done at Delta: these machines are getting too
expensive to operate.

In Danger: Comair - unless it can get its costs down, it's entirely
possible that Delta will shift flying to other small jet providers,
regardless of who owns them. There appears to be an iron-clad, chapter
11-proof agreement with Skywest/ASA, so if some RJ lift has to go, it
may well be at Comair.

Possible Winner: Mesa. This entity has not only low costs, but
management that can get deals done. Any SJP with higher costs, could be
replaced with Mesa.



SLC: Delta Re-Alignment
A Re-Structuring. Not A Pull-Down

Delta Air Lines announced plans to re-structure its SLC connecting
operation within days of its bankruptcy filing. Frequencies are cut by
14%, with capacity being brought down by 16%.

These reductions need to be kept in context, however. As at
Cincinnati/Northern Kentucky International, some of this reduction is
merely an adjustment for flight increases added in the past year as a
result of shifting resources from the now-closed DFW DL hub operation.

SLC is a critical part of Delta’s future. If SLC fails, Delta becomes
locked into being an East-of-The-Mississippi carrier, a.k.a. US Airways,
Phase II. An analysis of Delta’s program for the SLC hub would indicate
they fully understand this.

· Re-Sizing The Hubsite Operation. SLC is not a large O&D
market. The Delta changes appear to be ones to adjust the levels of
connectivity. Both mainline and CRJ frequencies have been reduced by
20%. Conversely, turboprop (Brasilia) departures will be increased by
almost 11%, as a result of higher frequencies in existing markets. Note
again that the reductions are off a recently-increased level of flight
frequency.

· More Spokes. The number of nonstop destinations served is
being increased, thereby strengthening the hub. Added: BDL, CLE, MEM, OGG.

· Tweaking. Not Major Surgery. Some of the adjustments are a
lot less dramatic than they appear on the surface. SLC-PHX is being
reduced from 13 daily departures to just four. Seat capacity, however,
is being reduced by only 90 seats, from 690 to 600, mainly due to the
fact that it’s 4 150-seat MD-90s replacing the 13 RJ flights. On the
whole, this will improve economics of operating this feed market,
especially when the main competition in the market is Southwest.

· No “Opportunities” For LCCs As A Result of SLC Restructuring.
Contrary to some media “reports,” none of the changes represent any
material opportunity for new competition, LCC or legacy, at SLC. There
is no wholesale slashing of service. Delta tended to generally cut just
one or two flights per day in many markets. Only two – MSY and ICT – are
being cut completely. MSY is for obvious reasons. The elimination of
SLC-ICT was announced several weeks ago, and is due mostly to the fact
that the market was a dog, with @ 25% load factors on 50-seat jets. No
“opportunity” for anybody here.

· Alliances. Not Mergers. Delta is clearly focused on building
SLC on the strength of its alliances with Northwest and Continental,
with additional or new service to MEM. CLE, and IAH. This gives enormous
new “barbell” markets – particularly small and mid-size – that will flow
new system traffic for all three carriers. These alliances are the
future, not mergers. The media babble about “mergers” is at this point
mostly musings by journalists and analysts who don’t look beyond a
glance at a route map.

· Fewer RJs In The Cards. But Maybe Not In The Desert. With
regard to fleet strategy, this schedule will need 9-10 fewer CRJ-200’s
and 5-6 fewer CRJ-700’s than the one it replaces. The announced Florida
cutbacks in combination with the SLC changes leave an excess of small
jets in the Delta system. Don’t be surprised if at least some of these
units make one last stop at the courthouse to cancel a lease or two on
their way to desert.

· E-Jets: More To Come? SLC is a perfect market for 70-110 seat
E-Jets. They have the range, comfort, and service transparency missing
in 50-70 seat RJs. As more EMB-170’s come on line, we expect that Delta
will enhance service patterns between SLC and mid-size cities in the
South and Midwest. Many of these markets represent sheltered traffic
flows that have significantly greater profit potential than in slugging
it out with Southwest in markets like SLC-RNO.

Given this schedule realignment and what we believe will be DL’s SLC
strategy going forward, our revised forecast indicates that enplanements
at SLC will be down slightly in 2006, coming off the 2005 capacity
bubble. It will return to a growth mode in 2007. The unknowns are the
number of E-Jets that DL will be able to add, and the net new revenue
fed to and through SLC from the CLE/IAH/MEM alliance hubs.




Another interesting commentary from Boyd... Didn't Delta just add new 50-seat RJ service from MCO to DFW, MCI and BTR?
 
Where did you get this from? Its a very interesting read, thank you.

D
 
Yeah, that is interesting. Where did you get this? Probably on the Boyd website. I knew from a SkyWest buddy of mine that they were going to slash RJ flights from SLC to PHX to 4 MD90s. Good, it is time to look at the waste out there and find planes that can compete with the LCCs on a direct basis. As I recall there are two LCCs on that route--SW and AWA. Then we throw in 13 RJs a day---lame.


Bye Bye--General Lee
 

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