More drag on Delta, the ACA opportunity

[~~~^~~~]

More drag on Delta, the ACA situation

Further, Atlantic Coast has had trouble with the Pratt & Whitney engines in its Fairchild Dornier planes. Executives said seven of the aircraft, which Atlantic Coast flies on behalf of Delta, are out of service this month, and six will remain out of service next month. Executives said they expect the planes to be back in service in March.

Atlantic Coast said the engines, made by United Technologies Corp. (NYSE:UTX - News)'s Pratt & Whitney unit, are still under warranty, and so Atlantic Coast doesn't have to pay for the repairs. But Atlantic Coast has no way to recoup the costs for the loss of business.

Atlantic Coast said it's not clear what Delta will do with the contract between the two carriers as Atlantic Coast launches a low-cost carrier. Delta's agreement with its pilots doesn't allow Delta to hire a regional airline to fly small jets if that regional airline also flies planes that seat more than 70 people.

Atlantic Coast executives said it's not clear whether Delta will ask its own pilots for a waiver or terminate the contract with Atlantic Coast. If Delta terminates the contract, the Fairchild Dornier planes in use on those routes would revert back to Delta, Atlantic Coast executives said.

But as for the regional jets Atlantic Coast uses for the United contract, they would remain with Atlantic Coast if the contract were terminated.

Atlantic Coast Chief Executive Kerry Skeen said the airline will need those 87 aircraft for Independence Air to fly between Washington's Dulles airport and smaller destinations. And he said there's the potential later to use the small regional jets to connect destinations without stopping in Dulles, as well.

As for Atlantic Coast's order for 34 regional jets from Bombardier Inc. , executives said they may cancel the order, depending on if and when UAL terminates its contract with Atlantic Coast.

Atlantic Coast will begin taking delivery later this year of new, medium-sized Airbus 319 planes. Four planes will be delivered in the fourth quarter of 2004, and the remaining 21 planes will come in 2005 and 2006. The airline may take five more planes at some point.

So, if UAL doesn't exit bankruptcy this summer as the airline expects and if UAL continues its contract with Atlantic Coast, the regional carrier would still be able to start Independence Air with those Airbus planes, Skeen said.

Executives also said they are considering implementing a fuel hedging program for the new low-cost airline, but it's difficult with high fuel prices to find points to put in hedges.

As for what Independence Air's planes will be like inside, Skeen said they will have one class. The airline plans to offer live television and leather seats on board, and the airline is "heavily leaning toward" a buy-on-board food product, Skeen said.

Independence Air will operate at its Dulles hub out of the 50 gates Atlantic Coast currently uses.

Earlier Wednesday, Atlantic Coast reported net income for the fourth quarter of $82.8 million, or $1.82 a share, compared with $39.3 million, or 85 cents a share, a year earlier. Revenue rose to $876.4 million from $760.5 million.

So, the choice is either waive the 70 seat scope limit, or force Delta to acquire a bunch of relatively new aircraft that are already undesireable in the marketplace. Acquisition cost, set by the contract, will be much more that Delta can sell the airplanes for and who wants to operate a type that has 35 to 33% of the fleet out of service for engine problems at any one time?

My guess is that the Delta MEC will stick to their guns and Delta mainline's arrogance will result in Delta cancelling the code share agreement. This perfect storm will result in Delta getting stuck with the airplanes or facing a "partner" who is a also a low cost competitor.

Also, Delta just earmarked 300 million to combat JBlue in NY. If the ACA feed is a critical part of their plan, this extra expense and instability is going to be a set back.

~~~^~~~

 

[General Lee]

Fins,

Guess what my friend? We won't give up the scope limitations so you guys can take advantage of that. Nope. We will fly everything over 70 seats (jets). I don't think they said that ACA was going to be a part of the JFK expansion---I only saw Chataqua. (and, they bring their own planes to the party) And, the $300 million at JFK was over 6 years I believe. (gosh, managment still believes we will be around in 6 years!!)

Here is the 70 seat limitation for ACA:

Section one of the DAL PWA states the following:

"2. If a domestic air carrier operates both permitted aircraft types and aircraft other than permitted aircraft types, the exemption for that domestic air carrier provided by Section 1 D. 1. will not apply unless:

a. the flying on aircraft other than permitted aircraft types is not performed for the Company within the meaning of Section 1 C., and

b. there is no reduction in the level of the Company’s then existing system scheduled aircraft block hours of flying as the result of the performance of such flying on other than a permitted aircraft type, and

c. the aircraft other than a permitted aircraft type, is either a jet aircraft configured with 70 or fewer passenger seats or a propeller driven aircraft configured with 72 or fewer passenger seats, and is operated on its own behalf or pursuant to agreement with an air carrier(s) other than the Company or an affiliate."

Whether ACA is a contract carrier or an affiliate, they would not be elligible for the domestic carrier exemption, since their Airbus would be configured with more then 70 seats. "


Bye Bye--General Lee

 

[j41driver]

Here is the 70 seat limitation for ACA:

Section one of the DAL PWA states the following:

"2. If a domestic air carrier operates both permitted aircraft types and aircraft other than permitted aircraft types, the exemption for that domestic air carrier provided by Section 1 D. 1. will not apply unless:

a. the flying on aircraft other than permitted aircraft types is not performed for the Company within the meaning of Section 1 C., and

b. there is no reduction in the level of the Company’s then existing system scheduled aircraft block hours of flying as the result of the performance of such flying on other than a permitted aircraft type, and

c. the aircraft other than a permitted aircraft type, is either a jet aircraft configured with 70 or fewer passenger seats or a propeller driven aircraft configured with 72 or fewer passenger seats, and is operated on its own behalf or pursuant to agreement with an air carrier(s) other than the Company or an affiliate."

Whether ACA is a contract carrier or an affiliate, they would not be elligible for the domestic carrier exemption, since their Airbus would be configured with more then 70 seats. "

Any chance you could post section 1.C and 1 D.1 that are referenced above?

Thanks.

 

[General Lee]

I got these from our Dalpa.net site, and I don't have the contract on my computer, (although I could try to find it). It might take awhile....But I will look for it....

Bye Bye--General Lee

 

[j41driver]

Thanks.

 

[FDJ2]

Any chance you could post section 1.C and 1 D.1 that are referenced above?

Thanks.

Here's section 1C.1., section 1D.1 to follow:

"C. Scope

Except as provided in Sections 1 D. and F.:

1. All flying performed by or for the Company or any affiliate will be performed by pilots in accordance with the terms and conditions of this PWA.

2. Section 1 C. 1. includes without limitation all passenger flying, cargo flying, freight flying, positioning flights and ferry flights (scheduled and non-scheduled, revenue and non-revenue) and non-scheduled flights as defined in Section 2 of this PWA:

a. performed by or for the Company or any affiliate on aircraft owned, leased or operated by the Company or any affiliate;

b. performed on aircraft under the operational control of the Company or any affiliate (excluding advisory flight planning and following services provided by the Company on a fee for service basis to other air carriers);

c. performed for the Company or any affiliate by any affiliate or other air carrier;

d. performed by any air carrier under or utilizing a designator code, trade name, brand, logo, trademarks, service marks, aircraft livery or aircraft paint scheme currently or in the future utilized by the Company or any affiliate, or performed on aircraft on which the Company or any affiliate has purchased or reserved blocked space or blocked seats for sale or resale to customers of the Company or any affiliate;

e. performed by Delta pilots for any other air carrier.

3. There will be no contracting or subcontracting of any Company flying to any other air carrier or performance of Company flying by pilots of any other air carrier without the prior written consent of the Delta MEC.

4. Nothing in Section 1 C. will be interpreted to cover flying performed by an air carrier other than the Company or an affiliate, merely because of its participation in industry standard interline agreements.

5. Nothing in Section 1 C. will be interpreted to cover flying performed by an air carrier other than the Company or any affiliate, merely because of its participation in the Company’s or any affiliate’s frequent flyer miles program under which passengers of such other carrier by frequent travel on board the aircraft of that carrier, may earn travel or other awards.

6. Neither the Company nor any affiliate will establish or maintain a pilot base at any point outside the United States unless all Company flying to and from such base is conducted by pilots who continue at all times to be covered in all respects by this PWA and the Railway Labor Act. Bidding and staffing for such base will be governed by the PWA without regard to visa or immigration requirements.

7. The Company and its affiliates will not train, or contract for training of, persons other than Delta pilots to perform Company flying.

8. The Delta name will be prominently displayed on all Company aircraft performing Company flying."

 

[FDJ2]

Section 1D1:

"D. Permitted Arrangement With Domestic Carriers

1. Section 1 C. will not apply to flying performed by any domestic air carrier(s) (other than the Company) for the Company or for any affiliate on any permitted aircraft type.

Exception: If a permitted aircraft type meets the certificated passenger seat requirement of Section 1 A. 17. b. when first placed into service by a Delta Connection Carrier but is subsequently certificated for operation in the United States with a maximum passenger seating capacity in excess of 50 passenger seats, this permitted aircraft type may continue to be operated by Delta Connection Carriers as long as all Delta Connection Carriers operate such permitted aircraft type with no more than 50 passenger seats and with a maximum certificated gross takeoff weight in the United States of 65,000 or fewer pounds at all times.

2. If a domestic air carrier operates both permitted aircraft types and aircraft other than permitted aircraft types, the exemption for that domestic air carrier provided by Section 1 D. 1. will not apply unless:

a. the flying on aircraft other than permitted aircraft types is not performed for the Company within the meaning of Section 1 C., and

b. there is no reduction in the level of the Company’s then existing system scheduled aircraft block hours of flying as the result of the performance of such flying on other than a permitted aircraft type, and

c. the aircraft other than a permitted aircraft type, is either a jet aircraft configured with 70 or fewer passenger seats or a propeller driven aircraft configured with 72 or fewer passenger seats, and is operated on its own behalf or pursuant to agreement with an air carrier(s) other than the Company or an affiliate.

3. Section 1 C. will not apply to flying performed by any affiliate on permitted aircraft types.

4. At least 85% of all Delta Connection flying flight segments each month will be under 900 statute miles.

5. At least 90% of all Delta Connection flying flight segments each month will operate to or from Delta hubs, defined for this purpose as being Atlanta, Boston, Cincinnati, Washington, D.C. (DCA and IAD), Dallas-Fort Worth, Orlando, Los Angeles, Salt Lake City, New York (LGA and JFK), Fort Lauderdale, Tampa and any other airport with more than 50 daily departures of Company flying.

6. No more than 6% of Delta Connection flying flight segments each month will be between Delta hubs (as defined in Section 1 D. 5.). For purposes of Section 1 D. 6., Delta Connection flying operated between FLL and TPA, FLL and MCO, TPA and MCO will not be considered flying between Delta hubs.

7. Delta Connection flying aircraft will only bear the name "Delta" as part of a phrase referencing a Connection-type operation.

8. Section 1 C. will not apply to prevent the Company or any affiliate from acquiring a domestic air carrier that operates aircraft other than permitted aircraft types ("acquired airline") and operating such acquired airline pending a merger of the Company and the acquired airline, provided that:

a. the Company agrees to operationally merge with the acquired airline and become a single corporation, a single carrier under the Federal Aviation Act and the Railway Labor Act, with a single air carrier certificate, a single pilot class or craft, not later than six months after the later of:

1) the effective date of issuance of a final and binding integrated pilot seniority list, or

2) the effective date of a single bargaining agreement.

b. the pilot seniority lists of the Company and the acquired airline will be integrated pursuant to Association merger policy if both groups are represented by the Association, or if the pilots of the acquired airline are not represented by the Association, then pursuant to a method to be determined by the Delta MEC.

1) However, in either case, the integrated seniority list produced by the Association, including any attendant conditions and restrictions, will be subject to the approval of the Company, and will be submitted to the Company for approval within twelve months of the date the Company or any affiliate acquired control of the acquired airline. The Company will provide the Association with its decision as to approval or disapproval (including its reasons for disapproval) of the integrated seniority list produced by the Association within two months following receipt of the integrated seniority list. If the Association does not without good cause produce and present an integrated seniority list to the Company for approval within twelve months of the date the Company or any affiliate acquired control of the acquired airline, the pilot seniority lists of the Company and the acquired airline will be integrated pursuant to the arbitration procedures set forth in Section 1 D. 8. b. 2).

2) If the Company rejects the list produced by the Association, the Association may modify the list and resubmit it to the Company for approval within three months after the date of such rejection, or at the election of the Association, the Association and the Company will submit to an arbitrator mutually selected by the Association and the Company for a final and binding decision, the choice of a list produced by the Association and a list produced by the Company. If the seniority list integration issue is to be submitted to an arbitrator and the Company and the Association cannot agree on the selection of an arbitrator, the arbitrator will be selected from the list of arbitrators referred to in Section 19, utilizing the alternate strike-off method, with the right to first strike a name from such list determined by the toss of a coin.

3) If the Association does not resubmit a modified list within the permitted time period or does so resubmit a modified list but it is rejected by the Company, then the matter will be decided through the arbitration procedure set forth in Section 1 D. 8. b. 2).

c. wages and benefits for the pilots of the acquired airline, to be effective upon the integration of the two seniority lists, will be negotiated between the Company and the Association. Nothing herein will entitle either the Company or the Association to negotiate any other provision of this PWA except as this PWA otherwise permits.

d. during the period between the closing date of the corporate transaction pursuant to which the Company or any affiliate acquires control of the acquired airline and the date of operational merger, the aircraft (including owned aircraft, leased aircraft, and all orders and options to purchase aircraft) of each pre-merger airline will remain separated. Such pre-merger aircraft of the Company will be operated by pilots in accordance with the terms and conditions of this PWA. Such pre-merger aircraft of the acquired airline will be operated by airmen on its seniority list. Nothing in Section 1 D. 8. d. will apply to prevent the Company from removing any aircraft from the fleet of either airline. In the event aircraft are removed from either fleet prior to the operational merger the Company and its affiliates will make reasonable efforts consistent with the then existing financial and operational needs of the service, to ensure that the ratio of the total number of aircraft block hours operated by pilots to the aircraft block hours operated by pilots of the acquired airline ("block hour ratio") is not reduced below the block hour ratio that existed on the date the Company or any affiliate acquired control of the acquired airline.

e. during the period between the closing date of the corporate transaction pursuant to which the Company or any affiliate acquires control of the acquired airline and the date of operational merger, the scheduled aircraft block hours operated by Delta pilots in any month will not be less than the scheduled aircraft block hours operated by Delta pilots in the same calendar month of the twelve-month period prior to such closing date. The Company will be excused from compliance with such minimum scheduled aircraft block hours requirement if either a circumstance over which the Company does not have control, or a governmental agency requirement causing the Company to reduce or cancel service as a condition of approval of the transaction, is the cause of such non-compliance."

 

[~~~^~~~]

As an ALPA / RJDC supporter the timing on this is about perfect. ALPA will cut off work to members at ACA at the same time they are answering discovery in a Court case where ALPA is trying to prove that its scope has no harmful effect on members at the non-preferred airlines. If you have read Judge Glasser's ruling you understand the significance of this.

Comair, and possibly ASA, are the likely beneficiaries...

 

[Parethd70]

Careful what you wish for!

This whole RJDC thing is a bunch of $h!t. Be careful what you wish for. If RJDC gets their way and scope at the mainline is gutted the next thing you know alter-egoes will spring from the woodwork to capture ASA and CMR jobs.

What would prevent ASA management from starting a Freedom Air type operation and siphoning all these newly won airframes to a non-union operation????

What prevents that now??? What little scope language we actually have. It's the same at the mainline level. They are only protecting their jobs with the only tool that they have. Collective bargaining.

 

[Extra300S]

RJDC

"Regional Jet jocks who Don't Cut it"

 

[General Lee]

Fins and other supporters of the RJDC are trying to see anything positive, when they know that they will lose. Why would restricting ACA hurt our cause? They are setting up their own airline with A320's. If they compete with mama Delta, they are gone. That is simple business. Comair or ASA would likely get the Dojos---and we can tell the judge that too. They would actually be benefiting at ACA's cost.

Discover THIS!!!

Bye Bye--General Lee

 

[46Driver]

Why would restricting ACA hurt our cause? They are setting up their own airline with A320's. If they compete with mama Delta, they are gone. That is simple business. Comair or ASA would likely get the Dojos---and we can tell the judge that too. They would actually be benefiting at ACA's cost.

If Delta is losing money (which it is), then why do you want to take on 30 airplanes with poor reliability as well as having to retrain 300+ pilots to operate it? To make matters worse, don't forget that Delta loses the Pratt & Whitney engine contract as well.

Delta management may be looking at the fact that although ACA is a competitor, ACA and Delta are not likely to go head to head in many markets. In actuality, ACA has the benefit of weakening Delta's bigger competitors (UAL and USAir). Whether or not Delta pilots accept this is another story.

 

[General Lee]

46driver,

I think a lot has to do with the airbi. If they are used on our routes, then we will probably do something about it.


Bye Bye--General Lee

 

[46Driver]

46driver,

I think a lot has to do with the airbi. If they are used on our routes, then we will probably do something about it.


Bye Bye--General Lee

Airbi... Hmmm, I always wondered what the plural of Airbus was...

I don't think ACA is stupid enough to confront the 800 lb gorilla that is Delta by going head to head on routes out of Dulles - especially in light of JetBlue getting whacked. I would think the company would either be developing new non-stop Dulles markets or taking on USAir (also UAL by default out of IAD) which are much weaker.

 

[General Lee]

True dat. I really don't know what Dalpa will do, and they have probably looked into it. If there is a bad engine deal, maybe they won't handicap Delta, as long as you stay away from ATL and CVG. I don't know........(I really don't)

But, I am sure Comair or ASA would like some extra jets, even broken ones....


Bye Bye--General Lee

 

[wms]

But, I am sure Comair or ASA would like some extra jets, even broken ones....

The pay's the same whether they're in the air or the hangar.

 

[General Lee]

Someone on the Dalpa website just brought up this point: How can we have a codeshare with AAmerican Eagle in LAX when their owner (AA) has planes over 70 seats? Why wouldn't we still use ACA?

Bye Bye--General Lee

 

[wms]

Send the DoJets to LA. 2 problems solved!

 

[chperplt]

OR trade the FRJs in on CRJs and you no longer have retraining issues.

 

[Pez D. Spencer]

How can we have a codeshare with AAmerican Eagle in LAX when their owner (AA) has planes over 70 seats? Why wouldn't we still use ACA?

Different operating certificates, perhaps?? The codeshare also brings up questions - but, I don't know the Delta contract and am too lazy to try to find out if that is different than the deal with ACA.