Public Response to ACA solo move...

[Cappy]

From the company website FYI:


THE PUBLIC RESPONDS

Passengers Show Support for Yesterday’s Announcement

Almost as soon as the announcement was made yesterday, airline passengers began emailing ACA management with their comments of support, encouragement, and yes – concern. The overwhelming majority of these comments were positive, though some, including a small amount of negative feedback, came from passengers in markets that won’t be served by ACA’s new low-fare carrier.



Here are just a few of the emails we’ve received…



“Congrats on your decision to go independent. I am a supportive customer having flown on ACA for more than 4 years first on the IAD/SWF route to NY and now on the IAD/BNA route to Nashville. I love the ACA service and will support your move towards independence with my weekly commuting. While I will miss the United Mileage Plus benefits, I am sure you will offer as good a Frequent Flyers program as any United ever had. Best wishes as you take this next important step. Don't skip a beat. You CAN do it!!!!” – Bob K.



“I read your article in the Washington Post this morning. As an owner of a small internet travel agency, I applaud your willingness to go independent and keep fares low. I will do what I can to support your effort. Thanks for keeping the small business people in mind.” – Warren F.



I just read an article about Atlantic Coast Airlines becoming a low cost carrier based out Dulles. I currently drive 50 miles to BWI to fly Southwest to Albany, NY when I live 1 mile from Regan National and 25 miles from Dulles because prices are not competitive. I hope that your prices will be competitive with Southwest and if so, I will be flying your airline. I also know of a lot of people that have to pay ridiculous amounts of money to fly to Syracuse, NY, so I hope that will be one of your low cost destinations. Thank you for thinking of the consumer!” - Stacey P.



“The city of Mobile, AL desperately needs a low-fare carrier. Fares in nearby Pensacola, FL and Gulfport, MS are generally $100-150 lower than fares here in Mobile, AL.” - Jeffrey P.



“If ACA uses the current jet aircraft fleet (CRJ) to creat a "Southwest-like" low fare airline....I promise to buy tickets! Good luck.” - Stuart A.



“You people are on the right track. I'm tired of going to BWI for reasonable flights to places like Raleigh, NC. Raleigh will be a big draw, many large corporate ties in the Dulles area to the Raleigh area.” - Unsigned



“I support your strategy of separating from United. I look forward to flying with you in a low cost format from Dulles. Please keep me informed of when you will be offering service. I am especially interested in flights to Charleston, SC, a location that is currently without low-cost service.” – Von F.



“I was extremely disappointed to learn of you decision to terminate your relationship with United. This relationship with United has been a key to my ability to have seemless <sic> travel on the east coast. Its now apparent that you are ditching your long term customers in favor of a hair brained scheme that will fail. I am extremely disappointed as I assume your shareholders and employees are. I have sent a similar email to United.” – Bill B.



“My issue with the current situation is that it appears to the consumer, who has not been at the negotiating table between your company and United, that you have basically said we are not willing to share in your struggle. United's partnership with your company allowed ACA to grow into one of the largest regional carriers with a modern fleet of regional jets. To a loyal United customer your brash move to halt negotiations for a new contract in favor of moving out on your own appears almost a betrayal of the entity that allowed you to become what you are today. As I said this is how it appears for my view as a customer and because I am unaware of the behind the scenes negotiating it may not be the actual case. I wish the best of luck to your employees during this difficult time for the entire airline industry. Though I disagree with the recent moves of your company I hope for the sake of your hard-working employees that you have a successful future. – William C.



”Good luck and congrats on your plans to make Atlantic Coast Airlines a true east coast airline, instead of a "feeder" We hope to see you offer nonstop service IAD-MLB in the near future. If so, we will buy 4 tix per month ( 2r/t -2pax). We know this will not support your airline alone, however, there are hundreds of pax just like us, wanting non-=stop low cost service to smaller airports up and down the East coast. Good Luck!” – Tony W.



“GOOD FOR YOU! It's about time that the "major regional" carriers like ACA begin to recognize the opportunity that exist for them in the evolving air transport system once they divest themselves from the legacy (which they will soon be...) carriers. Good luck. You will be successful in your new strategy!” – Ralph B.

 

[46Driver]

I expect that we are going to get a lot of overtures from small cities such as Mobile that Delta has been gouging. If we can get a deal from a number of cities like Air Tran where they guarantee a minimum number of tickets sold, I think we have an excellent chance of prospering. The overlooked thing about the RJ here is that we will be able to turn a profit on cities too small for Song's 757's or Air Tran's 717's - I hope...

 

[General Lee]

46driver,

That is the price of doing business in a smaller town. IF ACA competes with Delta on any of its mainline routes, you can bet that the CVG codeshare would be looked at closely, and possibly terminated I bet. Yes, then the Dojo's would become ours I think, and we probably have some pilots that would fly them. We shall see.

Bye Bye--General Lee

 

[KingAirer]

When does ACA DL contract come up for renewal?

 

[General Lee]

I don't know, but if they break the contract in any way--that would be grounds for termination.

 

[46Driver]

General Lee,
Possibly - although I think Delta will leave us alone. The plusses of us fatally weakening a big major (UAL) would be of greater benefit to DAL then the negatives of a small regional's (ACA) competition to Delta. Who knows.....

However, Delta may drop us and buy the Dorniers - our company would probably be quite happy about that - and it would be used by DAL, Comair, or ASA. Although a maintenance pig, it is a blast to fly and the avionics are state of the art.

As for our contract renewal with Delta, I think it is 7 years from now.

On a completely unrelated subject, did you see that they are making a movie version of "The Dukes of Hazzard" with Brittany Spears playing Daisy Duke! Some of the old cast may be in it as well including ole Sheriff Roscoe P. Coltraneeeee and his dog Flash.

 

[Cappy]

46driver,

That is the price of doing business in a smaller town. IF ACA competes with Delta on any of its mainline routes, you can bet that the CVG codeshare would be looked at closely, and possibly terminated I bet. Yes, then the Dojo's would become ours I think, and we probably have some pilots that would fly them. We shall see.

Bye Bye--General Lee

I would believe that the DEX flying and possible scope issues have been looked at in depth by the company lawyers and outside legal advise. I doubt that ACA (or whatever the new company will be) would go head to head with DAL on their own turf. If you recall from the webcast, it was their intent NOT to invade other markets operated by the Majors as part of the initial platform.

Also, if Delta decided to end the relationship with ACA, I do not believe that the D-328's would just "become" Delta's without a negotiated purchase contract. Not to accuse you of anything, but your tone seems somewhat angry with what ACA is attempting to do. Your comments are appreciated, though.

_________________________________________________

"My CEO has bigger balls than your CEO!"

 

[MONKEY]

UTILIZATION IS THE KEY

one thing to keep in mind, is that Delta controls the schedule. Part of the big push for ACA will be to utilize their aircraft better than the UAL schedule allows for. Since DAL controls the schedule, they can under-utilize an aircraft to death, making it unprofitable. If DAL where to implement a schedule that had ACA aircraft sitting at out stations 2-4 hours on a regular basis it could kill the profits. DAL would not have to do anything more, and ACA would be begging to get out of the contract. Will this happen, I don't know. All I know is the DAL did push Comair to the point that they ended up having to sell out to DAL.

I know that on message boards tone is hard to read into the posts, so I will try to explain my tone. I am not at all anti-ACA, infact I think it will make things very interesting on the East Coast. I look at this as a game of cat and mouse, and I am trying to anticipate the moves that each company might make. I have been very interested in the posts that others have put out as far as what they feel and what they think will happen.

 

[Carl_Everett]

Re: UTILIZATION IS THE KEY

one thing to keep in mind, is that Delta controls the schedule. Part of the big push for ACA will be to utilize their aircraft better than the UAL schedule allows for. Since DAL controls the schedule, they can under-utilize an aircraft to death, making it unprofitable. If DAL where to implement a schedule that had ACA aircraft sitting at out stations 2-4 hours on a regular basis it could kill the profits. DAL would not have to do anything more, and ACA would be begging to get out of the contract. Will this happen, I don't know. All I know is the DAL did push Comair to the point that they ended up having to sell out to DAL.

That is what UAL tried to do. They cut our avg hours from 11 to 9 (or less) per day for our CRJ. Then ACA set new rates for '03 and got all the money back from the lack of utilization. Part of the UAL deal (and possibly the DAL deal) is to reset rates each year to offset rising costs. If DAL makes our costs go up, ACA will reset the rates to compensate. I can't say for sure, butI doubt Kerry Skeen would enter into a contract where the other party can make it unprofitable for ACA.

 

[j41driver]

When does ACA DL contract come up for renewal?

I believe it is 2010.

 

[Cardinal]

Utilization may be the key, at least that's what everybody keeps saying. But I have great difficulty acccepting that. Even if you employ in-flight refueling to keep your CRJ in the air 24/7, a low fare aircraft that does not make. Even at an average utilization of perhaps 8 hours per day, rents only make up about 30% of CASM. Up the utlization to 12 hours per day, and voila, you still have an expensive aircraft, albeit with a 10% lower CASM, which is still dramatically higher than a Boeing's.

I'm all for breaking the mold with gutsy entrepreneurship, but without some gimmick like Virgin branding, etc, I just can't see how this is gonna work.

 

[exphojump]

Look at the markets and compare what the majors are charging.

Based on 60% load factor(30seats) and 15CASM.

500nm round trip would cost $125 full fare.

IAD SYR IAD

IAD CMH IAD

1000nm round trip would cost $250 full fare.

IAD HSV IAD

RIC IAD IND IAD RIC

ROA IAD PVD IAD ROA

1500nm round trip would cost $375 full fare.

IAD SRQ IAD

CRW IAD JAX IAD CRW

CAE IAD BVT IAD CAE

These are full fare rates based on filling only 30 seats which allows you discount 20 or more seats. You could sell all 50 seats 30 days prior at 70% of full fare and still make a 12% margin.

These are the economics of the CRJ. This does not include a the cheaper seats of a narrowbody. These rates are comparable to LUV and most customers will pay a 100 premium to avoid 3+ hours of driving.

Compare these rates to any of the discount airfare websites.

 

[exphojump]

With narrowbody economics on trips longer than 750nm.

Assume 737/320 cost of 7.5CASM(LUV) it may be closer to JBLU 6.5CASM because of stage length. Also 60% loadfactor.

SYR IAD SYR $125 roundtrip


IAD MIA $203 round trip

SYR IAD MIA $328 round trip full fare


IAD COS $315 round trip

SYR IAD COS $440 round trip full fare


IAD LAX $490 round trip

SYR IAD LAX $615 round trip full fare

Sound expensive? LUV full fare from BWI to LAX is $598 roundtrip.

 

[46Driver]

I just saw up on HQ walls the following: Sept 9, 1999 ACA signs a 10 year deal with DAL for regional fee for departure. The plan was for 25 Dorniers and 20 CRJ's. We did have some Delta side CRJ's but they all went away, we now only fly 33 Dorniers. Hope this helps.

 

[Cardinal]

exphojump, those numbers are helpful and don't look too frightening. But there's still a dichotomy, cause if ACA thinks it can pull this off profitably at a 15 cent CASM, why are the majors, with more like 10 cent network CASMs and an almost unlimited ability to "right-size" the aircraft type to the market, unable to make it work? It seems like ACA will have to jump on larger aircraft types very soon in order to make this work.

 

[exphojump]

ACAI is jumping on it,

If you listened to the 2nd quarter webcast our CEO stated that we expect to have larger aircraft on property and operating by 2nd quarter 2004, with or without release from the UAL contract.

If you look at a discount airfare site you'll see that the majors are charging high rates for RJ routes and routes with no LCC competition. A CASM of 10 cents is for mainline aircraft only competing against 7.5 CASM of LUV and 6.5 CASM of JBLU.

Take CAL for example:

2002

366 mainline jets

generating 80,122,000,000 ASMs

CASM 9.2 cents


Regional jets and turboprops(XJET)

188 aircraft

generating 6,219,000,000 ASMs

CASM 15.66 (first 6 months of 2002)

Regional jets are fairly minor component of a major airline in terms of total ASMs.

For the most part the majors are going head to head with LCCs with a CASM of 6.5 to 8.0 cents.

A regional airline that can get up and running almost overnight with 87 RJs and applying the same techniques that the mainline LCCs have applied will further squeeze the legacy carriers, while adding larger aircraft and applying pressure on long haul routes(6.5 to 7.6 CASM) out of IAD. So can CAL, DAL, USair, and UAL compete against ACAI's small to medium market rates while matching Airtran, Southwest, JetBlue, ATA, and Spirit on mainline routes?

It is not shown in the 10Ks but my guess is that the legacy carriers make a nice profit from regional aircraft because they can charge more.

http://travel.yahoo.com/

JFK-FLL AUG27/29 $204.00 DAL (JetBlue competition)

JFK-RDU AUG27/29 $553.00 DAL(operated by ACAI)

The stop through ATL is the same price.

Search the fare structure yourself.