What is the Skywest Inc. Plan?

[General Lee]

Ah, yes, but that is the CURRENT trend for the next few years while your (and everyone else's, for that matter) contract is in force, and while most of the current 50 seat fleet still operates. It's worthless to use as a measuring stick for the next 10, 20, or even 30 years, though, because neither you nor I know what's to come both in future aircraft and future world events. Past profits don't equal future results, my friend.

What made your post myopic is that you assume that the regionals are just sitting there, doing nothing, blindly accepting some sort of death-spiral fate handed down to them from the feds and your pilot contracts, but that is FAR from the truth.

Look, the Regionals are in a corner, and don't have many options. Their 50 seaters are very unpopular with the Legacy CEOs because high oil prices have made them inefficient. That's economics, and at the same time new legacy scope clauses have those 50 seaters on the way out. DL's clause exchanges 215 50 seaters to the boneyard for 70 new 70/76 seaters. That means fewer jets, and other than the new ones, no other replacements like large turboprops either. The only replacement really is 88 717s used by mainline. The days of the 50 seater, or the majority of the Regional Jets out there, are numbered.

Then throw in new rules that affect the Regionals. In the past 10 years there were plenty of 250 hour wonders coming out of UND or wherever, and that helped feed the Regionals growth. Unlimited supply it seemed. Now, that is changing. Not only is it more expensive to go to those Universities or even do it privately (especially in a downturn), but the GOVT raised the requirements. 1500 min unless you go to an approved (expensive) facility, and even 800 hours isn't easy to get. Next throw in fatigue rules that hamper super efficiency, something Regionals and Major partners count on.

And again, the Independence Air experiment was important. If you decide to go on your own, you lose all the "freebees" that you had with your legacy partner, like advertising, reservations, etc. Those are huge costs, and then you find yourself competing against all 3 legacies, and a bunch of LCCs that don't want the competition either. Consolidation has fortified the playing field. That was the point, less competition makes the remaining industry stronger. The big 3 and a few LCCs have strengthened their hubs, and are making huge profits. And, everyone is watching to make sure the Regionals stay in line. Look at Comair in the US, Eurowings in Germany, etc. Both were dismantled when the Legacy partner needed to dump regional lift.

Consolidation has also occurred in the Regionals as well. SKW buying up ASA and Expressjet. Endeavor, the combo of PNCL, Mesaba, and Colgan. Republic owns a bunch too. The big Regionals are trying to scramble to keep any mainline feed they can.

Look at Legacy profits. The Legacies with lower profits have lately been the ones relying more on 50 seaters. The one who is dumping 50 seat lift, had a $1.37 BILLION quarterly profit. Do you think the other legacy CEOs are watching?


So, I am hoping that 15,000 upcoming retirements pick up the majority of the Regional pilots who want to go to the Legacies. If there weren't that many upcoming retirements, it would have been really interesting. That is not myopic. Sure, things could change tomorrow, and Mars could attack too.


Bye Bye---General Lee

 

[badog]

In UA's case, regionals fly 55% of their domestic route structure, delta's narrow body fleet is getting replaced not added to right ? Not growth aircraft !
Face it, not too many pilots want to wait 5 or more years to get hired or sit reserve for the the next 15 years. Regionals will be around for a while as long as mainline pilots won't fly little jets for a c scale.

 

[XPOO]

Look, the Regionals are in a corner, and don't have many options. Their 50 seaters are very unpopular with the Legacy CEOs because high oil prices have made them inefficient. That's economics, and at the same time new legacy scope clauses have those 50 seaters on the way out. DL's clause exchanges 215 50 seaters to the boneyard for 70 new 70/76 seaters. That means fewer jets, and other than the new ones, no other replacements like large turboprops either. The only replacement really is 88 717s used by mainline. The days of the 50 seater, or the majority of the Regional Jets out there, are numbered.

Again, the General Lee thinks he knows what he's talking about and is way off the mark. The 50-seat aircraft are not money losers. United thought that years ago. SkyWest then took those aircraft United wanted to shed and started flying their own at-risk routes. United saw how profitable it was and instantly took it all back and resigned on the 50-seat feed. The reason the majors want to get rid of them is so they can bring in more 51-76 seat aircraft that allow for dual-class cabins since their mainline pilots wont cave on scope to have 500 50-seaters and 500 51-76 seaters. They want those regional routes to be able to accomodate the business travelers. 50-seat aircraft aren't configured to do that. If other regional airlines can't turn a profit on the 50's and SkyWest can, then that tells you more about how poorly ran some other regional airlines are. SkyWest is mainly 50 seaters, and cranked out a $48M profit last quarter. Does that sound like they are losing money? I can tell you this, though, as the majors cut their contracts on 50-seat feed, the regional airlines that can operate those aircraft on an at-risk basis (to get around scope at the majors), and do it well...are sitting so very pretty right now. Guess who has the most and is cranking out major profits on them still? Bingo. I know you hate SkyWest more than any other regional, but get used to it. They're gonna be here for a long time to come.

 

[XPOO]

And again, the Independence Air experiment was important. If you decide to go on your own, you lose all the "freebees" that you had with your legacy partner, like advertising, reservations, etc. Those are huge costs, and then you find yourself competing against all 3 legacies, and a bunch of LCCs that don't want the competition either.

Consolidation has also occurred in the Regionals as well. SKW buying up ASA and Expressjet. Endeavor, the combo of PNCL, Mesaba, and Colgan. Republic owns a bunch too. The big Regionals are trying to scramble to keep any mainline feed they can.

There is no need to go it alone. I don't even know who you are talking about. SkyWest already runs a myriad of at-risk flying for both United and Delta. And have contract provisions to do the same with American and US Airways if the opportunity arises. When you put out a quality product, Legacy airlines love the free publicity. No cost to them, just a slice of the profit pie.

Also, SkyWest did not consolidate. They bought assets. Assets that assure them their place as the largest regional feed for both United and Delta. It was a very smart move. And you'll recall that your beloved Mother Delta had to beg JA to take ASA off their hands, and they really wanted Comair to go with it.

 

[General Lee]

Again, the General Lee thinks he knows what he's talking about and is way off the mark. The 50-seat aircraft are not money losers. United thought that years ago. SkyWest then took those aircraft United wanted to shed and started flying their own at-risk routes. United saw how profitable it was and instantly took it all back and resigned on the 50-seat feed. The reason the majors want to get rid of them is so they can bring in more 51-76 seat aircraft that allow for dual-class cabins since their mainline pilots wont cave on scope to have 500 50-seaters and 500 51-76 seaters. They want those regional routes to be able to accomodate the business travelers. 50-seat aircraft aren't configured to do that. If other regional airlines can't turn a profit on the 50's and SkyWest can, then that tells you more about how poorly ran some other regional airlines are. SkyWest is mainly 50 seaters, and cranked out a $48M profit last quarter. Does that sound like they are losing money? I can tell you this, though, as the majors cut their contracts on 50-seat feed, the regional airlines that can operate those aircraft on an at-risk basis (to get around scope at the majors), and do it well...are sitting so very pretty right now. Guess who has the most and is cranking out major profits on them still? Bingo. I know you hate SkyWest more than any other regional, but get used to it. They're gonna be here for a long time to come.

Really? Tell that to RA. I can post some recent comments from conference calls that state the 50 seaters need to go. Is it profitable for UAL? It sure doesn't look like it, they have to continue to make cost cutting programs because they can't cut Regional contracts, YET.

Look, maybe future hiring for dispatchers isn't looking as great as it is for pilots. Regardless, there has been a huge shift in flying back towards mainline, and the Regionals are getting squeezed. They can't go of on their own, and they get what the Major partner dishes out to them. It's just the way it is now.


Bye Bye---General Lee

 

[badog]

Really? Tell that to RA. I can post some recent comments from conference calls that state the 50 seaters need to go. Is it profitable for UAL? It sure doesn't look like it, they have to continue to make cost cutting programs because they can't cut Regional contracts, YET.

Look, maybe future hiring for dispatchers isn't looking as great as it is for pilots. Regardless, there has been a huge shift in flying back towards mainline, and the Regionals are getting squeezed. They can't go of on their own, and they get what the Major partner dishes out to them. It's just the way it is now.


Bye Bye---General Lee

How much % domestic flying is done by their regional partners ?
That number is your answer not your idiosyncratic rhetoric.

 

[XPOO]

Really? Tell that to RA. I can post some recent comments from conference calls that state the 50 seaters need to go. Is it profitable for UAL? It sure doesn't look like it, they have to continue to make cost cutting programs because they can't cut Regional contracts, YET.

Look, maybe future hiring for dispatchers isn't looking as great as it is for pilots. Regardless, there has been a huge shift in flying back towards mainline, and the Regionals are getting squeezed. They can't go of on their own, and they get what the Major partner dishes out to them. It's just the way it is now.


Bye Bye---General Lee

I get what you are trying to say. Obviously, the current amount of 50-seat aircraft flying is unsustainable. There is no getting around that. However, its not a dead aircraft. There is still a sizeable need for it. Just as there is still a very sizable need for the Brasilia. If you can operate those types of aircraft, with a healthy operational reliability and at a decent profit, then how is that a bad business model? And with 300-600 large RJs on order, the future of the regional industry looks to be very much alive and still thriving with no threat of "having to go it alone." Will there be as many regional airlines left when the 50-seat dust settles? No.

As for the supposed pilot shortage, and the new 117 rules to boot, its all speculation at this point. There will obviously be massive retirements coming over the next few years. Will some airlines struggle to adapt in both cases? Yes. But the regional industry is no more volatile than the majors industry in either regard.

 

[General Lee]

There is no need to go it alone. I don't even know who you are talking about. SkyWest already runs a myriad of at-risk flying for both United and Delta. And have contract provisions to do the same with American and US Airways if the opportunity arises. When you put out a quality product, Legacy airlines love the free publicity. No cost to them, just a slice of the profit pie.

Also, SkyWest did not consolidate. They bought assets. Assets that assure them their place as the largest regional feed for both United and Delta. It was a very smart move. And you'll recall that your beloved Mother Delta had to beg JA to take ASA off their hands, and they really wanted Comair to go with it.

You are really "reaching" for it. At risk flying under the Legacy banner is NOT the same as competing against them. Ask Indy Air how that worked out. Not gonna happen again.

And, SKW buying assets is consolidation when it is a brought under one umbrella. A holding company owns all 3. They may not all have the same brand, but those 3 don't compete for contracts, the management decides who gets what. To say otherwise is disingenuous. If they are competing against each other for contracts, then that is whipsawing. Either way, it was removing competitors, which is the point of Consolidation..... Other airlines were interested in ASA and Expressjet too probably, but it was smart to grab assets and contracts as fast as they could. AA Eagle could be next, and of course Compass already was purchased by Hulas at TSA. Consolidation is in full swing, and that is done out of opportunity, and also out of desperation. The Regionals tend to be the latter.


Bye Bye---General Lee

 

[General Lee]

I get what you are trying to say. Obviously, the current amount of 50-seat aircraft flying is unsustainable. There is no getting around that. However, its not a dead aircraft. There is still a sizeable need for it. Just as there is still a very sizable need for the Brasilia. If you can operate those types of aircraft, with a healthy operational reliability and at a decent profit, then how is that a bad business model? And with 300-600 large RJs on order, the future of the regional industry looks to be very much alive and still thriving with no threat of "having to go it alone." Will there be as many regional airlines left when the 50-seat dust settles? No.

As for the supposed pilot shortage, and the new 117 rules to boot, its all speculation at this point. There will obviously be massive retirements coming over the next few years. Will some airlines struggle to adapt in both cases? Yes. But the regional industry is no more volatile than the majors industry in either regard.

And I see where you are going with this. The only turboprops flying for DL are your at risk E120s out of SLC. There used to be tons of Saabs in MEM, MSP, DTW, and even ATL. All but your E120s at SLC are gone. What about 50 seaters for DL in LAX? Gone. Only CR7/9s for SKW, and an increasing number of E170s by Compass. The DL side is shedding turboprops and 50 seat jets fast. You are right, there will be a smaller market for 50 seaters, there will be 125 left on the DL side. Who flies them will be interesting.

As far as the UAL side, the E120s are doing a lot of flying out of SoCal, but even that has shrunk. A few years ago the E120s were doing even more flights to SNA and ONT from LAX, all gone now. Of course the Expressjet ONT experiment didn't last long on their own at risk try. 50 seaters need to go to routes that have zero competition and very high yield. Those types of routes mat be swapped to 717s or 319s eventually.

And, retirements will be great for legacies, bad for Regionals. Better paying jobs will sink the alternative. Eventually, the airlines will fight for pilots, and that will be good for pilot contracts.


Bye Bye---General Lee

 

[Clutch]

Boring

 

[Mercyful Fate]

Ohhhhh, okay....??? Wow, no actual reasons, just blanket statements. Got any reasons why Mercy? Ah, never mind ...


Bye Bye---General Lee

Plenty of reasons...Reasons that don't need to be explained to anyone with half a brain.

History of the business numbskull....History that the airline business lives or dies over certain economic factors that can change overnight and do...Economic factors that can change with zero control over the airline business. Commodities..politics...the list goes on and on.

Good enough for you skipper?

 

[AntiJedi]

Look, the Regionals are in a corner, and don't have many options.

You make it seem like the mainlines aren't in a pickle, either, which is hardly true. They have limitations on where they can send their planes, and they also have to pick their fights. Just look at what's going on at SEA right now.

Their 50 seaters are very unpopular with the Legacy CEOs because high oil prices have made them inefficient.

Let's get something straight. Inefficient doesn't mean "makes negative profit." Your CEO is clearly wanting to increase that $1.5 BILLION in profit. If the 50-seaters were losing money this whole time, they would've been dumped a long time ago.

The days of the 50 seater, or the majority of the Regional Jets out there, are numbered.

And yet, Embraer, CSeries, and the RRJ programs seem to be doing JUST fine. (We'll leave Mitsu off the table for now, because that plane isn't flying yet.)

Then throw in new rules that affect the Regionals. In the past 10 years there were plenty of 250 hour wonders coming out of UND or wherever, and that helped feed the Regionals growth. Unlimited supply it seemed. Now, that is changing. Not only is it more expensive to go to those Universities or even do it privately (especially in a downturn), but the GOVT raised the requirements. 1500 min unless you go to an approved (expensive) facility, and even 800 hours isn't easy to get. Next throw in fatigue rules that hamper super efficiency, something Regionals and Major partners count on.

And again, the Independence Air experiment was important. If you decide to go on your own, you lose all the "freebees" that you had with your legacy partner, like advertising, reservations, etc. Those are huge costs, and then you find yourself competing against all 3 legacies, and a bunch of LCCs that don't want the competition either.

Indy had a lot of other problems besides competing with UA. In fact, competing with UA really WASN'T their problem; it was costs associated with a large, dormant fleet, and the costs and time it took to get the A320 on the certificate.

Look at Comair in the US, Eurowings in Germany, etc. Both were dismantled when the Legacy partner needed to dump regional lift.

They were dismantled because they were both wholly owned, and thus easy targets. Yes, Delta was looking to reduce 50-seat lift after the contract was signed, BUT they couldn't just go to anyone and say, "Thou shall..." No, that would be a breach of contract. The 70-seat replacements was negotiated because DL couldn't bully around a contract. SKYW easily took those orphaned airplanes and put them somewhere else, where they're ALSO making a profit.

The big Regionals are trying to scramble to keep any mainline feed they can.

Keep? No. Leverage, yes.

Look at Legacy profits. The Legacies with lower profits have lately been the ones relying more on 50 seaters. The one who is dumping 50 seat lift, had a $1.37 BILLION quarterly profit. Do you think the other legacy CEOs are watching?

How much of Delta's profits were from ancillary fees, though? How much of that was from the oil refinery? The 50 to 70 seat reduction had VERY little overall impact on that.

As far as the UAL side, the E120s are doing a lot of flying out of SoCal, but even that has shrunk. A few years ago the E120s were doing even more flights to SNA and ONT from LAX, all gone now.

I still don't understand why UA cut those particular flights. Perhaps they weren't tthe biggest profit makers, but they were great connector flights for those who didn't want to bother driving to LAX, and many frequent flyers LOVED them.

 

[XPOO]

And I see where you are going with this. The only turboprops flying for DL are your at risk E120s out of SLC. There used to be tons of Saabs in MEM, MSP, DTW, and even ATL. All but your E120s at SLC are gone. What about 50 seaters for DL in LAX? Gone. Only CR7/9s for SKW, and an increasing number of E170s by Compass. The DL side is shedding turboprops and 50 seat jets fast. You are right, there will be a smaller market for 50 seaters, there will be 125 left on the DL side. Who flies them will be interesting.

As far as the UAL side, the E120s are doing a lot of flying out of SoCal, but even that has shrunk. A few years ago the E120s were doing even more flights to SNA and ONT from LAX, all gone now. Of course the Expressjet ONT experiment didn't last long on their own at risk try. 50 seaters need to go to routes that have zero competition and very high yield. Those types of routes mat be swapped to 717s or 319s eventually.

And, retirements will be great for legacies, bad for Regionals. Better paying jobs will sink the alternative. Eventually, the airlines will fight for pilots, and that will be good for pilot contracts.


Bye Bye---General Lee

And yet, in the past month, SkyWest has gone from 42 Brasilias to 45. That's right, they brought three of them back. Why? They're turning a substantial profit on them.

So Delta has a bunch of pilots retiring. Let's say the retirement number far exceed the amount of hiring and training that can be done at any given time. Eventhough Delta will have a very large pool of candidates from which to hire they are in the same boat as everyone else. And we all know that every hire wont come from one airline, it will be pretty evenly distributed across the regionals (current negotiated flow-throughs not withstanding). Each regional is going to have upward movement again, and fast upgrades, and this basically puts everyone on a level playing field again. The only remaining factor is which regionals are more attractive to incoming recruits. Airlines that gutted pilot pay, work rules, and/or QOL like Pinnacle, Mesa or Republic? Or airlines that pay a decent wage, with above average work rules and QOL like SkyWest and Compass?

So yes, there is going to be a more stressful struggle at the regional level, but some companies are going to have an easier go of it than others. Its all still complete speculation until it actually happens.

 

[CFIT]

Hey General,

Is Delta going to start using B717's and are they going to retire CRJ 200's ?

 

[General Lee]

Plenty of reasons...Reasons that don't need to be explained to anyone with half a brain.

History of the business numbskull....History that the airline business lives or dies over certain economic factors that can change overnight and do...Economic factors that can change with zero control over the airline business. Commodities..politics...the list goes on and on.

Good enough for you skipper?

Riiiiight? Thanks for the great answer Gilligan!


Bye Bye---General Lee