JA From United States of America, joined Dec 2004, 513 posts, RR: 1 Posted (8 months 1 week 11 hours ago) and read 10272 times:
It is my personal belief that Comair can be restructured into a viable point to point operation supporting the Delta network. There are several markets that could benefit from the type of S-curve effect that a new Comair could provide. In addition, a point to point structure (operations that are heavily O/D based) would support the kind of cost structure that is the new reality for 50 seat aircraft. As part of this new business model, I would propose a reduction in seating capacity from 50 seats to 46 seats as numerous markets currently take some sort of penalty above 46 seats. Comair would continue to fly under a codeshare agreement with Delta.
The new Comair would continue to use the current 21 aircraft and would also take on 41 Delta owned aircraft from Skywest. As the former Skywest aircraft come in, other CRJ200s with viable medium term value (let's say 5 years) would receive an engine overhaul. Allegedly, all of the Comair aircraft and half of the Skywest aircraft will need both engines overhauled before 2015 at a cost of $2M per airplane. I can certainly see why Delta would park the aircraft first, but there are other options.
In my sketch of what a restructured Comair would look like, I decided to focus on several focus cities that offer the largest potential for point to point operations. This includes STL, PIT, BNA, and MSY. In addition, a new BWI focus city would be opened to focus on connecting the DC area with numerous medium sized business markets. There are also opportunities to be opportunistic in this environment with regards to flying EAS and SCASD markets where sensible.
Before mentioning ExpressJet or Independence Air, remember that Comair had a codesharing relationship with Delta as an independent airline. It is more helpful when flying thin point to point markets to have a large hub and spoke network to support you. That way, customers can fly one way on the nonstop and make a connection on the way back.
rampart From United States of America, joined Aug 2005, 2851 posts, RR: 7 Reply 1, posted (8 months 1 week 11 hours ago) and read 10254 times:
I like it.
I will mention ExpressJet, but in a positive way. At least 1/3 of ExpressJet in their stand-alone venture was very successful. Are you saying that the DL code-share in place would be enough to float the remaining 2/3?
Second, how would you handle direct and probably fierce competition from WN, in STL, BNA, MSY, and BWI?
Polot From United States of America, joined Jul 2011, 1497 posts, RR: 0 Reply 2, posted (8 months 1 week 11 hours ago) and read 10214 times:
Quoting JA (Thread starter): This includes STL, PIT, BNA, and MSY. In addition, a new BWI focus city would be opened to focus on connecting the DC area with numerous medium sized business markets.
So..you want this new Comair to just be destroyed by WN?
Quoting JA (Thread starter): Before mentioning ExpressJet or Independence Air, remember that Comair had a codesharing relationship with Delta as an independent airline.
When? Comair has been wholly owned by Delta since 1999, and DL has had a financial stake in them since 1986. Comair hasn't been an independent airline in a long time. If you are talking about this theoretical airline and are using the past tense by mistake, why would DL codeshare with this airline versus putting its passengers on its planes and routing them through their hubs, collecting all of the revenue?
Mir From United States of America, joined Jan 2004, 19697 posts, RR: 56 Reply 3, posted (8 months 1 week 11 hours ago) and read 10178 times:
Quoting rampart (Reply 1): Second, how would you handle direct and probably fierce competition from WN, in STL, BNA, MSY, and BWI?
And that's the real problem with this proposal - every focus city is a WN stronghold (maybe not MSY, but that still leaves three). You'd have to shoot for some markets that don't have a carrier like that, but unfortunately WN is pretty big in all of them.
-Mir
7 billion, one nation, imagination...it's a beautiful day
usflyer msp From United States of America, joined May 2000, 1785 posts, RR: 0 Reply 4, posted (8 months 1 week 11 hours ago) and read 10166 times:
I don't see the point? Most of those markets are precisely the type of markets that 50-seat RJ economics do not work on - medium sized markets with LCC competition.
EricR From United States of America, joined Jul 2010, 1449 posts, RR: 1 Reply 5, posted (8 months 1 week 10 hours ago) and read 10107 times:
Would not work. WN has the pricing power (and frequency) in these cities (STL, BWI, BNA). The only way Comair could penetrate is via low fares, but I don't see how that could financially work considering those RJs would not be very cost effective against WN's 73s.
xjramper From United States of America, joined Dec 2003, 2345 posts, RR: 52 Reply 6, posted (8 months 1 week 10 hours ago) and read 10005 times:
The biggest flaw with this plan is that Delta is going to be done with all 50-seat jet flying here soon regardless of what you want to spin OH into. IIRC, FL utilized ZW CR2s a few years back to cover some of the thin markets that just couldn't sustain 717 flying, and after a while, FL realized that they could fly an almost empty 717 and lose less money than they would flying a full CR2, which is why they cut that service. They tried it again with OO and their contract with OO was terminated prematurely, although I suspect that had something to do with the WN takeover but money loss was a definite factor as well.
Secondly, DL has tried variations to P2P flying and EAS flying and it just isn't lucrative. Certain non-hub cities have some P2P routes, but mostly they have cut those routes way back.
Thirdly, as others have pointed out, WN would crush the already money-loss CR2s.
DeltaMD90 From United States of America, joined Apr 2008, 5297 posts, RR: 48 Reply 7, posted (8 months 1 week 10 hours ago) and read 10002 times:
I know we'd all love to see Comair stay, but we're thinking in the wrong mindset here... Delta is a business. The easiest and cheapest way to reduce costs at OH is to shut them down and transfer their assets to OO. I hate it too but that's the way it's gonna be. If you could find a plan (and quickly) that is more cost effective than Delta's plan, shoot it their way and I'm sure it'll be implemented. Delta didn't get this far by being a charity.
Plus, I don't see how deploying inefficient 46/50 seaters on WN routes without much feed would solve anything. That's probably the worst thing OH (DL) can do
seabosdca From United States of America, joined Sep 2007, 4277 posts, RR: 4 Reply 8, posted (8 months 1 week 10 hours ago) and read 9979 times:
Quoting JA (Thread starter): It is my personal belief that Comair can be restructured into a viable point to point operation supporting the Delta network.
I think no matter how much clever network design you try to do, you can't build a comprehensive network that works today with 50-seaters. They are now a niche tool, suitable only for a few markets that 1) have meaningful business traffic but 2) are too thin to attract LCCs or legacy mainline. As has been pointed out already, many of your proposed routes have LCC competition, and a few more have mainline legacy competition.
Also, I should just point out:
Quoting JA (Thread starter): In addition, a new BWI focus city would be opened to focus on connecting the DC area with numerous medium sized business markets.
Business travelers out of DC will not use BWI in any great numbers. It's too far away from the center of gravity of business in DC, which is between the western half of the District and Northern Virginia.
Most gorgeous aircraft: Tu-204-300, 757-200, A330-200, 777-200LR, 787-8
strfyr51 From United States of America, joined Apr 2012, 488 posts, RR: 0 Reply 9, posted (8 months 1 week 9 hours ago) and read 9832 times:
This is pretty much a dead issue, DELTA hasn't the SLIGHTEST interest in saving comair and they own them AND the leases on their airplanes... Comair's days were numbered after the. Last pilots strike. UAL bought,cut up and flushed Air Wisconsin in the same manner in the previous decade. Maybe you armchair CEO's might want to do more research. The demise of the regionals was a foregone conclusion once they hopped lustily in to bed with the majors. Before all of this incestuous behavior began. Regionals had their own CSR, reservations,ground handling and catering staffs. they shed all of that to becomes indentured slaves. And NOW?? Slavery has run it's course and regionals are summarily being tossed on the scrap heaps.. They should return to the previous arms length partnerships. And again live or DIE on their OWN merit and Business plan..
seabosdca From United States of America, joined Sep 2007, 4277 posts, RR: 4 Reply 10, posted (8 months 1 week 8 hours ago) and read 9779 times:
Quoting strfyr51 (Reply 9): They should return to the previous arms length partnerships. And again live or DIE on their OWN merit and Business plan..
It's not about how independent they are from the majors (although without the majors' customer-facing systems they'd quickly be dead in the water today). It's about the fact that 50-seat jets just don't work in today's economic environment, no matter who's flying them. Even 70-seaters are in jeopardy.
Most gorgeous aircraft: Tu-204-300, 757-200, A330-200, 777-200LR, 787-8
PHX787 From Japan, joined Mar 2012, 4954 posts, RR: 15 Reply 11, posted (8 months 1 week 7 hours ago) and read 9676 times:
Quoting Polot (Reply 2): Quoting JA (Thread starter):
This includes STL, PIT, BNA, and MSY. In addition, a new BWI focus city would be opened to focus on connecting the DC area with numerous medium sized business markets.
So..you want this new Comair to just be destroyed by WN?
Exactly. The only reason OH survived this long is because WN never wanted to touch their home turf- CVG. CVG was the main fortress for OH and their relationship (rocky, albeit) with DL is what made OH survive this long, until the apparent inevitable happened.
flyby519 From United States of America, joined Jul 2007, 851 posts, RR: 0 Reply 12, posted (8 months 1 week 6 hours ago) and read 9566 times:
I think the 50seat CRJs would have a better chance being turned into all-first class, maybe 15-20seats total, and flown between big O&D markets like JFK-MIA, JFK-LAX (if they have the range?), LGA-ORD, etc and keep the codeshare with DL.
AA94 From United States of America, joined Aug 2011, 357 posts, RR: 0 Reply 14, posted (8 months 1 week 4 hours ago) and read 9123 times:
Quoting seabosdca (Reply 8): Business travelers out of DC will not use BWI in any great numbers. It's too far away from the center of gravity of business in DC, which is between the western half of the District and Northern Virginia.
I love BWI, it's a great medium-sized airport, but it's primary clientele is not business travelers. It's a perfect airport for leisure travel, hence why WN carries ~55% of passengers who pass through there.
DCA is usually the go-to for businessmen in the city.
Choose a challenge over competence / Eleanor Roosevelt
HOMsAR From United States of America, joined Jan 2010, 802 posts, RR: 0 Reply 15, posted (8 months 1 week 4 hours ago) and read 9104 times:
Quoting flyby519 (Reply 12): I think the 50seat CRJs would have a better chance being turned into all-first class, maybe 15-20seats total, and flown between big O&D markets like JFK-MIA, JFK-LAX (if they have the range?), LGA-ORD, etc and keep the codeshare with DL.
At that point, you might as well cut 10 more seats out of them and call them business jets.
LHCVG From United States of America, joined May 2009, 1368 posts, RR: 1 Reply 16, posted (8 months 1 week 3 hours ago) and read 8968 times:
Quoting HOMsAR (Reply 15): At that point, you might as well cut 10 more seats out of them and call them business jets.
The only way you'll see premium RJ service is if someone else buys the CRJ-705, or configs an E-Jet in a similar manner. I believe AC is the only current customer for those, and even then they are more akin to PS as they still have Y, rather than all F. A route like LGA-ORD could probably work with an all-F large RJ, but then you get to the point where you're better off just throwing a 757 or 321 on the route to get the same number of F pax plus all the rest. But you'd certainly never see that on a 50 seater due to the economics, and plus anyone paying the premium for that flight wouldn't be cool with the low windows on a CRJ.
Bobloblaw From United States of America, joined Jan 2012, 1360 posts, RR: 0 Reply 17, posted (8 months 1 week 3 hours ago) and read 8637 times:
Quoting JA (Thread starter): It is my personal belief that Comair can be restructured into a viable point to point operation supporting the Delta network.
There is too much 50 seat capacity.
Quoting JA (Thread starter): The following markets would be flown:
Ever hear of ExpressJet??? 50 seat point to point doesnt work, period. Plus there is no way Delta would ever agree to a capacity buy in these markets.
fwa2500 From United States of America, joined Feb 2005, 98 posts, RR: 0 Reply 18, posted (8 months 6 days 23 hours ago) and read 6730 times:
As much as i wish we werent closing down, there its no turning back now. Delta could have forced a drastic restructure if they wanted, but they didnt, which is why were are now less than two weeks from ceasing ops permanently.
JA From United States of America, joined Dec 2004, 513 posts, RR: 1 Reply 19, posted (8 months 6 days 22 hours ago) and read 6405 times:
Quoting rampart (Reply 1): Second, how would you handle direct and probably fierce competition from WN, in STL, BNA, MSY, and BWI?
Quoting Mir (Reply 3): And that's the real problem with this proposal - every focus city is a WN stronghold (maybe not MSY, but that still leaves three). You'd have to shoot for some markets that don't have a carrier like that, but unfortunately WN is pretty big in all of them.
Quoting usflyer msp (Reply 4): I don't see the point? Most of those markets are precisely the type of markets that 50-seat RJ economics do not work on - medium sized markets with LCC competition.
Has anyone done the math regarding 50 seaters? The system cost (all in) is around $3,000 per hour. That is around $65 per hour per seat in a 46 seat configuration. Has anyone seen the WN fares lately? More than 50% of the WN fares being sold work on an RJ. The idea that RJs would get creamed by WN is ridiculous. Rather, you let WN fill up on low fares until you reach the RJ break even number and then you match them from there.
17% of WN customers buy full fares. This is an indication that there are a LOT of business travelers on WN.
I'll use STL-BHM as an example. The seat cost is $71.74 for this route on an RJ in this direction. My estimate is that WN is 39% less per seat on the sector. Here is the fare distribution for direct flights on WN from FlightAware:
Minimum: $50.76
Median: $138.99
Maximum: $271.99
Minimum to Median is 50% of the tickets sold. Median to Maximum is the other 50%.
Mathematically, I would be fine competing with more than 50% of WN's nonstop tickets. WN can continue to set the pricing and I would engage them somewhere below the median.
Quoting rampart (Reply 1): Second, how would you handle direct and probably fierce competition from WN, in STL, BNA, MSY, and BWI?
It's not a problem to have WN set the price. The profit/loss estimates assume that these routes would ignore the first 30% of the WN fare structure and adopt the rest. WN is not cheap anymore. They target the business traveler intensely. WN's network is essentially a web, with nodes in key medium and large business centers as well as leisure points. Many cities double as both. DL has so many hubs that the implementation of point to point operations by OH would essentially make the DL network a web in the East. DL has corporate contracts, so being able to minimize overnight stays is a top priority. Point to point service can speed thousands of trips by giving people a nonstop on at least one side. Even if they have to go through the hub on the other, that is more business to DL.
Quoting AA94 (Reply 14): I love BWI, it's a great medium-sized airport, but it's primary clientele is not business travelers. It's a perfect airport for leisure travel, hence why WN carries ~55% of passengers who pass through there.
DCA is usually the go-to for businessmen in the city.
DCA has rail access. The Metro is a big part of why DCA is the preferred airport. Everyone cannot fly through DCA (even if the perimeter restrictions are lifted). The BWI plan would include a plan to put in premium rail service every 20-30 minutes directly to Union Station and New Carrollton. Amtrak does the trip in 22 minutes. Two train sets would make a 30 minute schedule. MARC would operate it at a premium fare (about $10-12). It isn't that hard to do, particularly outside the peak rush hour. During rush hour, there are tons of trains already.
Quoting DeltaMD90 (Reply 7): I know we'd all love to see Comair stay, but we're thinking in the wrong mindset here... Delta is a business. The easiest and cheapest way to reduce costs at OH is to shut them down and transfer their assets to OO. I hate it too but that's the way it's gonna be. If you could find a plan (and quickly) that is more cost effective than Delta's plan, shoot it their way and I'm sure it'll be implemented. Delta didn't get this far by being a charity.
Plus, I don't see how deploying inefficient 46/50 seaters on WN routes without much feed would solve anything. That's probably the worst thing OH (DL) can do
This isn't about keeping Comair's big birds. Those are already gone. The idea here is to take premium traffic from WN. DL likes premium traffic and the premium flyers are generally more time sensitive. WN is not the Borg to DL. They already know that WN's pricing is substantially higher than an FL or a B6. Premium travelers on WN aren't flying for price. They are flying for TIME. Save them time and they will bring you cash.
Delta isn't a charity. They will have to replace engines on the entire OH CR2 fleet by 2015 and more than half of the DL owned OO fleet by the same time. In addition, DL has to NEGOTIATE the modification of contracts with other carriers. They do not have to do so with OH. You eat the low hanging fruit to give you the energy to climb the tree and deal with the highest fruit. However, the market rate for leasing CRJ200s is $30,000 per month. The 21 50 seaters at OH would yield $7.5M in lease revenue. In addition, I have proposed bringing 41 DL owned frames from OO to OH that they have both agreed to remove. That is another $14.7M in lease revenue. In addition, they are no longer responsible for replacing engines on the aircraft. So, they will still save $82M between now and 2015 by not replacing engines. It is going to cost some money to close down OH. So, you can spend money to close the carrier or you can collect $22M per year for at least another 2-5 years until the aircraft are replaced. We haven't even discussed the potential S-curve effects yet.
I don't know what to tell you, the fact that real airlines are moving away from 50 seaters tells me that your assumption is wrong/mostly wrong. If some person on A.net finds a way for an airline to make tons of money, odds are that it's already been thought of (and dismissed.) Legacy spin offs have always done horribly going against LCCs... Song, DLX, Metrojet, Ted, etc so what makes some inefficient 50 seaters special?
JA From United States of America, joined Dec 2004, 513 posts, RR: 1 Reply 21, posted (8 months 6 days 22 hours ago) and read 6262 times:
Quoting fwa2500 (Reply 18): As much as i wish we werent closing down, there its no turning back now. Delta could have forced a drastic restructure if they wanted, but they didnt, which is why were are now less than two weeks from ceasing ops permanently.
You may be right, but I have actually contacted DL about Comair. Granted, I didn't go into this detail (and there are small, but important pieces missing here), but the absolute worst thing they can say is no. There is a difference between buying a carrier and assuming a feed contract and buying a carrier and operating completely at-risk. I would estimate that the likelihood of this happening is 30% and that is enough to put time and effort into.
JA From United States of America, joined Dec 2004, 513 posts, RR: 1 Reply 23, posted (8 months 6 days 22 hours ago) and read 5975 times:
Quoting DeltaMD90 (Reply 20): I don't know what to tell you, the fact that real airlines are moving away from 50 seaters tells me that your assumption is wrong/mostly wrong. If some person on A.net finds a way for an airline to make tons of money, odds are that it's already been thought of (and dismissed.) Legacy spin offs have always done horribly going against LCCs... Song, DLX, Metrojet, Ted, etc so what makes some inefficient 50 seaters special?
Some good quotes about the airline business:
These days no one can make money on the goddamn airline business. The economics represent sheer hell.
— C. R. Smith, President of American Airlines.
A recession is when you have to tighten your belt; depression is when you have no belt to tighten. When you've lost your trousers - you're in the airline business.
— Sir Adam Thomson
The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.
— Warren Buffett, annual letter to Berkshire Hathaway shareholders, February 2008
As of 1992, in fact—though the picture would have improved since then—the money that had been made since the dawn of aviation by all of this country's airline companies was zero. Absolutely zero.
— Warren Buffett, billionaire investor, interview 1999.
Why all of these quotes? Airline management is conservative and reactive. We take JetBlue's existence for granted now, but look at this quote from an industry professional:
I don't think JetBlue has a better chance of being profitable than 100 other predecessors with new airplanes, new employees, low fares, all touchy-feely ... all of them are losers. Most of these guys are smoking ragweed.
— Gordon Bethune, Continental Airlines CEO, Time magazine, June 2002.
JetBlue "broke the glass" in some respects and did what other people were doing better in many other respects. Allegiant also "broke the glass" with regards to its business model and continues to outperform its peers by picking up the business that was ALWAYS THERE. Now, there are lots of CEOs claiming that they cannot support 50 seaters and in their current structure, they are correct. Several airlines have tried exclusively point to point and destroyed themselves. Song, DLX, MetroJet, and Ted were all airlines within an airline using large aircraft. Are you really going to kill yourself?
The closest thing to a fused hub & point to point structure is WN. WN has the highest large aircraft unit costs in the industry and they are STILL making money. There is a reason for that. They offer lots of nonstops in their web structure. They have reasonable fares which are high enough to make money. Their marketing is excellent. However, their reach is limited. This is where the DL network (and other legacy networks) maintain their advantage. A 50 seat aircraft is the right size to do point to point flying. In fact, even an ER3(!) can make money flying point to point. Since everyone is scared to fly against WN and even more scared to take the 50 seaters point to point to augment their hubs, it makes it cheaper for OH to do this. The price of the planes get forced down and you get ignored just long enough to get your feet set.
It is my hope that no one figures out that I am right except for DL. It would make my life much easier.
slcdeltarumd11 From United States of America, joined Jan 2004, 2452 posts, RR: 0 Reply 25, posted (8 months 6 days 21 hours ago) and read 5995 times:
I would say their best bet is to seek EAS or airports with large subsidies. That would certainly help the economics of fuel. Smaller would probably be the best bet and mean small. Use the planes that dont need an expensive overhaul only or ditch them when they do. I think they would have to be very small to survive and only EAS or subsidy airports on one end.
What value do all these have on the market? Wiki lists comair fleet size as "74" and "15 CRJ700" and "5 CRJ900" ? What are the staus of those planes?
Well you are right in saying new strategies pop up, but I really don't see how 1: using 50 seaters and 2: going primarily against WN in P2P routes would work since trends have shown that these two ideas don't seem to work. I have no figures or anything to back what I'm saying up, but you can just look at the airlines now to see what they are doing... although they may mismanage at times, the airlines know the airline business best, and they all seem to be going away from 50 seaters and picking their fights with LCCs (at hubs and away from most P2P routes)
seabosdca From United States of America, joined Sep 2007, 4277 posts, RR: 4 Reply 27, posted (8 months 6 days 19 hours ago) and read 5076 times:
Quoting JA (Reply 19): The BWI plan would include a plan to put in premium rail service every 20-30 minutes directly to Union Station and New Carrollton. Amtrak does the trip in 22 minutes. Two train sets would make a 30 minute schedule. MARC would operate it at a premium fare (about $10-12). It isn't that hard to do, particularly outside the peak rush hour. During rush hour, there are tons of trains already.
First, it's still no DCA. From the airport, you have to get on a crowded bus and ride 10-12 minutes even to get to the train station, and then you end up at Union Station which is not close to where you want to be unless you happen to be doing Hill business.
Second, MARC is having trouble obtaining enough revenue to operate its current trains, let alone adding a bunch of new airport-only trains that would not come close to breaking even.
Quoting JA (Reply 19): ather, you let WN fill up on low fares until you reach the RJ break even number and then you match them from there.
If it were that easy, there would be giant fleets of 50-seaters buzzing all over everywhere in the country with even a splash of business travel activity.
But it's just not that easy. WN (or any other large-aircraft competitor) can easily absorb lowering fares temporarily to capture even the business travelers for long enough to bleed an RJ operator out of money. The 50-seater makes it impossible to engage in a fare war... which will inevitably happen if you attack an incumbent on its home turf.
Many, many operators have actually discovered this in recent years. Think about DL's painful experience in Los Angeles, a very good example, and you get the picture.
Most gorgeous aircraft: Tu-204-300, 757-200, A330-200, 777-200LR, 787-8
MSY, JAX, MCI, BUF are on my list. I haven't run these markets in my profit/loss spreadsheet yet, but I'll get to them. YUL is interesting, as is HPN and ISP, but I'm not sure DL would be up for RDU flights from HPN and ISP.
MSY - 199 pax
JAX - 99
MCI - 234
BUF - 148
The model I built will penalize MCI unless the fares are very good, much as fuel generally hits routes over 750 miles pretty hard.
JA From United States of America, joined Dec 2004, 513 posts, RR: 1 Reply 29, posted (8 months 6 days 19 hours ago) and read 5033 times:
Quoting seabosdca (Reply 27): Second, MARC is having trouble obtaining enough revenue to operate its current trains, let alone adding a bunch of new airport-only trains that would not come close to breaking even.
MARC would make money at $10 per passenger. I don't claim DCA is good enough for everyone, but there is lots of business traffic that is going through it right now.
Quoting seabosdca (Reply 27): If it were that easy, there would be giant fleets of 50-seaters buzzing all over everywhere in the country with even a splash of business travel activity.
But it's just not that easy. WN (or any other large-aircraft competitor) can easily absorb lowering fares temporarily to capture even the business travelers for long enough to bleed an RJ operator out of money. The 50-seater makes it impossible to engage in a fare war... which will inevitably happen if you attack an incumbent on its home turf.
Many, many operators have actually discovered this in recent years. Think about DL's painful experience in Los Angeles, a very good example, and you get the picture.
WN does not want to lose money right now. Digesting another carrier is expensive. DL is positioned very differently now than in 2008. In addition, WN's fares are at least 20% higher now than in 2008 in most markets. The idea is not to engage in a fare war. The idea is to recapture business traffic under the WN fare structure. The vast majority of the markets listed for BWI passed a special profit/loss test that assumes 70% load factor at the lowest average fare in the market and no connections. It is why DL isn't panicked about WN metal in ATL. They know that WN is going to raise FL's fares to something that DL can make money at. WN's powder is largely being used in DEN.
PHX787 From Japan, joined Mar 2012, 4954 posts, RR: 15 Reply 30, posted (8 months 6 days 15 hours ago) and read 4160 times:
Quoting JA (Reply 21): I have actually contacted DL about Comair.
I would like to know what they said.
Also I would like to point out this: Comair is a Cincinnati airline. There's no way THEIR brass is gonna want to move away from CVG. You all need to take this into consideration.
OH was founded after de-reg which left a huge hole in CVG, a hole which OH filled, and which DL bought. Now the hole is back, and the people at CVG are scrambling to figure out what defines "profitability" for themselves and trying to get DL or other airlines to continue their routes to CVG (or with other airlines, ADD routes) despite the airline's notion of profitability.
Be that so, route planning falls solely on DL.
There's your brief history of OH.
Now you intend to take OH (Ohio, remember) and turn it into some WN thing? from STL? It's not making too much sense to me.
edit: Cincinnatians also aren't gonna like the fact that their Cincinnati airline is going to their arch-rival city, STL
xdlx From United States of America, joined Aug 2008, 532 posts, RR: 1 Reply 31, posted (8 months 6 days 13 hours ago) and read 3508 times:
With all due respect..... OH is a success story for commuter-regional airline.
Its demise is directly related to SCOPE & the inability to secure 70-90 seat flying in a competitive enviroment.
Their crews are top notch and experienced. But the marketplace disregards those accolades in favor to lower cost and wages.
No reason to spin this around....... I have many friends in OH and feel for them! But they are leaving the industry
with their head high and so they should. They where a very important part of DL history in CVG.
Good luck my OH friends.......Best paid til last day!
Polot From United States of America, joined Jul 2011, 1497 posts, RR: 0 Reply 33, posted (8 months 6 days 13 hours ago) and read 3189 times:
Quoting JA (Reply 29): MARC would make money at $10 per passenger. I don't claim DCA is good enough for everyone, but there is lots of business traffic that is going through it right now.
So assuming that every Comair flight is full and every passenger is using MARC that is only $500 a plane...no where near enough to support new trains/lines.
Quoting JA (Reply 29): WN does not want to lose money right now. Digesting another carrier is expensive.
They don't want to lose money right now...no carrier ever does. But that is different that deluding yourself into thinking they aren't willing to get in a turf war with another carrier. Especially one that would be easy to squash as this one.
Quoting JA (Reply 29): In addition, WN's fares are at least 20% higher now than in 2008 in most markets. The idea is not to engage in a fare war. The idea is to recapture business traffic under the WN fare structure.
But why would a business traveler chose Comair over WN if they are the same price? Why would I choose an airline with a limited network and limited frequency in cramped, uncomfortable CRJ-200s when I can fly 737s that have more legroom on a carrier with a good domestic network?
You also must have contingencies in place. What if WN DOES lower its fares in a fare war, how will your airline survive? To run a successful business you need to think of all the worse possible scenarios and how your business will over come them if they come into fruition. You can't just ignore them and only think of sunshine and flowers and think everything is going to be all right with your airline.
People care about value in the end, not just price. I get more for my money with WN than this Comair...what is Comair's hook? Other airlines have TVs or more legroom to help attract passengers at higher fares, all this airline has different is that it is using 50 seat jets, which generally are not the most popular jets among passengers.
FlyPNS1 From United States of America, joined Nov 1999, 6049 posts, RR: 25 Reply 34, posted (8 months 6 days 12 hours ago) and read 3058 times:
Even if the economics of your plan worked (and I don't think they do), you are ignoring a few other factors. Business travelers HATE the CRJ200. They are cramped, miserable planes to fly in. The customer service level is just poor. Two, DL has already tried a vast array of P2P RJ routes and they've perpetually failed. So why would yours be any different?
Quoting JA (Reply 19): We haven't even discussed the potential S-curve effects yet.
The "S-curve" effect is a nice sales pitch from a consulting firm, but reality is quite different. Remember, when DL claimed S-curve economics would allow them to add all these new routes from PIT, STL, CMH and RDU. Here we are three years later and those markets have little to show for it.
Quoting JA (Reply 29): WN does not want to lose money right now.
For the small number of routes you are talking about, WN could easily engage in a fare war. A bunch of $39 specials and the RJ's would be in big trouble.
Quoting JA (Reply 23): WN has the highest large aircraft unit costs in the industry
False. The fact that you believe this concerns me about the analysis you are doing for the OH CRJ's. While WN does have the highest labor costs, the overall costs at WN are lower than the legacy carriers by a decent margin.
toltommy From United States of America, joined Dec 2003, 3220 posts, RR: 4 Reply 36, posted (8 months 6 days 12 hours ago) and read 2952 times:
Quoting FlyPNS1 (Reply 34): While WN does have the highest labor costs, the overall costs at WN are lower than the legacy carriers by a decent margin.
I believe this "plan" would leave the new Comair with even higher costs. The only employees left now are the most expensive, most senior. Passengers have shown repeatedly that they are not willing to pay a fare that reflects the cost of such experience. WN now has some of the highest labor costs in the industry (which I believe will come back to haunt them within 5 years), but at least for now they can still spread the cost over a much larger passenger base. Your plan cannot. You'd be better off buying the certificate, and starting a new carrier. But your plan really doesn't support that either. CVG currently has the air service it can support. Cinci-tuckians still think the airport should have 500 daily flights to 150 cities. Those days are over.
Goldenshield From United States of America, joined Jan 2001, 5427 posts, RR: 12 Reply 37, posted (8 months 6 days 12 hours ago) and read 2934 times:
Quoting xjramper (Reply 6): They tried it again with OO and their contract with OO was terminated prematurely, although I suspect that had something to do with the WN takeover but money loss was a definite factor as well.
It was 100% to do with the WN takeover. If there was any money to lose, it was OO's. Mum's the word on the financials on that operation, but management seemed to be pleased.
Two all beef patties, special sauce, lettuce, cheese, pickles, onions on a sesame seed bun.
HOMsAR From United States of America, joined Jan 2010, 802 posts, RR: 0 Reply 38, posted (8 months 6 days 12 hours ago) and read 2817 times:
Quoting JA (Reply 19): Has anyone done the math regarding 50 seaters? The system cost (all in) is around $3,000 per hour. That is around $65 per hour per seat in a 46 seat configuration. Has anyone seen the WN fares lately? More than 50% of the WN fares being sold work on an RJ. The idea that RJs would get creamed by WN is ridiculous. Rather, you let WN fill up on low fares until you reach the RJ break even number and then you match them from there.
If CRJs are so cheap to operate that you could make a profit charging fares starting at just over $65/hour/seat, then why aren't existing regional airlines swimming in money? Typical RJ flights (and, granted, I don't have exact numbers in front of me) generally run far higher than that (heck, typical LCC flights tend to run higher than that unless you're talking bottom-of-the-barrel Spirit fares or something like that). Yet, despite the (supposed) low cost, airlines left and right are trying to dump these planes like a bad date.
So, either the airlines (which have direct, everyday experience operating these planes and are intimately familiar with the costs involved) are doing it wrong, or there's something wrong with your math. Which do you think is more likely?
That's not to say that there isn't something out there that every airline has missed (new things are thought of every day), but I really don't think it's as simple as you make it out to be.
Quoting JA (Reply 19): DCA has rail access. The Metro is a big part of why DCA is the preferred airport. Everyone cannot fly through DCA (even if the perimeter restrictions are lifted). The BWI plan would include a plan to put in premium rail service every 20-30 minutes directly to Union Station and New Carrollton. Amtrak does the trip in 22 minutes. Two train sets would make a 30 minute schedule. MARC would operate it at a premium fare (about $10-12). It isn't that hard to do, particularly outside the peak rush hour. During rush hour, there are tons of trains already.
You're assuming Amtrak would be okay with adding all that service to their railroad (it's pretty congested during peak times).
Turning at BWI would complicate things even further, as you'd tie up far more track than normal (sitting at the station for 8 minutes, then changing ends and heading out, preventing any other trains from moving in your direction until you've cleared the interlocking). Maybe if you built an extra track and platform, but now you're talking hundreds of millions in investment.
Others have mentioned the shuttle bus from BWI to the rail station, which is the most annoying part of the transfer, so you'd have to spend a bunch to add more shuttles.
All this for what amounts to 15x46 passengers per day. That's 690 people flying into BWI on this new Comair. Not all of whom would even be going to DC.
Granted, other airline passengers could also use this service. But still, besides the capacity issue, if there were a profit to be had by running more frequent Union Station-BWI service, between MARC and Amtrak they'd already be doing it.
JA From United States of America, joined Dec 2004, 513 posts, RR: 1 Reply 40, posted (8 months 6 days 4 hours ago) and read 2274 times:
Quoting Polot (Reply 33): But why would a business traveler chose Comair over WN if they are the same price? Why would I choose an airline with a limited network and limited frequency in cramped, uncomfortable CRJ-200s when I can fly 737s that have more legroom on a carrier with a good domestic network?
You would have to make the case that WN's network is better than DL's network (as OH would be codesharing with DL). I would disagree with you. You would also have to make the case that a CRJ200 with 46 seats (which would be the new configuration) would have less legroom than a WN 737. They would end up being about the same (33-34 inches).
Quoting Polot (Reply 33): What if WN DOES lower its fares in a fare war, how will your airline survive? To run a successful business you need to think of all the worse possible scenarios and how your business will over come them if they come into fruition. You can't just ignore them and only think of sunshine and flowers and think everything is going to be all right with your airline.
I don't see WN cutting their fares by 30% in BWI...or anywhere else for that matter. That is approximately what it would take to make the business not worth doing. WN also initiated a fare increase on both 8/17 and 9/14 and was matched.
Quoting FlyPNS1 (Reply 34): Two, DL has already tried a vast array of P2P RJ routes and they've perpetually failed. So why would yours be any different?
In many of those markets, the average fare was too high. Some of the RDU point to point markets saw 20% average fare increases. My plan is based on running at existing fares.
Quoting FlyPNS1 (Reply 34): The "S-curve" effect is a nice sales pitch from a consulting firm, but reality is quite different. Remember, when DL claimed S-curve economics would allow them to add all these new routes from PIT, STL, CMH and RDU. Here we are three years later and those markets have little to show for it.
Critical mass. S-curve economics is based on a certain amount of critical mass. Token additions do not cut it. RDU seems to have gained some traction as two of the point to points were saved due to customer outcry. STL has a ton of DL service already and it would not take much to make it a focus city. In fact, DL was looking at 80-100 flights two years ago.
Quoting HOMsAR (Reply 38): If CRJs are so cheap to operate that you could make a profit charging fares starting at just over $65/hour/seat, then why aren't existing regional airlines swimming in money?
The major keeps it through CPA agreements. The BTS data is there if you want to verify the numbers.
Polot From United States of America, joined Jul 2011, 1497 posts, RR: 0 Reply 41, posted (8 months 6 days 4 hours ago) and read 2242 times:
Quoting JA (Reply 40): You would have to make the case that WN's network is better than DL's network (as OH would be codesharing with DL).
So why would Delta go through all this trouble just to keep Comair alive? Why take the planes from Skywest and give them to Comair when they can just have Skywest fly the routes if they think they can make so much money on them? Then Delta can not only reap these supposedly huge profits but also wash its hands with all the troubles that is involved with owning a regional. If the BWI/DC business traveler was such a huge untapped market why did DL get rid of most of its DCA's slots? DCA is by far the preferred airport for business travelers in the region.
Quoting JA (Reply 40): You would also have to make the case that a CRJ200 with 46 seats (which would be the new configuration) would have less legroom than a WN 737. They would end up being about the same (33-34 inches).
So you are making the CRJ's already poor economics even worse. And reducing the number of seats by 4 is going to do little to make a CRJ attractive compared to a 737 to me and most other people. There are fundamental problems with the passenger experience of the CRJ-200 that cannot be easily fixed (which is something Bombardier recognized and improved with the CRJ-700/900).
Quoting JA (Reply 40): I don't see WN cutting their fares by 30% in BWI...or anywhere else for that matter. That is approximately what it would take to make the business not worth doing. WN also initiated a fare increase on both 8/17 and 9/14 and was matched.
You don't see it, but what if they surprise you? Your Comair is then SOL. WN doesn't need to cut all their fares by 30%, just on the flights that Comair would directly compete with.
Quoting JA (Reply 40): In many of those markets, the average fare was too high. Some of the RDU point to point markets saw 20% average fare increases. My plan is based on running at existing fares.
How do you know that the average fare is too high? Maybe the average fare was too low and nobody was making money until the fare increase.
Quoting JA (Reply 40): Critical mass. S-curve economics is based on a certain amount of critical mass. Token additions do not cut it. RDU seems to have gained some traction as two of the point to points were saved due to customer outcry. STL has a ton of DL service already and it would not take much to make it a focus city. In fact, DL was looking at 80-100 flights two years ago.
Ok, but why does DL need OH to do this? Why not have its remaining partners do the increased flying?
You are just looking for an excuse to keep OH around. DL (rightfully) does not care about OH's heritage, everything you suggested could easily be done by DL without OH around if they actually saw money in it.
usflyer msp From United States of America, joined May 2000, 1785 posts, RR: 0 Reply 42, posted (8 months 6 days 4 hours ago) and read 2239 times:
Quoting JA (Reply 40): I don't see WN cutting their fares by 30% in BWI...or anywhere else for that matter. That is approximately what it would take to make the business not worth doing. WN also initiated a fare increase on both 8/17 and 9/14 and was matched.
A 30% fare cut is very easy to justify if it means getting rid of your competition.
Your entire business proposition seems to based upon some fictional world where airlines do not react to one another. OH does not exist in a vacuum and would be subject to a severe reality check if it ever tried this plan.
steex From United States of America, joined Jun 2007, 1423 posts, RR: 9 Reply 43, posted (8 months 6 days 4 hours ago) and read 2239 times:
Quoting JA (Reply 19): The system cost (all in) is around $3,000 per hour.
Could you provide a breakdown of what these costs include? I'm just curious where the number comes from as I've certainly not done the research that you have.
Quoting JA (Reply 40): You would have to make the case that WN's network is better than DL's network (as OH would be codesharing with DL). I would disagree with you. You would also have to make the case that a CRJ200 with 46 seats (which would be the new configuration) would have less legroom than a WN 737. They would end up being about the same (33-34 inches).
For most fliers in the cities you target, it's not difficult to make the case that WN has the better network. Not everyone in STL (for example) is looking to have the world in their reach with one stop, some are just looking to have major domestic markets in their reach non-stop with reasonable fares. Note that "reasonable fares" doesn't always mean cheapest, either - many travelers, especially business travelers, will pay some premium to fly WN because of the inherent flexibility their tickets provide.
Also, legroom isn't the sole reason people find the CRJ uncomfortable. You could put only four seats on a CRJ, and if they were placed 2-2 in a single row such that I would have to try to share my shoulder room with another person, I would still avoid that plane like the plague.
JA From United States of America, joined Dec 2004, 513 posts, RR: 1 Reply 44, posted (8 months 6 days 4 hours ago) and read 2222 times:
Quoting HOMsAR (Reply 38): You're assuming Amtrak would be okay with adding all that service to their railroad (it's pretty congested during peak times).
Amtrak operates the Penn Line under contract. They would try to fit it in. The chokepoint is actually Union Station itself.
Quoting HOMsAR (Reply 38): So, either the airlines (which have direct, everyday experience operating these planes and are intimately familiar with the costs involved) are doing it wrong, or there's something wrong with your math. Which do you think is more likely?
That's not to say that there isn't something out there that every airline has missed (new things are thought of every day), but I really don't think it's as simple as you make it out to be.
It isn't a matter of "simplicity". The conventional wisdom is often the path of least resistance. No major airline has to make 50 seaters work. They can simply abandon markets that need anything smaller than 70 seats. This improves the performance of the airline that drops the markets and increases the pricing power of those that remain. In the short term, both paths are viable, but one is harder than the other. As with the gas guzzling MD80s, there are people who would choose to make the 50 seater work. I believe the planes can work when backed by a solid network. The fact that majors CHOOSE not to make it work is of no consequence to me.
Polot From United States of America, joined Jul 2011, 1497 posts, RR: 0 Reply 45, posted (8 months 6 days 3 hours ago) and read 2188 times:
Quoting JA (Reply 44): As with the gas guzzling MD80s, there are people who would choose to make the 50 seater work.
Well where are they? There are several airlines who would love to have them. People are quickly turning their back on the MD-80 too...don't forget Allegiant's recent A319 announcement.
JA From United States of America, joined Dec 2004, 513 posts, RR: 1 Reply 46, posted (8 months 6 days 3 hours ago) and read 2191 times:
Quoting Polot (Reply 41): So why would Delta go through all this trouble just to keep Comair alive?
Who said anything about DL doing this? I am proposing that an independent Comair do this.
Quoting Polot (Reply 41): If the BWI/DC business traveler was such a huge untapped market why did DL get rid of most of its DCA's slots?
NYC is a bigger market. The swap was a no brainer. Life is all about tradeoffs.
Quoting usflyer msp (Reply 42): Your entire business proposition seems to based upon some fictional world where airlines do not react to one another. OH does not exist in a vacuum and would be subject to a severe reality check if it ever tried this plan.
Retaliation is a fact of life in transportation. I get threatened a lot. No one fights you if they aren't making money there. This isn't the first time I have tried this. The only difference between aviation and ground transportation is that people tend to use death threats and violence much more frequently on the ground. So, if the main premise is that WN goes nuclear, you have to do better than that.
Quoting Polot (Reply 41): How do you know that the average fare is too high?
The market usually tells you.
Quoting steex (Reply 43): Not everyone in STL (for example) is looking to have the world in their reach with one stop, some are just looking to have major domestic markets in their reach non-stop with reasonable fares. Note that "reasonable fares" doesn't always mean cheapest, either - many travelers, especially business travelers, will pay some premium to fly WN because of the inherent flexibility their tickets provide.
You are 100% correct. In a large number of markets, WN has the better network because they have substantially more point to point flights. The plan is simply to provide similar connectivity using an independent OH under the DL code. My premise is simply that by providing more point to point flights, the DL network will become an option for more itineraries at no additional cost to DL. That is the entire premise of the plan.
Quoting steex (Reply 43): Also, legroom isn't the sole reason people find the CRJ uncomfortable. You could put only four seats on a CRJ, and if they were placed 2-2 in a single row such that I would have to try to share my shoulder room with another person, I would still avoid that plane like the plague.
I think people will tolerate CRJ200s (in general) to save time. I am sure that when the choir begins singing that 70 seaters are tough to make money with, OH can simply upgauge.
Polot From United States of America, joined Jul 2011, 1497 posts, RR: 0 Reply 47, posted (8 months 6 days 3 hours ago) and read 2185 times:
Quoting JA (Reply 46): Who said anything about DL doing this? I am proposing that an independent Comair do this.
You did. In fact in your very first post you suggest OH take Delta owned CRJs from Skywest. You are also trying to argue that this new Comair will be fine because it will have access to Delta's network. Why would Delta allow that but not have the flying under the Delta Connection banner? You are now creating a competitor to Delta and Delta Connection. So in addition to WN trying to squash you you will have DL too.
Quoting JA (Reply 46): The market usually tells you.
I can fly BZN- MCN and have completely full planes if I price it right. What does that tell you?
Quoting JA (Reply 46): The plan is simply to provide similar connectivity using an independent OH under the DL code. My premise is simply that by providing more point to point flights, the DL network will become an option for more itineraries at no additional cost to DL. That is the entire premise of the plan.
Again, why would Delta allow this? You are just creating a new competitor for DL that can leech off their network. If DL wants this flying it will have it done under the Delta Connection brands. Whats the point of having an independent OH if Skywest, Republic, or someone else can do the flying too?
usflyer msp From United States of America, joined May 2000, 1785 posts, RR: 0 Reply 48, posted (8 months 6 days 3 hours ago) and read 2183 times:
Quoting JA (Reply 46): Retaliation is a fact of life in transportation. I get threatened a lot. No one fights you if they aren't making money there. This isn't the first time I have tried this. The only difference between aviation and ground transportation is that people tend to use death threats and violence much more frequently on the ground. So, if the main premise is that WN goes nuclear, you have to do better than that.
JA From United States of America, joined Dec 2004, 513 posts, RR: 1 Reply 49, posted (8 months 6 days 3 hours ago) and read 2173 times:
Quoting Polot (Reply 45): People are quickly turning their back on the MD-80 too...don't forget Allegiant's recent A319 announcement.
People have turned their back on the MD-80 for 10 years now. How do you think Allegiant got theirs at the price they got them? No plane lasts forever, but the MD-80 continues to be commercially viable 10 years after the conventional wisdom said they were not. The Allegiant management made them work. All planes have missions and sometimes, the mission assigned isn't right for the plane. If you go to a cornerstone strategy, the 50 seater does not work as well. The strength of the 50 seater may not be the strength of your airline. Therein lies the rub. The 50 seater is no longer the best plane to run hub and spoke. If you are a hub and spoke airline, this could be an issue.
However, a point to point structure is different. The plane can do that just fine.
JA From United States of America, joined Dec 2004, 513 posts, RR: 1 Reply 50, posted (8 months 6 days 3 hours ago) and read 2147 times:
Quoting Polot (Reply 47): You did. In fact in your very first post you suggest OH take Delta owned CRJs from Skywest. You are also trying to argue that this new Comair will be fine because it will have access to Delta's network. Why would Delta allow that but not have the flying under the Delta Connection banner? You are now creating a competitor to Delta and Delta Connection. So in addition to WN trying to squash you you will have DL too.
Correct, because those planes would otherwise be parked. I did not say that DL would actually continue to run OH.
I have been clear that this would be independently run from the beginning.
Why wouldn't DL allow this? They are ceding much of this traffic to WN now. Do you realize that DL gets a cut of pro-rate flights too without any expenses? That is like saying that Midway was a competitor to AA at RDU. That isn't sensible.
steex From United States of America, joined Jun 2007, 1423 posts, RR: 9 Reply 51, posted (8 months 6 days 3 hours ago) and read 2136 times:
Quoting JA (Reply 46): I think people will tolerate CRJ200s (in general) to save time. I am sure that when the choir begins singing that 70 seaters are tough to make money with, OH can simply upgauge.
Keep in mind you wouldn't be saving people time, though. You'll be competing head-to-head with WN on routes they also do non-stop, so you need to differentiate by price and product. I think both will be very difficult due to the scale involved.
Quoting JA (Reply 46): Who said anything about DL doing this? I am proposing that an independent Comair do this.
I think the issue is that Comair, operating as a standalone carrier, will have every bit as much difficulty luring customers as standalone ExpressJet did. Note that most of ExpressJet's successful routes were unique services with no head-to-head competition. And given the lack of FF benefits and the like, Comair would not lure many passengers away from WN.
That means the new Comair would be extremely reliant on the Delta codeshare. Since DL would be selling the tickets, they'll slice off a piece of the income for each ticket, and make the margins even tighter for Comair.
I'm also a little dubious of that $3,000 per hour number. I feel like that will be low once you include all the extra expenses that will come along with no longer relying on Delta to provide the route analysis, reservations systems, phone operators, etc.
DeltaMD90 From United States of America, joined Apr 2008, 5297 posts, RR: 48 Reply 52, posted (8 months 6 days 3 hours ago) and read 2112 times:
Quoting JA (Reply 46): Quoting Polot (Reply 41):
So why would Delta go through all this trouble just to keep Comair alive?
Who said anything about DL doing this? I am proposing that an independent Comair do this.
It is DL doing this because OH is DL. If DL frees OH from itself then DL essentially loses a part of itself, the other part which will crash and burn after WN kicks its ***. In the end, DL will lose money
You still haven't demonstrated to us why you, some random guy on the internet, has the *answer* that all these other airlines failed to figure out. It's not as if it's a revolutionary concept either, it's been tried before, and doesn't work. It's all based on some fuzzy math that you don't show us and the assumption that WN "won't fight back and if they do, don't worry they won't." I'm still at a loss at what's going to be different with your plan.
Polot From United States of America, joined Jul 2011, 1497 posts, RR: 0 Reply 53, posted (8 months 6 days 3 hours ago) and read 2111 times:
Quoting JA (Reply 50): Do you realize that DL gets a cut of pro-rate flights too without any expenses? That is like saying that Midway was a competitor to AA at RDU. That isn't sensible.
Actually in pro-rate flying DL would get no cut, the regional airline pays all the costs and gets all the operating income. That is why it is pro-rate. In exchange the regional gets Delta's name and marketing force behind it. Pro-rating already occurs with regional. What is going to be different about this OH versus the pro-rate flying that Skywest does or has done, for example.
JA From United States of America, joined Dec 2004, 513 posts, RR: 1 Reply 54, posted (8 months 6 days 3 hours ago) and read 2101 times:
Quoting steex (Reply 51): That means the new Comair would be extremely reliant on the Delta codeshare. Since DL would be selling the tickets, they'll slice off a piece of the income for each ticket, and make the margins even tighter for Comair.
Would you pay DL for instant visibility? I certainly would.
Polot From United States of America, joined Jul 2011, 1497 posts, RR: 0 Reply 55, posted (8 months 6 days 3 hours ago) and read 2079 times:
Quoting JA (Reply 54): Would you pay DL for instant visibility? I certainly would.
So now is this "independent" Comair is flying with Delta branding (under the connection banner). How are they different from Skywest, ASA, Republic etc? They are not going to be any more independent than they are. Tell me again, why would DL give its planes to an independent Comair over Skywest?
JA From United States of America, joined Dec 2004, 513 posts, RR: 1 Reply 56, posted (8 months 6 days 2 hours ago) and read 2058 times:
Quoting DeltaMD90 (Reply 52): It's not as if it's a revolutionary concept either, it's been tried before, and doesn't work. It's all based on some fuzzy math that you don't show us and the assumption that WN "won't fight back and if they do, don't worry they won't." I'm still at a loss at what's going to be different with your plan.
Please provide us with an example of a 50 seat point to point operation with a major carrier codeshare that failed while still under that codeshare. Only one comes to mind: ExpressJet & DL in LAX. Do you know of any others?
Quoting Polot (Reply 53): In exchange the regional gets Delta's name and marketing force behind it. Pro-rating already occurs with regional. What is going to be different about this OH versus the pro-rate flying that Skywest does or has done, for example.
Which is paid for with a fee. Hence, DL's cut. All the local revenue belongs to the operating carrier, while connection revenue is split. You still pay the major a "marketing" or similar fee for the local passenger. It would be set up similarly to what Skywest does now.
DeltaMD90 From United States of America, joined Apr 2008, 5297 posts, RR: 48 Reply 57, posted (8 months 6 days 2 hours ago) and read 2042 times:
Quoting JA (Reply 56): Please provide us with an example of a 50 seat point to point operation with a major carrier codeshare that failed while still under that codeshare. Only one comes to mind: ExpressJet & DL in LAX. Do you know of any others?
ExpressJet was a full fledged failure and didn't really surprise anyone.
DL has tried this at MCO, RDU, LAX, and MIA to name a few.
Polot From United States of America, joined Jul 2011, 1497 posts, RR: 0 Reply 58, posted (8 months 6 days 2 hours ago) and read 2034 times:
Quoting JA (Reply 56): It would be set up similarly to what Skywest does now.
EXACTLY! That is what I have wanted you to say for the past hour. Now you have to explain to us why this independent Comair would be better than what Skywest or any other regional can do. Especially since you also want them to rip out 4 seats that could be filled with fare-paying passengers.
steex From United States of America, joined Jun 2007, 1423 posts, RR: 9 Reply 59, posted (8 months 6 days 2 hours ago) and read 2033 times:
Quoting JA (Reply 54): Would you pay DL for instant visibility? I certainly would.
Well, I wouldn't try to operate 46-seat regional jets in head-to-head competition as an upstart niche operator against WN, so I'm probably not the right guy to ask.
My point is that the additional costs of being a standalone RJ-only without a per departure guarantee make margins pretty tight to start with, which isn't helped by then relying on Delta to actually provide all of the customers while taking a share of the revenue. The codeshare deal would need to benefit Delta substantially or it wouldn't be worth their effort, they could just as easily refuse and instead capture those who insist on flying DL via connections.
I'll be honest, I'm just generally skeptical about the plan. The suggestion is that the majors could make money using their regionals to fly these routes, but don't want to go to the effort. The problem is that they obviously see that potential flying as less profitable than what they are currently doing, otherwise they would do it - they're never too lazy to make more money. Now, if an unaffiliated competitor comes in, those majors will suddenly have a vested interest in squashing that competition who wants to steal their revenue. In that sense, it obviously won't just be WN vs. OH, all of the carriers will realize that a reasonable application of pressure will make it possible to kill the new OH.
JA From United States of America, joined Dec 2004, 513 posts, RR: 1 Reply 60, posted (8 months 6 days 2 hours ago) and read 2033 times:
Quoting Polot (Reply 55): So now is this "independent" Comair is flying with Delta branding (under the connection banner). How are they different from Skywest, ASA, Republic etc? They are not going to be any more independent than they are. Tell me again, why would DL give its planes to an independent Comair over Skywest?
Instead of going to be parked, I am proposing that they be leased to an independent Comair for flying under a codeshare (pro-rate). So, the agreement would be similar to what Skywest does now in certain markets. US does this at PIT with Trans States. Trans States runs a few routes with decent O/D that are remnants from the former hub. I don't share the opinion that DL would see this as competition for them.
usflyer msp From United States of America, joined May 2000, 1785 posts, RR: 0 Reply 61, posted (8 months 6 days 2 hours ago) and read 2036 times:
Quoting JA (Reply 56): Please provide us with an example of a 50 seat point to point operation with a major carrier codeshare that failed while still under that codeshare. Only one comes to mind: ExpressJet & DL in LAX. Do you know of any others?
AA @ RDU & BOS
US @ LGA & BOS
DL/NW @ LAX, MCO, TPA, MKE, IND, STL, RDU
UA @ SAT
I suggest you take a close look at the Trans States/UA experience at SAT. I think that is the closest to what you are proposing.
Instead of going to be parked, I am proposing that they be leased to an independent Comair for flying under a codeshare (pro-rate). So, the agreement would be similar to what Skywest does now in certain markets. US does this at PIT with Trans States. Trans States runs a few routes with decent O/D that are remnants from the former hub. I don't share the opinion that DL would see this as competition for them.
Then you shouldn't be writing to DL. You should be writing to investors that are willing to buy/lease these CRJs and do your plan. I'm sure DL has 0 objectives with some investors buying the planes and flying suicidal routes as long as DL gets their due money. I'm sure DL would even let them have the OH name.
Polot From United States of America, joined Jul 2011, 1497 posts, RR: 0 Reply 63, posted (8 months 6 days 2 hours ago) and read 1991 times:
Quoting DeltaMD90 (Reply 62): Then you shouldn't be writing to DL. You should be writing to investors that are willing to buy/lease these CRJs and do your plan. I'm sure DL has 0 objectives with some investors buying the planes and flying suicidal routes as long as DL gets their due money. I'm sure DL would even let them have the OH name.
Its not like the OH shut down came as some huge surprise. DL has been trying to unload OH for years but no one was biting.
JA From United States of America, joined Dec 2004, 513 posts, RR: 1 Reply 64, posted (8 months 6 days 2 hours ago) and read 1980 times:
Quoting steex (Reply 59): Well, I wouldn't try to operate 46-seat regional jets in head-to-head competition as an upstart niche operator against WN, so I'm probably not the right guy to ask.
Since you seem to understand what I am trying to do (even though you are skeptical), I am grateful for that.
Quoting Polot (Reply 58): EXACTLY! That is what I have wanted you to say for the past hour. Now you have to explain to us why this independent Comair would be better than what Skywest or any other regional can do.
Everyone else would want DL to guarantee the risk here. Regionals like flying under contract. This is pro-rate flying.
Quoting DeltaMD90 (Reply 57): ExpressJet was a full fledged failure and didn't really surprise anyone.
You are aware of that tiny little fuel spike we had in summer 2008, correct? The little fuel spike that made the industry collectively groan.
I hear echoes of the following again:
I don't think JetBlue has a better chance of being profitable than 100 other predecessors with new airplanes, new employees, low fares, all touchy-feely ... all of them are losers. Most of these guys are smoking ragweed.
— Gordon Bethune, Continental Airlines CEO, Time magazine, June 2002.
Quoting steex (Reply 59): The problem is that they obviously see that potential flying as less profitable than what they are currently doing, otherwise they would do it - they're never too lazy to make more money.
Which is why I would not expect them to do it themselves, but to consider letting someone else do it at that person's expense. It may not meet Delta's ROI targets in-house, but they may let OH do it on their own.
Quoting steex (Reply 59): In that sense, it obviously won't just be WN vs. OH, all of the carriers will realize that a reasonable application of pressure will make it possible to kill the new OH.
It is certainly possible, but I would argue again that fear of a competitive response is NOT a good reason not to do this. The underlying fundamentals are pretty sound. The people who swear that I am using controlled substances have not yet run the numbers on this. Who went nuclear on XE at LAX? There was a competitive response, but I don't recall it being thermonuclear. DL at MCO/RDU/MIA? Who went nuts at point to point 50 seat RJs? American's response in MIA was a token response.
Polot From United States of America, joined Jul 2011, 1497 posts, RR: 0 Reply 65, posted (8 months 6 days 2 hours ago) and read 1976 times:
Quoting JA (Reply 64): It is certainly possible, but I would argue again that fear of a competitive response is NOT a good reason not to do this. The underlying fundamentals are pretty sound. The people who swear that I am using controlled substances have not yet run the numbers on this. Who went nuclear on XE at LAX? There was a competitive response, but I don't recall it being thermonuclear. DL at MCO/RDU/MIA? Who went nuts at point to point 50 seat RJs? American's response in MIA was a token response.
Not exactly the most reassuring comment. You are saying we shouldn't fear a competitive response...and then give us plenty of examples of flying that failed despite the lack of a major competitive response.
steex From United States of America, joined Jun 2007, 1423 posts, RR: 9 Reply 66, posted (8 months 6 days 2 hours ago) and read 1966 times:
Quoting JA (Reply 64): The people who swear that I am using controlled substances have not yet run the numbers on this. Who went nuclear on XE at LAX? There was a competitive response, but I don't recall it being thermonuclear. DL at MCO/RDU/MIA? Who went nuts at point to point 50 seat RJs? American's response in MIA was a token response.
In fairness, I don't believe anyone thinks that there will be a nuclear response, you're adding that hyperbole.
However, I'd expect those people's response is that nobody actually needed to have a "nuclear" response in order for every single one of the operations you mention to fail, and in turn it seems (at least on the surface) naive to expect a different outcome for this proposed venture. It seems like, as with those operations, a moderate effort to match prices by WN and the other majors could be enough to render this operation unprofitable.
JA From United States of America, joined Dec 2004, 513 posts, RR: 1 Reply 67, posted (8 months 6 days 2 hours ago) and read 1964 times:
Quoting DeltaMD90 (Reply 62): You should be writing to investors that are willing to buy/lease these CRJs and do your plan.
Who owns the certificate? Who needs to preserve the certificate in order for it to be worth anything? Who would be in charge of authorizing pro-rate flying? Who has planes on the certificate right now?
That is why I wrote to them first. I understand that you find this proposal to be illogical, but there IS a logic to this process. My hope is that the only people that find this logical work at DL and that is my expectation.
Polot From United States of America, joined Jul 2011, 1497 posts, RR: 0 Reply 68, posted (8 months 6 days 2 hours ago) and read 1938 times:
Quoting JA (Reply 67): That is why I wrote to them first. I understand that you find this proposal to be illogical, but there IS a logic to this process. My hope is that the only people that find this logical work at DL and that is my expectation.
Yes. But then are going to tell you "show me the money and it is all yours." So unless you personally have enough money to buy and maintain the certificate/brand (you don't) you need to get investors first. Then you approach DL.
usflyer msp From United States of America, joined May 2000, 1785 posts, RR: 0 Reply 69, posted (8 months 6 days 2 hours ago) and read 1927 times:
Quote: It is certainly possible, but I would argue again that fear of a competitive response is NOT a good reason not to do this. The underlying fundamentals are pretty sound. The people who swear that I am using controlled substances have not yet run the numbers on this.
I would agree that you shouldn't be afraid of competitive responses but simply ignoring it in your initial calculations gives a skewed view of your chances for success and is, quite frankly, a recipe for disaster.
Quoting JA (Reply 64): Who went nuclear on XE at LAX? There was a competitive response, but I don't recall it being thermonuclear. DL at MCO/RDU/MIA? Who went nuts at point to point 50 seat RJs? American's response in MIA was a token response.
You would have to define what thermonuclear is. I would not define the 30% WN BWI fare cut need to destroy your model that you mentioned earlier in the thread as thermonuclear. I would call it a reasonable competitive response.
JA From United States of America, joined Dec 2004, 513 posts, RR: 1 Reply 70, posted (8 months 6 days 1 hour ago) and read 1914 times:
Quoting Polot (Reply 65): You are saying we shouldn't fear a competitive response...and then give us plenty of examples of flying that failed despite the lack of a major competitive response.
Absolutely. There are people who say that WN's competitive response would kill the operation. History shows that the competitive response has NOT been a factor in killing previous operations. This is exactly why I don't worry about it.
Quoting steex (Reply 66): However, I'd expect those people's response is that nobody actually needed to have a "nuclear" response in order for every single one of the operations you mention to fail, and in turn it seems (at least on the surface) naive to expect a different outcome for this proposed venture. It seems like, with those operations, a moderate effort to match prices by WN and the other majors could be enough to render this operation unprofitable.
Since the concept involves matching the upper 70% of WN's fare structure, WN would be matching themselves. Everyone already matches WN (more or less) and have been for a while. I am not saying that risk does not exist, but the risk is calculated.
Quoting usflyer msp (Reply 61): AA @ RDU & BOS
US @ LGA & BOS
DL/NW @ LAX, MCO, TPA, MKE, IND, STL, RDU
UA @ SAT
DL is making LGA work where US failed. My CRJ200 model tended to show most Florida flying (other than JAX) as unprofitable, even on medium distances, so things like RDU-MCO simply didn't work under the parameters I set for flying. I'll take a look at the SAT operation to see how it was structured to offer any clues to its failure. BOS is very competitive. Even WN has retrenched a little bit there.
DeltaMD90 From United States of America, joined Apr 2008, 5297 posts, RR: 48 Reply 71, posted (8 months 6 days 1 hour ago) and read 1909 times:
Quoting JA (Reply 64): You are aware of that tiny little fuel spike we had in summer 2008, correct? The little fuel spike that made the industry collectively groan.
And how did the other airlines that didn't fly just a bunch of independent 50 seaters P2P fare? Why was ExpressJet the only to fail? I can't remember fully, but I recall ExpressJet doing poorly on this venture from start to finish. Anyway, a spike could happen again, do you think DL would rather a tiny fragile OH try and survive the storm of OO? In fact, if this is such a good idea, why don't you write OO and tell them to fly these routes? I think that would be a lot easier
Quoting JA (Reply 64): I hear echoes of the following again:
I don't think JetBlue has a better chance of being profitable than 100 other predecessors with new airplanes, new employees, low fares, all touchy-feely ... all of them are losers. Most of these guys are smoking ragweed.
— Gordon Bethune, Continental Airlines CEO, Time magazine, June 2002.
I could go into how much larger JFK is traffic-wise than smaller airports like STL and BWI, but I really don't have to. If you can convince some investors to throw some money down, more power to you
Quoting JA (Reply 67): Who owns the certificate? Who needs to preserve the certificate in order for it to be worth anything? Who would be in charge of authorizing pro-rate flying? Who has planes on the certificate right now?
Won't be DL for very long... you'd need the investors. Unless DL would keep it, but you're saying OH would do this independently, so I'm confused
DeltaMD90 From United States of America, joined Apr 2008, 5297 posts, RR: 48 Reply 72, posted (8 months 6 days 1 hour ago) and read 1894 times:
Quoting JA (Reply 70): competitive response has NOT been a factor in killing previous operations.
Tell that to Frontier. It doesn't help that you're already starting at a competitive disadvantage using CRJ-200s (which you still haven't shown the numbers to support that they are anywhere near as efficient as 737s.) You can post all day but how do you explain the fact that 50 seaters aren't selling these days and carriers are trying to dump them?
usflyer msp From United States of America, joined May 2000, 1785 posts, RR: 0 Reply 73, posted (8 months 6 days 1 hour ago) and read 1896 times:
Quoting JA (Reply 70): DL is making LGA work where US failed.
DL @ LGA is no longer a point-to-point operation...it is a full scale hub and even then DL's operation is far less dependent upon 50-seat RJ's than US' was.
JA From United States of America, joined Dec 2004, 513 posts, RR: 1 Reply 74, posted (8 months 6 days 1 hour ago) and read 1892 times:
Quoting Polot (Reply 68): But then are going to tell you "show me the money and it is all yours." So unless you personally have enough money to buy and maintain the certificate/brand (you don't) you need to get investors first. Then you approach DL.
It is much easier to finance a deal when there is a structure. If DL says "pay us and it is yours", that is a structure that can be analyzed. I know numerous folks at investment banks and they don't have the time for guesses. I know exactly how to finance the deal, but the pro-rate is the only thing that makes everything else work. If there is no pro-rate, there is absolutely no deal.
seabosdca From United States of America, joined Sep 2007, 4277 posts, RR: 4 Reply 75, posted (8 months 6 days 1 hour ago) and read 1884 times:
Quoting JA (Reply 70): Since the concept involves matching the upper 70% of WN's fare structure, WN would be matching themselves.
And it really would not be difficult for them. In the grand scheme of things, it wouldn't hurt them much to drop their fares just enough that you would have to match the top 30% of their fare structure or be unprofitable.
Quoting JA (Reply 70): History shows that the competitive response has NOT been a factor in killing previous operations.
That is just not true. A mild competitive response from several airlines is what killed ExpressJet at LAX.
Quoting JA (Reply 64): I don't think JetBlue has a better chance of being profitable than 100 other predecessors with new airplanes, new employees, low fares, all touchy-feely ... all of them are losers. Most of these guys are smoking ragweed.
— Gordon Bethune, Continental Airlines CEO, Time magazine, June 2002.
JetBlue flew big airplanes. They've had good success with 150-seaters and much more mixed success with 100-seaters. They are expanding bigger, not smaller -- they have A321s coming. Trying to fly a 50-seater would be a disaster for them.
Most gorgeous aircraft: Tu-204-300, 757-200, A330-200, 777-200LR, 787-8
JA From United States of America, joined Dec 2004, 513 posts, RR: 1 Reply 76, posted (8 months 6 days 1 hour ago) and read 1871 times:
Quoting DeltaMD90 (Reply 72): Tell that to Frontier. It doesn't help that you're already starting at a competitive disadvantage using CRJ-200s (which you still haven't shown the numbers to support that they are anywhere near as efficient as 737s.) You can post all day but how do you explain the fact that 50 seaters aren't selling these days and carriers are trying to dump them?
What makes you think that a 50 seater has to be as efficient as a 737 to make money? Why do the airlines fly anything but A320s and 737s if that idea was correct? By that logic, UA should no longer be in DEN.
DeltaMD90 From United States of America, joined Apr 2008, 5297 posts, RR: 48 Reply 78, posted (8 months 6 days 1 hour ago) and read 1846 times:
Quoting JA (Reply 76): What makes you think that a 50 seater has to be as efficient as a 737 to make money?
Flying your proposed routes (against all those WN 737s) makes me think so. I think you seriously underestimate WN. They'd crush this operation like a bug
Polot From United States of America, joined Jul 2011, 1497 posts, RR: 0 Reply 79, posted (8 months 6 days 1 hour ago) and read 1819 times:
Quoting JA (Reply 74): It is much easier to finance a deal when there is a structure. If DL says "pay us and it is yours", that is a structure that can be analyzed. I know numerous folks at investment banks and they don't have the time for guesses. I know exactly how to finance the deal, but the pro-rate is the only thing that makes everything else work. If there is no pro-rate, there is absolutely no deal.
But as I mentioned DL has been trying to unload OH for years. They have been actively trying to seek out people to buy OH from them before giving up. Knowing people at investment banks is not enough. You need people with actual experience running an airline on board.
HOMsAR From United States of America, joined Jan 2010, 802 posts, RR: 0 Reply 80, posted (8 months 6 days ago) and read 1782 times:
Quoting JA (Reply 44):
Amtrak operates the Penn Line under contract. They would try to fit it in. The chokepoint is actually Union Station itself.
How do you know Amtrak would "try to fit it in" as you say? Railroad capacity isn't cheap. How much would Amtrak charge to fit it in.
Union Station may be a choke point, which makes it even more unlikely to come cheaply. There's no way to (easily) expand Union Station (without lots of money).
Quoting JA (Reply 40): Quoting HOMsAR (Reply 38):
If CRJs are so cheap to operate that you could make a profit charging fares starting at just over $65/hour/seat, then why aren't existing regional airlines swimming in money?
The major keeps it through CPA agreements. The BTS data is there if you want to verify the numbers.
So then the majors (instead of the regional contract carrier) should be swimming in profits from these 50-seat CRJs. If that is the case, then why is Delta trying to rid itself of 50-seaters? It's not because they "choose" not to continue to make a profit on service that you seem to claim should be profitable.
Again, if CRJs are so cheap that you can make money on an average fare of $65/hr/seat, then whoever operates these planes (be it the regional, or the major that contracts with said regional) should be swimming in money. They're not. Instead, they're parking them.
JA From United States of America, joined Dec 2004, 513 posts, RR: 1 Reply 81, posted (8 months 6 days ago) and read 1760 times:
Quoting Polot (Reply 79): Knowing people at investment banks is not enough. You need people with actual experience running an airline on board.
Which is why I would keep the existing management in place if they chose to stay.
Quoting HOMsAR (Reply 80): How do you know Amtrak would "try to fit it in" as you say? Railroad capacity isn't cheap. How much would Amtrak charge to fit it in.
Union Station may be a choke point, which makes it even more unlikely to come cheaply. There's no way to (easily) expand Union Station (without lots of money).
Amtrak needs to make money and they are running on their own railroad. P3 partnerships come with financial incentives from the federal government. I haven't looked at the Penn Line consists, but there are ways to modify the schedules to get things done. For example, MARC pays Amtrak to carry some people on their trains. There is capacity on the Regionals to add a stop when an airport express train can't fit.
Quoting HOMsAR (Reply 80): So then the majors (instead of the regional contract carrier) should be swimming in profits from these 50-seat CRJs. If that is the case, then why is Delta trying to rid itself of 50-seaters? It's not because they "choose" not to continue to make a profit on service that you seem to claim should be profitable.
Again, if CRJs are so cheap that you can make money on an average fare of $65/hr/seat, then whoever operates these planes (be it the regional, or the major that contracts with said regional) should be swimming in money. They're not. Instead, they're parking them.
ROI. Their ROI is higher with 70 and 76 seaters. There is still a role for 50 seaters.
HOMsAR From United States of America, joined Jan 2010, 802 posts, RR: 0 Reply 82, posted (8 months 5 days 20 hours ago) and read 1638 times:
Quoting JA (Reply 81): ROI. Their ROI is higher with 70 and 76 seaters.
ROI matters when you're looking at future investment. If you've already invested the money (as Delta and others have by already buying a bunch of 50-seaters), then the only reason not to fly them is because you can't make money on them.
FlyPNS1 From United States of America, joined Nov 1999, 6049 posts, RR: 25 Reply 83, posted (8 months 5 days 14 hours ago) and read 1550 times:
Quoting JA (Reply 77): Fuel killed ExpressJet. I believe fuel went up $40-50 per barrel from when they started to when they threw in the towel.
And where is fuel today? It's running near $100 barrel. Not cheap.
Quoting JA (Reply 81): Amtrak needs to make money and they are running on their own railroad.
Amtrak has never made money.
Quoting JA (Reply 70): DL is making LGA work where US failed.
DL is running a hub at LGA now...plus they don't rely on 50 seaters alone. Again, your lack of industry knowledge is disconcerting for someone trying to pull off this type of deal.
Quoting JA (Reply 64): The people who swear that I am using controlled substances have not yet run the numbers on this.
I've run some of the numbers and they aren't good. A few routes might work, but most of the routes you propose are doomed to fail.
Quoting JA (Reply 70): History shows that the competitive response has NOT been a factor in killing previous operations.
No, it's bad economics have killed these operations, yet somehow you insist your economics are different from every other P2P RJ operator in the past. Even worse, you want to go head to head in one of WN's largest hubs (BWI) and fly routes like BWI-RSW!!
JA From United States of America, joined Dec 2004, 513 posts, RR: 1 Reply 84, posted (8 months 5 days 12 hours ago) and read 1462 times:
Quoting FlyPNS1 (Reply 83): And where is fuel today? It's running near $100 barrel. Not cheap.
With your statements about my "industry knowledge", you should be aware that it is a big problem when your budget plans for $85/barrel oil and it spikes to $147/barrel. Having a $90-110 range (which it has stayed within now) allows one to keep their budget.
Generic. Amtrak makes money working for MARC. The fact that you lose money overall doesn't mean that you lose money doing everything. Amtrak typically bids their commuter rail contracts for profit. They cannot use federal money to subsidize commuter rail operations.
Quoting FlyPNS1 (Reply 83): Again, your lack of industry knowledge is disconcerting for someone trying to pull off this type of deal.
The collective industry knowledge has yielded a net zero return over the history of aviation. The most profitable airline is run by a travel agency. So, forgive me for my skepticism about the industry.
seabosdca From United States of America, joined Sep 2007, 4277 posts, RR: 4 Reply 85, posted (8 months 5 days 11 hours ago) and read 1396 times:
Quoting JA (Reply 77): Fuel killed ExpressJet. I believe fuel went up $40-50 per barrel from when they started to when they threw in the towel.
You have to look at how fuel killed ExpressJet. High fuel prices have worse effects on the operating economics of 50-seaters than on any type of mainline except ULH. High fuel prices made it easier for competitors to put the squeeze on ExpressJet and make them choose between being uncompetitive or unprofitable. The same thing would happen to any P2P 50-seat operator in this climate.
The network you've outlined is a challenge, but the real problem with your plan is the 50-seaters. They're just not a good tool in this environment except for a very specific type of route. On most routes, they can't compete with either larger RJs or mainline.
Most gorgeous aircraft: Tu-204-300, 757-200, A330-200, 777-200LR, 787-8
OOsnowRat From United States of America, joined Sep 2012, 9 posts, RR: 0 Reply 86, posted (8 months 5 days 7 hours ago) and read 1308 times:
Quoting HOMsAR (Reply 80): So then the majors (instead of the regional contract carrier) should be swimming in profits from these 50-seat CRJs. If that is the case, then why is Delta trying to rid itself of 50-seaters? It's not because they "choose" not to continue to make a profit on service that you seem to claim should be profitable.
Again, if CRJs are so cheap that you can make money on an average fare of $65/hr/seat, then whoever operates these planes (be it the regional, or the major that contracts with said regional) should be swimming in money. They're not. Instead, they're parking them.
To be fair, nobody is operating CR2s in the manner J A is proposing. Personally,I would find a CR2 with the legroom of a 737 and an inflight product similar to QX (complimentary beer/wine, quality snacks) and onboard wi-fi a lot more appealing that the middle seat of a WN 737. Access to DL's SkyMiles and Sky Clubs ought to sweeten the deal for business travelers.
JA From United States of America, joined Dec 2004, 513 posts, RR: 1 Reply 87, posted (8 months 5 days 5 hours ago) and read 1239 times:
Quoting seabosdca (Reply 85): You have to look at how fuel killed ExpressJet. High fuel prices have worse effects on the operating economics of 50-seaters than on any type of mainline except ULH. High fuel prices made it easier for competitors to put the squeeze on ExpressJet and make them choose between being uncompetitive or unprofitable. The same thing would happen to any P2P 50-seat operator in this climate.
You are absolutely correct that fuel may make a competitive response more effective. It is certainly a risk, but it is a risk worth taking in my opinion.
Quoting OOsnowRat (Reply 86): To be fair, nobody is operating CR2s in the manner J A is proposing. Personally,I would find a CR2 with the legroom of a 737 and an inflight product similar to QX (complimentary beer/wine, quality snacks) and onboard wi-fi a lot more appealing that the middle seat of a WN 737. Access to DL's SkyMiles and Sky Clubs ought to sweeten the deal for business travelers.
I don't think I would put wi-fi on these aircraft because of their age. On the routes that stick, I would look at ordering new CRJ-700NG units for them with wi-fi installed. However, the rest of it approximates the idea.
DeltaMD90 From United States of America, joined Apr 2008, 5297 posts, RR: 48 Reply 88, posted (8 months 5 days 4 hours ago) and read 1190 times:
I'll hit from a different angle, I suppose we can agree to disagree on the previous points (for now at least.) Why is this plan better than just giving the planes to OO? DL gets rid of OH that they've been trying to get rid of forever (fact) and OO's costs are lower than OH's. Why not write OO about your business plan? They already do some of their own independent flying anyway
If the alternative is closing up shop and everyone losing their jobs, I would think a new OH would be in a position to negotiate a little bit lower cost structure.
Quoting DeltaMD90 (Reply 88): Why not write OO about your business plan?
Still have to work thru DL, as they own the planes.
DeltaMD90 From United States of America, joined Apr 2008, 5297 posts, RR: 48 Reply 93, posted (8 months 5 days ago) and read 1000 times:
Quoting OOsnowRat (Reply 92): I would think a new OH would be in a position to negotiate a little bit lower cost structure.
But OH *IS* Delta. OH has no negotiating power. It would have to be a brand new airline... so why not give them to the already well established OO instead of with this shaky plan? I mean if OP got some investors on board that wanted to purchase these CRJs from DL it would be different. I guess I don't see why OP is writing DL... I'm sure DL has 0 problem with his plan, granted DL has nothing to do with it except give the planes/certificate in exchange for $$$$$$$$ and taking them OFF Delta's hands
Quoting OOsnowRat (Reply 92): Quoting DeltaMD90 (Reply 88):
Why not write OO about your business plan?
Still have to work thru DL, as they own the planes.
DL wants nothing to do with them and in a few days/weeks (not sure how long) they are either going in the desert or to OO. DL doesn't want to do 50 seat flying but if OO really did like this plan and want those 50 seaters, I'm sure DL would have no problem letting OO pick them up
OOsnowRat From United States of America, joined Sep 2012, 9 posts, RR: 0 Reply 95, posted (8 months 4 days 21 hours ago) and read 934 times:
Quoting DeltaMD90 (Reply 93): But OH *IS* Delta. OH has no negotiating power.
OH is a wholly owned subsidiary of DL, just like Regional Elite was. It has its own certificate and employees, with whom it can certainly negotiate if it chooses.
Quoting DeltaMD90 (Reply 93): why not give them to the already well established OO
I would guess because OO already found a money-making home for its CR2s and DL hasn't. OO already has four operations in the air with a fifth on the way; isn't that enough for now?
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From United States of America, joined Dec 2004, 513 posts, 
From Japan, joined Mar 2012, 4954 posts, 
Exactly. The only reason OH survived this long is because WN never wanted to touch their home turf- CVG. CVG was the main fortress for OH and their relationship (rocky, albeit) with DL is what made OH survive this long, until the apparent inevitable happened.
It's not making too much sense to me.
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