ExpressJet_ERJ From United States of America, joined Oct 2001, 834 posts, RR: 4 Posted (11 years 7 months 3 weeks ago) and read 2953 times:
Here's an artical from Rocky Mountain News about United ordering more CRJs...
United lines up jet deals
Bankrupt airline plans for partners to acquire smaller, regional planes
By Ann Imse, Rocky Mountain News
January 4, 2003
Bankrupt United Airlines quietly has lined up the purchase of hundreds of skinny new regional jets by its United Express partners, part of a move that could transform the experience of flying United.
If the airline goes ahead with the full plan, it could be selling tickets on 425 of the 50-seat Bombardier jets within a few years. That's approaching the size of United's current fleet of large planes.
Under the plan, millions of passengers would find themselves on miniature jets more cramped than a Boeing 737 - but arriving at their destinations hours sooner.
The change is part of a United strategy to vastly expand its route network, without spending a dime on its own planes or flight crews.
On the regional jet deal alone, United has shifted a capital investment of up to $8 billion to its partners.
If the strategy is carried out, despite the Chapter 11 filing, United will be able to offer passengers many more destinations. But often, even though they'll have a United ticket, they'll be flying on another airline.
That network of other airlines now includes three United Express carriers, 13 foreign airlines and US Airways, which is just beginning its joint ticket-sale arrangement with United.
United has said it can earn as much money selling tickets on its partners' planes as it does flying its own aircraft. United's highly paid staff pilots had long opposed the strategy for fear it would mean a loss of jobs.
But pilots now hope it will funnel more passengers from smaller cities onto the United mainline jets they fly, said one senior pilot.
For passengers, the greatest change will come when they board one of the United Express Bombardier CRJ-200 jets. Travelers who have flown the 50-seat jets found them narrow, low-ceilinged over the seats, with little room for stretching. They have just four seats across with a narrow aisle in the middle, and typically carry only one flight attendant.
But since they cost 52 percent less to run than the large jets, they can fly profitably on lightly traveled routes, United says. That opens up nonstops at 530 mph where none existed previously.
Analyst Michael Linenberg of Merrill Lynch recently flew a regional jet between Des Moines, Iowa, and Newark, N.J., a trip that previously required changing planes in Chicago.
"I'd rather fly the 737," he said. But flying nonstop on the swift regional jet cut his trip time from six hours to 2 ½. "That's a big difference. I'll take that over changing in Chicago in winter."
Linenberg said the expansion plan plays to United's competitive advantage - its vast network of 13,000 city pairs connected through hubs like Denver. A Denver-Birmingham, Ala., flight might attract five passengers a day flying between the two cities, but 70 who want to connect in Denver to United's other destinations, he said.
With no cash or credit of its own, United has arranged for the vast expansion of its current fleet of 125 regional jets by persuading its three United Express subcontractors to acquire them. United pays the Express carriers a fee to provide both planes and crews, who are paid less than United staff. United decides where to fly, sells the tickets and takes the financial risk and reward.
The expansion plan is proving to be highly risky for the United Express carriers, who are taking on enormous investments for a now-bankrupt airline.
According to interviews and corporate documents, the three carriers have placed firm orders for 131 regional jets, most in the coming year, and options for at least 169 more. All are for 50-seat Bombardier CRJ-200 jets. That would bring the total to 256 to 425 small jets.
United has said in court filings that it also wants to acquire a number of slightly larger regional jets, with 70 seats.
A fleet of more than 400 regional jets would come close to the size of United's regular fleet of Boeings and Airbuses. United currently flies 557 full-sized jets, but pilots have agreed to allow that to drop to 496, said analyst Linenberg.
United pilots already have agreed to allow United to run as many as 293 regional jets, including 50 that replace turboprops, Linenberg says.
That could rise in the renegotiation of the pilots' contract.
United passengers also will be offered many more flights on the small jets on United's new partner, US Airways. It has approval from its pilots' union to expand its regional fleet from 70 to 465 jets within a few years, Linenberg said.
For the United Express carriers, the deals started low-risk, with United guaranteeing them a base level of long-term revenue. But the risk jumped when United went into bankruptcy court, where it can tear up contracts without being sued.
United already has told the three United Express carriers they'll have to cut their fees by $80 million or risk losing their contracts with United. That could leave the United Express carriers with huge fleets of jets that no one wants to use.
Upping the pressure, United has already asked two unnamed companies to prepare competing bids to take over the United Express business from the three who have it now.
Atlantic Coast showed its hand - and its nerves - on the issue last week. It asked the bankruptcy judge to order United to stick to its contract to pay for use of 47 regional jets that Atlantic Coast is acquiring on United's behalf almost weekly in 2003.
Given the magnitude of the deal - $940 million - Atlantic Coast argued that a late decision by United to cancel the contract could threaten Atlantic Coast's very viability. The judge has not ruled.
But SkyWest spokesman Phil Gee was much more confident. SkyWest also is adding regional jets for its Delta routes out of Salt Lake City, and Delta might need the planes if United doesn't, he said. In addition, SkyWest/United Express is the only airline serving many of the small cities of the West, and he believes SkyWest would continue to do so.
"We still plan on taking delivery of them," Gee said. "We're pretty confident they'll be used somewhere, if not by United."
United has said it will fly the regional jets on routes where small jets can make a profit and large ones can't. But any more precise route information is a closely held secret.
"We don't even know (where we'll be flying) until right before delivery," said the SkyWest spokesman. Last fall, before filing for bankruptcy protection, United told Denver International Airport it planned to boost the number of regional jets flying here from 29 to 60.
Meanwhile, United also has said it is planning to create a separate, low-cost airline that will fly its smaller Boeings and Airbuses.
So what do you guys think? Good idea? Or bad idea?
Usairways85 From United States of America, joined Nov 2001, 3401 posts, RR: 7
Reply 3, posted (11 years 7 months 2 weeks 6 days 23 hours ago) and read 2894 times:
HlywdCatft: i dont know if you were being sarcastic, but what they mean is that they will be able to offer lets say 5 RJ flts between 2 cities rather than 3 737's. So they operate more frequently therefore in essence get you to your destination sooner.
BA From United States of America, joined May 2000, 11153 posts, RR: 59
Reply 5, posted (11 years 7 months 2 weeks 6 days 23 hours ago) and read 2881 times:
They never built any regional gates anywhere in DEN.
DEN has seen no expansion since it opened. The regional gates on Concourse A were always there and were originally built for Continental Express. Now they are used by Great Lakes Airlines and Mesa (Frontier JetExpress).
They WERE planning on building a commuter terminal on Concourse A, but that was scrapped after United ran into financial troubles.
It sounds like they want to start the project again, but this time on Concourse B.
"Generosity is giving more than you can, and pride is taking less than you need." - Khalil Gibran
Strickerje From United States of America, joined Feb 2001, 723 posts, RR: 1
Reply 9, posted (11 years 7 months 2 weeks 6 days 23 hours ago) and read 2833 times:
Arriving at the destination hours sooner? Gee, I didn't know a CRJ was that much faster than a 737.
In addition to the increased frequency, what it meant was that new routes that used to require connections will offer non-stop service, which it stated repeatedly: That opens up nonstops at 530 mph where none existed previously. ... But flying nonstop on the swift regional jet cut his trip time from six hours to 2 ½. "That's a big difference. I'll take that over changing in Chicago in winter."
ScottysAir From , joined Dec 1969, posts, RR:
Reply 11, posted (11 years 7 months 2 weeks 6 days 22 hours ago) and read 2797 times:
Is that was true about Frontier need get expansion with concourse A, right? I am sure also will be more UAX into the concourse B gate soon. When will be completed for all concourse into DEN? Please let us know! Thanks, BA!!
UAL Bagsmasher From United States of America, joined Sep 1999, 2146 posts, RR: 10
Reply 17, posted (11 years 7 months 2 weeks 6 days 20 hours ago) and read 2717 times:
Ramp is affected too. They are taking all our flights away along with our jobs. What also gets me, is how UA is praising DH and ZW for outstanding bag handling and few missed bags. What they aren't telling you is that UA MAINLINE rampers in ORD are doing 100% of the ramp transfers off of DH flights. DH employees are too inept in ORD to ramp their own bags. We used to get bags from DH two hours after our flights had left. The problem wasn't that DH flights were arriving late, it was that once the flights landed, DH employees didn't have a clue how to get bags from F gates to B and C councourse in under 2 hours. Pretty sad if you ask me.
Gigneil From United States of America, joined Nov 2002, 16347 posts, RR: 85
Reply 19, posted (11 years 7 months 2 weeks 6 days 19 hours ago) and read 2674 times:
If UA points out that they're spending $4m on the concourse, but that the regionals are gambling billions to buy new RJs and to feed UA with more revenue, I think the judge will allow it.
In terms of capital expenditures, which are different than other expenses since for a capital expenditure you get a tangible asset back which goes right back in the book as the same amount you paid for it, making it almost a zero-sum-game, $4m is not too much really. $4m for 30 new gates?
How much did the new Concourse A at Dulles cost? You know, US built a new what $20m Express concourse at CLT and at PHL or PIT I forget which. Is that the right number?
Cloudy From , joined Dec 1969, posts, RR:
Reply 20, posted (11 years 7 months 2 weeks 6 days 18 hours ago) and read 2646 times:
I'm afraid its the independent regionals that have the power now, not the mainline. The mainline depends more on them then vice versa. There is a reason they get those guaranteed profit contracts. Without feed, a hub carrier's business structure collapses. Yet there are plenty of airlines that are looking for more regional feed. Still, most regional traffic goes to mainline connections. Yet this may not be true for long. Regional carriers are carrying more and more traffic entirely on their own, without a connection to a major.
Sometime in the next 3 years we may see a large regional start painting all its planes in its own colors and run them in competition with the major it used to serve. Remember, you heard it here first. Even the threat of doing so would probably make a real impression on a carrier like United. Or Usair and America West. Mesa, from what I gather, would be in a good position to do this.
As to the regionals that are owned or mostly owned by thier partners - American Eagle, etc... These would of course be loyal. But this merely removes one more potential source of feed from those who depended on the independents.
In short....United trying to browbeat its regional partners may be a BIG mistake.
Searpqx From Netherlands, joined Jun 2000, 4344 posts, RR: 10
Reply 23, posted (11 years 7 months 2 weeks 6 days 18 hours ago) and read 2624 times:
Actually Cloudy, a good example of what you're suggesting already exists. Or mostly exists anyway. Horizon, while owned by the same holding company that owns Alaska, operates its own planes, in its own colors, serviced by its own staff (both in flight and support, including res, scheduling, marketing, etc), from its own gates. The only thing that keeps them from being truly independent is that all of their flights are published under the AS code. The last time I checked, a large majority of their pax and their revenue was O & D and not directly to AS (or other codeshare) connections. Of course AS/QX coordinate almost everything, right down to colors and logos, none the less, QX very much has its own identity, separate from that of AS.
"The two most common elements in the universe are Hydrogen and stupidity"
AA717driver From United States of America, joined Feb 2002, 1566 posts, RR: 13
Reply 24, posted (11 years 7 months 2 weeks 6 days 18 hours ago) and read 2618 times:
The true picture is starting to emerge. This is union-busting, pure and simple. UAL will run its mainline at JB rates, ramp and CSR(or CSA) will be at Express rates and the commuters will do half the flying.
UAL sheds its unions and its IND overhaul base and the customers still pay more than SWA/JB fares while riding halfway across the country in a CRJ.
Same story at USAir.
Who gets screwed? The employees(yes, we all know they shoud be happy to sling bags at $8.00/hr. with no retirement) and the original shareholders(caveat emptor).
Watch for the sequel coming to an airline near you.TC
: I'm all for some Union busting. If the company goes under, nobody that works there will get a dime of anything. If they stay afloat, everyone will hav
: The US Airways Express terminal in PHL cost $100 million for a 185,000 square foot terminal with 38 gates for commuter aircraft. From being in it seve
: Hmmm. Think I'll pick up some more Bombardier shares. They're pretty cheap right now.
: Am I the only one that missed this: "Upping the pressure, United has already asked two unnamed companies to prepare competing bids to take over the Un
: Just got word that at ORD UA has requested the immediate use of 6-RJ positions on the Signature ramp adjacent to T5. UA has also requested permission
: Wow... that's a LONG commute to get back to T1. N
: Yep... I hear they have been kicking around the idea of a bus operation for a couple of months now. Guess its finally going to happen. Any incite on t
: United/Express have been looking at starting a remote bussing operation for months now. Parking spots for CRJs on the F-Concourse is quite limited, an
: On the contrary, T1 is not that far away from T5 if you use the airport shuttle. It about the same time as it takes you to walk from NWA mainline to M