silentbob
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 4:16 am

Quoting nutsaboutplanes (Reply 99):
The Airline industry is not an enigma....basic economic principles still apply in ALL circumstances.

Quite often basic principles of any kind are not accurate, as they do not account for all the variables in more complex situations.
 
nutsaboutplanes
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 4:43 am

Quoting silentbob (Reply 100):
Quite often basic principles of any kind are not accurate, as they do not account for all the variables in more complex situations.

In my years of doing this, I have yet to experience a situation where they do not. All actions have a reaction, I have found this to be particularly true in finance.
American Airlines, US Airways, Alaska Airlines, Northwest Airlines, America West Airlines, USAFR
 
JA
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 5:52 am

Quoting LAXintl (Reply 96):
Well since I just read it, according to Skywest, pilot labor cost made up 41.3% of block-hour cost at ExpressJet in 2013, up from 39.2 in 2012.

ExpressJet is an anomaly because their block hour cost do not include aircraft procurement on the UA side. The typical labor cost is 20-30% of operating cost. The bigger issue for Skywest is that they are losing money on ExpressJet's flying. In addition, Republic stated that Chautaqua's 50 seat flying is a "break even" proposition. It is hard to raise pilot pay on flying that is already break even or loss making. I would agree, however, that the regionals will have no choice but to do that and the majors will scale back regional feed to compensate.
 
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mercure1
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 6:48 am

Quoting Shawn Patrick (Reply 95):
Your logic is flawed because you overestimate the overall cost of pilot compensation. It is a cost that airlines CAN absorb without raising ticket prices.

Every cost increase has to come out somewhere. Just like water and physics, any cost increase has to be managed with an offset. That is your business 101.

Maybe you don't recall how airlines have been forced to literally pinch cents, remove the tomato on the salad to help save millions at the end of the year, so certainly giving an employee group wage increase will require something else to give.

As other poster mentioned you cant move one domino without effecting another one.

Quoting Shawn Patrick (Reply 95):
consider Delta Air Lines. DAL posted RECORD-breaking profits in 2013, at the same time they gave their pilots a giant pay raise.

Again you fail to view things in larger context. Its like reading 10 pages of a book and knowing everything about it.

What will happen at Delta and other dominoes that will fall might be 1 year of 10 year journey to observe.

Remember in the US, late 90's how the airline industry had all those beautiful labor agreements, one after another, each one with pilot rates $1 more than the other?
Well what happened. It only took a single domino to disassemble everything and send every US major airline in the bankruptcy court.

So save yourself the trouble and don't look at Delta as some magic best practice. The story and outcome of that is far from clear yet. In a few years we could very well be talking about how foolish the company was in 2013-2014.


But maybe with age and experience these facets become clearer.
mercure f-wtcc
 
XFSUgimpLB41X
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 6:54 am

Quoting mercure1 (Reply 103):
Every cost increase has to come out somewhere. Just like water and physics, any cost increase has to be managed with an offset. That is your business 101.

Maybe you don't recall how airlines have been forced to literally pinch cents, remove the tomato on the salad to help save millions at the end of the year, so certainly giving an employee group wage increase will require something else to give.

As other poster mentioned you cant move one domino without effecting another one.

The airlines are going to have to figure out how to manage this, because pilot training is at an all time low for those pursuing airline careers. It's just too expensive to fork out 60 grand in licenses plus a college degree and get stuck making 20-30 grand a year for years. Fewer and fewer are willing to make that investment. The chinese carriers are paying people 18,000 a month to go and fly RJs over there. Eventually the regionals are going to have to get over this tripping over themselves to save a dime and actually pay pilots some semblance of respect to the costs associated with becoming a pilot.
Chicks dig winglets.
 
Mir
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 8:52 am

Quoting mercure1 (Reply 103):
Maybe you don't recall how airlines have been forced to literally pinch cents, remove the tomato on the salad to help save millions at the end of the year

Forced, or chosen? In a time of record profits, I find it hard to believe that those decisions are made because there is no other choice - they're made because cutting costs enables them to be even more profitable. Which is their prerogative, but I have a hard time buying that there is no other choice.

Quoting XFSUgimpLB41X (Reply 104):
Eventually the regionals are going to have to get over this tripping over themselves to save a dime and actually pay pilots some semblance of respect to the costs associated with becoming a pilot.

   People have a pretty easy time going along with increased pay for executives because they claim you have to pay properly in order to attract and keep good people. Same thing with pilots. The good news is that it wouldn't take much to improve pilot pay significantly at the lower ends - maybe $5 per ticket. And while that will have a negative effect on demand, it will be a small one - $5 isn't going to make or break many people's decisions to fly or not.

-Mir
7 billion, one nation, imagination...it's a beautiful day
 
bennett123
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 9:14 am

Shawn Patrick

Are you sure about the rate for a 1st yr Captain at US Air?.
 
INFINITI329
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 9:19 am

Quoting bennett123 (Reply 36):
According to airfleets, AA have 173 MD80 in storage, in addition to 154 operational.

How many could realistically be returned to service.

Also what would the economics be like?.

One problem that you would run into would be gate space. Esp places that have parking only such as JFK, LGA, YYZ, and and so on. AA would have hire more pilots which in theory worsen the problem

Quoting Shawn Patrick (Reply 93):
Currently, at US Air E-190 pays hourly:
FO Year 1: $42
FO Year 12: $83

CA Year 1: $35
CA Year 12: $123

How does a Year 1 FO make more than a Year 1 CA?
 
bennett123
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 9:33 am

178 was only the starting point.

If you look at replies 56 and 57, then 40 is probably a more realistic figure. Certainly would not exceed 84.

My understanding of typical period in storage is based on Europe, where climate is also a factor.

However, it seems likely that most of the 184 have either been scrapped or have been parted to the point of being shells.
 
strfyr51
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 11:50 am

Quoting Shawn Patrick (Reply 85):
AA/US have already negotiated a payscale for EMB-175/CRJ-900 during bankruptcy. As mentioned, US already has a EMB190 training program in place. It would take a matter of weeks to add the EMB-175 to that training program. Adding EMB-175s would be "plug and play" at US.

IMO, this is the future of these aircraft.

I haven't read the contract but I'll bet the UA/CO alpa contingent also have a plan to bring the E175 flying in house if it comes to that as well. It has been warned enough that only a FOOL would look the inevitable in the eye and say it Ain't gonna happen..
This is a "Perfect Storm" we're looking at and the Majors already KNOW what they're looking at. But the regionals RAH and SKYW have leveraged themselves into this. There's no WAY anyone can tell me they didn't see this coming with the ATP rule and FAR117 right behind it. The draft for EACH was on the Docket 12 months ago. If they didn't know?? They should have!
That's why they have the Regional Airline Association, to LOOK out for stuff like this coming down the pike. Envoy's ALPA contingent read the same thing, That's why they're "flexing their muscles" now, They can see the handwriting on the wall as well. This benefits EVERYBODY in the industry. Salaries go up. Low budget airlines go OUT. Price supports for the major's fares remain firm and in place, and Everybody is optimistic Nobody loses. Everything becomes supply side economics. with the supply of qualified and trained Pilots dwindling. .
 
commavia
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 2:37 pm

The other impact of this that I think will be interesting to see is the impact his has on AA's mainline, not regional, fleet strategy. As more and more 50-seat lift is removed from the system, I think there will be a natural dynamic where larger RJs that may in the last decade have largely replaced mainline capacity in regional markets now instead flow downward to backfill smaller jets at lower frequency (i.e., 3 CR7s replacing 4 ER4s, etc.).

In that situation, I think we're also naturally going to see more mainline flying return to markets that haven't seen it for some time - particularly on the US side where relatively much more of the network has shifted to regional in the last decade. I suspect there are many markets (think PHL-BUF, CLT-SAV, etc.) "on the edge" where the economic calculus is changing - when CR7/CR9/E75 tails are more critically needed to replace 50-seaters, these markets may well see the smallest mainline jets - E90s but more likely A319s - come back in.

In that context, while I remember hearing reports/rumors of Parker expressing dismay at the number of new A319s AA had on order, thinking more of those jets should be shifted upward to A320s or A321s. But given how quickly the regional feed situation is evolving, perhaps maintaining a relatively healthy order book of A319s will prove prescient. The A319s may not have the economics of an A320 or 738, but in a lot of these "on the edge" markets where demand is big but not big enough for a 150-seat jet, the A319 may well end up having better economics than an E75 as pilot costs rise.

Quoting Acey559 (Reply 75):
We're absolutely going to shrink but it's not going to be on the company's terms.

I agree with others that Eagle was always going to get smaller one way or another. This may have altered the timeline and the contours of that drawdown somewhat, but I doubt by much, and the ultimate outcome will still be the same. I will be interested to see what impact this has on the economics of the ground handling operation, which by all accounts is relatively profitable (perhaps moreso on a margin basis than the actual flying).

Quoting LAXintl (Reply 96):
I think you need to stay for the entire class.
Quoting LAXintl (Reply 96):
Labor cost and labor supply don't exist in a vacuum on their own, and are very reliant on outside influence.

Okay, but not all economics is demand-driven. In this case, with 1500 hours, rest/duty rules, and the looming "silver tsunami" of age 65 retirements, the supply of qualified commercial pilots was inescapably going to shrink, and therefore - at least in the short term - the value of that labor is going to rise. We're already seeing it with big signing bonuses, etc. There is no way around it. Given that reality, why on earth would people willingly decrease the cost of their labor as its value is steadily increasing? It makes absolutely no economic sense.

Quoting LAXintl (Reply 96):
Well airlines cannot raise their cost without either hurting margins or if they try to pass it on further eroding demand.

So the outcome is that the least efficient capacity (sub 50 seats) will get cut to better adjust to the existing pilot work force pool. Less flying, less planes, to keep CASM in tact.

Precisely. Input cost rise, supply and demand follow. But again - that was going to happen, anyway, regardless of this specific Eagle contract. Look around the industry - pilot costs are going up everywhere.
 
Shawn Patrick
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 3:16 pm

Quoting mercure1 (Reply 103):

I don't disagree that increased costs have to come from somewhere. But the airlines have turned the corner financially. There are record profits on the board and cash in the bank. Airlines can now afford an increased pilot cost. They can even put the tomato back on.

Let me ask you a question - where did the money come from to give Delta pilots big raises? Yes I agree it had to come from somewhere. Why don't you enlighten us? You make it seem like it is impossible for Delta to bear such an increased labor cost burden. Please explain!

Also my example is not an isolated one. UAL pilots received huge raises shortly after Delta's raises. They are both on par in terms of compensation. AA/US pilots are receiving raises upon implementation of their joint contract that will put them on par with UA/DL.

Jetblue just announced significant raises for their pilots.
http://www.crainsnewyork.com/article...-costs-rise-on-pilot-pay-rate-bump

VX (yes VX!) pilots have been getting annual raises for the past few years, with another raise just recently announced.

RAH (yes RAH!), just announced a tentative agreement with their pilots union that includes pay and work rule improvements.
http://aviationblog.dallasnews.com/2...union-for-its-three-airlines.html/

So tell me how this idea of pilot raises is an isolated occurrence? Please, I am ears.

I have no problem debating, but if you can't open your eyes and observe simple truths occurring in the industry, then your words deserve no consideration or respect within this discussion.
 
capejet
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 3:43 pm

Did AA just reduce the salaries and benefits of the Eagle (Envoy) workforce in bankrupcy? If so, why are their costs so high relative to Endeavor, Republic or Sky West?
 
Shawn Patrick
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 3:46 pm

Quoting bennett123 (Reply 106):

I have no reason to believe that source is inaccurate.

I will let LAXintl, who has been juggling dollars and cents in the industry for 26 years, explain why Year 1 US Air E190 CA rate is not an important number.
 
INFINITI329
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 3:59 pm

Quoting Shawn Patrick (Reply 111):
Jetblue just announced significant raises for their pilots.
http://www.crainsnewyork.com/article...-bump

That wasnt even enough to stop B6 pilots from seeking ALPA representation. B6 Seeking Alpa (by infiniti329 Feb 15 2014 in Civil Aviation)
 
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LAXintl
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 4:21 pm

Quoting Shawn Patrick (Reply 111):
I have no problem debating, but if you can't open your eyes and observe simple truths occurring in the industry, then your words deserve no consideration or respect within this discussion.

You know, you really need to learn to be more respectful and less condescending to posters on this site.

Quoting Shawn Patrick (Reply 111):
But the airlines have turned the corner financially.

Maybe for now, but history has well thought us well, its only temporary.

Look at this chart:



One big see-saw, with negative trajectory.

US airline industry historically has only had a 0.9 Percent margin. Consider rest of American industry during this same time period brought back average over 8 percent return per Air Transport Association. Rather terrible results with all the boom-bust cycles.

So no it would be fool hearty to say we've turned any corner corner when we know the next catastrophe might be only a day away.

Quoting Shawn Patrick (Reply 111):
There are record profits on the board and cash in the bank. Airlines can now afford an increased pilot cost. They can even put the tomato back on.

Ah the "entitlement" mentality.

Companies can certainly decide what to do with their profits today, but caution including keen focus on keeping cost down, paying off debt, and saving for the next rainy day has proven to be the more judicious use of cash then simply opening the piggy bank and having an all you can eat buffet.

Anyhow, if you really want to give folks what they deserve, the airlines need to earn billions back before they become even and cover losses generated the last decade or more, so there is still lots more of profits that need to be earned.

Quoting Shawn Patrick (Reply 111):
So tell me how this idea of pilot raises is an isolated occurrence? Please, I am ears.

We have been down this road before. Look back at late 90s' and all those wonderful rich pilot contracts which came to nothing mere a few years later. Unfortunately such short-sighted orgy was in total isolation without any view to the larger picture and acknowledgement that another bust was certainly around the corner.

So imo, not much point in gloating about some profits today, or opening the dam gates today as we all know they likely will be be wiped away tomorrow.

Thus is the dark reality of the industry.
From the desert to the sea, to all of Southern California
 
dispatchguy
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 6:16 pm

Quoting LAXintl (Reply 115):
Look back at late 90s' and all those wonderful rich pilot contracts which came to nothing mere a few years later. Unfortunately such short-sighted orgy was in total isolation without any view to the larger picture and acknowledgement that another bust was certainly around the corner.

I was at the United Airlines Pilot Crew Desk in the 1999/2000 time frame. During that same time frame we got the "Vision 2000" Pay Raise at the crew desk, which averaged a 30% pay raise.

I remember a very senior manager walking around after we got our individual raises and said "the only reason we got that raise is that we are making cash hand over fist, planes are full and we're making obscene cash (This was before the UA/US Merger was announced). The second this economy tanks, and it will, that raise will go poof. Bank it now, you'll need it later."

A year and a half later 9.11.01 happens, and a couple of years later (I had already left after the summer of love), UA declares bankruptcy. I banked all of the incremental raise - and that manager (thank you Walt wherever you are) saved my financial house.
Nobody screws you better than an airline job!
 
oc2dc
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 6:32 pm

Quoting Shawn Patrick (Reply 95):
Just to prove my point - go research how much profit airlines made in 2013. They were record-breaking profits. In particular, consider Delta Air Lines. DAL posted RECORD-breaking profits in 2013, at the same time they gave their pilots a giant pay raise. Their pilots now have an industry-leading compensation package, at the same time as they are making record profits.

Even better, look at WN and how they have historically undercut legacy carriers in major markets. WN pilots also happen to be some of the highest paid in the industry....Did I mention they have been profitable every year for over 40 years?

Quoting LAXintl (Reply 96):
Well since I just read it, according to Skywest, pilot labor cost made up 41.3% of block-hour cost at ExpressJet in 2013, up from 39.2 in 2012.

Was this strictly for EMB-120 aircraft? This seems outrageously high.

Quoting capejet (Reply 112):
Did AA just reduce the salaries and benefits of the Eagle (Envoy) workforce in bankrupcy? If so, why are their costs so high relative to Endeavor, Republic or Sky West?

Yes, they just took a bath in bankruptcy. I don't believe they lowered wages but they did take away a lot of extra benefits, i.e. healthcare, 401K, night pay, etc...
I'm not complaining, I'm critiquing...
 
KD5MDK
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 7:21 pm

Logically, if we set pilot wages to 0 then tickets will become much more affordable, demand for travel will increase and there will be more pilot jobs.
 
silentbob
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 7:32 pm

Quoting oc2dc (Reply 117):
Yes, they just took a bath in bankruptcy. I don't believe they lowered wages but they did take away a lot of extra benefits, i.e. healthcare, 401K, night pay, etc...

Pensions are gone pretty much industry wide, mostly replaced with (much cheaper) 401k plans.
 
tyler81190
Posts: 720
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 8:37 pm

Quoting silentbob (Reply 119):
Pensions are gone pretty much industry wide, mostly replaced with (much cheaper) 401k plans.

I know the sCO employees still have their pensions... But did MQ ever have pensions?
 
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LAXintl
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 9:43 pm

Quoting oc2dc (Reply 117):
Was this strictly for EMB-120 aircraft? This seems outrageously high.

Its for ExpressJet, so suppose its blended rate between its CRJ and ERJ operations.

I've actually have heard the ERJ ops at XJT cockpit crew cost make up ~50%'ish of hourly operating cost. Remember XJT has no ownership burden on the ERJ fleet so its virtually all crew, maintenance and some general corporate overhead.

Hence why unless they manage to improve their crew cost they don't have much else to play with. (Rather similar problem with MQ, they virtually have no ownership with fleet either)
From the desert to the sea, to all of Southern California
 
tyler81190
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 9:47 pm

Quoting LAXintl (Reply 121):
I've actually have heard the ERJ ops at XJT cockpit crew cost make up ~50%'ish of hourly operating cost. Remember XJT has no ownership burden on the ERJ fleet so its virtually all crew, maintenance and some general corporate overhead.

Hence why unless they manage to improve their crew cost they don't have much else to play with. (Rather similar problem with MQ, they virtually have no ownership with fleet either)

I think XJT will be the next MQ in a year or so...
 
oc2dc
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RE: AE/Envoy MEC Reject AIP

Sat Feb 15, 2014 9:50 pm

Quoting kd5mdk (Reply 118):
Logically, if we set pilot wages to 0 then tickets will become much more affordable, demand for travel will increase and there will be more pilot jobs.

Using the pay scale provided by Shawn Patrick (above), lets do the math with your "much more affordable" comment.

I'm going to apply the pay scale to an ERJ-145 and assume both the captain and the FO are at the maximum pay in order to show you the maximum savings of all passengers.

For a 1 hour flight, each passenger on an ERJ-145 essentially pays $2.66 for the pilots to fly the plane to their destination.

For a 2 hour flight, each passenger pays $5.32.

For a 3 hour flight, each passenger pays $7.98.

You get the picture... I don't think cutting pay another 30% is going to save you much money... Unless you are a coupon using, Walmart shopping, penny pincher, saving between $0.80 and $3 isn't going to make flying "much more affordable." And in that case, if you are, go fly NK and see how far that gets you.
I'm not complaining, I'm critiquing...
 
Cubsrule
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RE: AE/Envoy MEC Reject AIP

Sun Feb 16, 2014 1:37 pm

Quoting oc2dc (Reply 123):
You get the picture... I don't think cutting pay another 30% is going to save you much money... Unless you are a coupon using, Walmart shopping, penny pincher, saving between $0.80 and $3 isn't going to make flying "much more affordable."

No, but by the same token, raising fares that much will cause folks to book away if they are booking solely on price. $3 more in fare, even if it's only $3, gets the price-sensitive traveler nothing in his mind.
I can't decide whether I miss the tulip or the bowling shoe more
 
Mir
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RE: AE/Envoy MEC Reject AIP

Sun Feb 16, 2014 4:02 pm

Quoting Cubsrule (Reply 124):
No, but by the same token, raising fares that much will cause folks to book away if they are booking solely on price. $3 more in fare, even if it's only $3, gets the price-sensitive traveler nothing in his mind.

If the choice is between paying the extra $3 and having to face an extra connection, waiting for a less optimally timed flight, a longer drive to a larger airport, or even not flying at all, the vast majority of travelers will pay the extra $3.

-Mir
7 billion, one nation, imagination...it's a beautiful day
 
JBirdAV8r
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RE: AE/Envoy MEC Reject AIP

Sun Feb 16, 2014 4:16 pm

Quoting oc2dc (Reply 117):

Was this strictly for EMB-120 aircraft? This seems outrageously high.

SkyWest, along with the other fee-for-departure carriers, does not pay for their fuel. The mainline partners pay for it.



[Edited 2014-02-16 08:17:43]
I got my head checked--by a jumbo jet
 
Cubsrule
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RE: AE/Envoy MEC Reject AIP

Sun Feb 16, 2014 4:34 pm

Quoting Mir (Reply 125):
If the choice is between paying the extra $3 and having to face an extra connection, waiting for a less optimally timed flight, a longer drive to a larger airport, or even not flying at all, the vast majority of travelers will pay the extra $3.

I think for most passengers this is true (and for many if not most travelers, that number is likely larger than $3 for many of the things you've listed). But if the $3 goes to pilot compensation, it gets the passenger none of these things.
I can't decide whether I miss the tulip or the bowling shoe more
 
Mir
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RE: AE/Envoy MEC Reject AIP

Sun Feb 16, 2014 4:44 pm

Quoting Cubsrule (Reply 127):
I think for most passengers this is true (and for many if not most travelers, that number is likely larger than $3 for many of the things you've listed). But if the $3 goes to pilot compensation, it gets the passenger none of these things.

On the contrary, it gets them all of those things. Right now, regionals can't staff their flights, which means that flights have to be cut. That means less service to smaller markets, fewer routes that bypass hubs, some stations closing entirely, etc. But there is no shortage of pilots, just a shortage of pilots willing to work for the current wages. Bumping up fares $3 would allow a very substantial increase in wages, and at that point the regionals would be able to staff their flights, which means the flights don't have to be cut, and passengers can take advantage of having flights to more destinations, more nonstops, etc. - all the benefits that having smaller aircraft that can make those routes work bring.

-Mir
7 billion, one nation, imagination...it's a beautiful day
 
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par13del
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RE: AE/Envoy MEC Reject AIP

Sun Feb 16, 2014 5:32 pm

Quoting ckfred (Reply 31):
What's to say that the mainline operations won't pick up some regional flying. If a route had 7 or 8 Embrear 140/145 flights, that could easily become 3 or 4 A319s, MD-80s, or 738s.

Well unless the markets have changed, these routes were removed from mainline because their ops cost was higher.

Quoting tyler81190 (Reply 54):
MQ pilots hold the cards, and will likely find employment with mainline carriers, some with AA.

Why would you go through this again with AA management who is in charge of MQ, when AA cost once again goes out of whack when US pilots are bought up to date where do you think they will be looking for cuts next?

Quoting bennett123 (Reply 63):
The part that seems strange to me is that he says that "they will remain an airline", he then talks about the Ground Handling Operations.

Its about cash, MQ also does ground handling for a number of other airlines, in essense AA could spin off the ground handling operation to make some money to pay the pilots, then they would have to pay for ground handling and the circle starts again

Quoting norcal (Reply 71):
Why is it so hard for the Anet community to understand that these airplanes weren't parked as part of a plan?

We are raised and trained to believe in authority and not the workers who always have agendas, so until management says they are parking planes because they have no pilots we will accept their word that it is part of a greater plan 
 
oc2dc
Posts: 469
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RE: AE/Envoy MEC Reject AIP

Sun Feb 16, 2014 8:13 pm

Quoting JBirdAV8r (Reply 126):

Quoting oc2dc (Reply 117):

Was this strictly for EMB-120 aircraft? This seems outrageously high.

SkyWest, along with the other fee-for-departure carriers, does not pay for their fuel. The mainline partners pay for it.

That is a caveat worth mentioning. There numbers don't seem so out of whack now that I've been enlightened.

Quoting Mir (Reply 128):
On the contrary, it gets them all of those things. Right now, regionals can't staff their flights, which means that flights have to be cut. That means less service to smaller markets, fewer routes that bypass hubs, some stations closing entirely, etc. But there is no shortage of pilots, just a shortage of pilots willing to work for the current wages. Bumping up fares $3 would allow a very substantial increase in wages, and at that point the regionals would be able to staff their flights, which means the flights don't have to be cut, and passengers can take advantage of having flights to more destinations, more nonstops, etc. - all the benefits that having smaller aircraft that can make those routes work bring.

-Mir

Keep in mind the numbers I used were for the highest paid FO's and Captain's. So bumping up fares $3 dollars on flights even just 3 hours long would be a significant increase for the pilots and truly an unsubstantial amount to the consumer.

Quoting Cubsrule (Reply 124):
No, but by the same token, raising fares that much will cause folks to book away if they are booking solely on price. $3 more in fare, even if it's only $3, gets the price-sensitive traveler nothing in his mind.

There are airlines for price sensitive travelers, it's called NK, G4, F9. Just make sure you print your boarding pass at home and don't ask for anything to drink or else that $3 you were trying to save may disappear.
I'm not complaining, I'm critiquing...
 
tyler81190
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RE: AE/Envoy MEC Reject AIP

Sun Feb 16, 2014 8:19 pm

Quoting par13del (Reply 129):
Why would you go through this again with AA management who is in charge of MQ, when AA cost once again goes out of whack when US pilots are bought up to date where do you think they will be looking for cuts next?

Because AA mainline pilots have not been screwed as much by management, as the MQ pilots have been. AA can say they will liquidate MQ if they don't get what they want... But AA management WILL NEVER say they will liquidate AA if they don't get what they want.
 
norcal
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RE: AE/Envoy MEC Reject AIP

Sun Feb 16, 2014 11:48 pm

Quoting LAXintl (Reply 121):
I've actually have heard the ERJ ops at XJT cockpit crew cost make up ~50%'ish of hourly operating cost. Remember XJT has no ownership burden on the ERJ fleet so its virtually all crew, maintenance and some general corporate overhead.

You heard wrong.

It is impossible for the cockpit crew to cost that much.

I don't know exactly what an ERJ burns per hour, but I'll guess it is in the neighborhood of 2,500 lbs of fuel, or roughly 373 gallons. At $3.00 per gallon, that is $1,119 for fuel alone (nearly $900 per hour if you assumed 2,000 lbs per hour which I think is likely low). If you max the pilot salaries out ($97 per captain, $44 per FO) you come up with $141 an hour. Now there are healthcare, training, retirement, and other benefits to consider. Even if you assumed all wages, benefits, and training for the flight crew was $400 an hour (nearly tripling the wage costs) it is no where near 50% of the total hourly operating costs. If you count just the fuel and pilot costs, the flight crew makes up 36%. Throw in flight attendants, rampers, catering, cleaning, gate agents, mechanics, mx costs, etc. and pilot portion plummets more.

Regional flight crews are no where near as significant as you think they are.
 
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par13del
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RE: AE/Envoy MEC Reject AIP

Mon Feb 17, 2014 1:10 am

Quoting tyler81190 (Reply 131):
But AA management WILL NEVER say they will liquidate AA if they don't get what they want.

Well, they did refuse to sign a new contract for years then put the airline in chpt.11 to get a contract placed on them. Now the pilots and their unions may claim that their agitation caused the merger with US, on that score the jury is out on the greater good. Unfortunately for us pax, the mergers have created three airlines that the economy may claim are too big to fail, so as long as they don't openly try to out do each other, three domains will exist and those who run them will be free set their environment.
 
tyler81190
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RE: AE/Envoy MEC Reject AIP

Mon Feb 17, 2014 2:25 am

Quoting par13del (Reply 133):
Well, they did refuse to sign a new contract for years then put the airline in chpt.11 to get a contract placed on them. Now the pilots and their unions may claim that their agitation caused the merger with US, on that score the jury is out on the greater good. Unfortunately for us pax, the mergers have created three airlines that the economy may claim are too big to fail, so as long as they don't openly try to out do each other, three domains will exist and those who run them will be free set their environment.

A lot of that was probably positioning for the inevitable. The merger was going to happen... Bankruptcy was going to happen...

Now the question I have, is how long will MQ continue to operate? By hook or by crook they will be closed, but which will happen?

Will so many pilots leave that MQ will have to close? When would that happen at current rates of ~50-60/month?

Will AA just call the calling of their bluff and go ahead and close down ops before the pilots can leave?

What kind of timeline would one expect for this?
 
Shawn Patrick
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RE: AE/Envoy MEC Reject AIP

Mon Feb 17, 2014 5:20 am

Quoting norcal (Reply 132):
Regional flight crews are no where near as significant as you think they are.

This is my point exactly. This is where LAXintl errs. Pilot pay increases (especially regional pilot pay) will not break the bank. As was mentioned, giving modest regional airline pilot pay increases will be necessary to protect the integrity of each mainline's regional network. I will even give you the benefit of the doubt and say that this increased cost may lead to reduction of service in a FEW select marginal markets, but that is just the way the economics work out. Oh well.

Just another exercise to put this in perspective...

Let's say MQ pilots demand a very modest 20% increase in payrates. Let's say they won't tweak any other contractual provisions, just add 20%. We'll consider a 12 year captain and 6 year FO.

20% raise means 12 year captain pay increases from $92/hr to $110/hr.
20% raise means 6 year first officer pay increases from $41/hr to $49/hr.

This would create an industry-leading compensation package for MQ, would attract newhires, and mitigate MQ's impending pilot staffing problems.

And what would it cost the company per flight?

On a two hour flight, the difference would be:

2 x ((110-92))+(49-41)) = $51.

So, for a two hour flight, the company would have to shell out an extra $51 dollars.

On an EMB-145, that equates to about $1 per seat.
On a CRJ-700, that equates to less than $1 per seat.

Is an extra dollar per seat enough to justify mass service cancellations in marginal markets? Is it enough to warrant risking the integrity of the regional network?

Crew costs at regional airlines are not as significant as you may be lead to believe. I understand the "razor-thin" margin argument, but unfortunately, this is a cost that airlines will have to absorb. Nobody ever said airlines were a good place for ROIC. That's just the nature of the business. But at this point, the decision is whether or not the mainlines want a reliable regional airline network or not. The cost of regional feed is going up.
 
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LAXintl
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RE: AE/Envoy MEC Reject AIP

Mon Feb 17, 2014 5:39 am

Quoting norcal (Reply 132):
It is impossible for the cockpit crew to cost that much.

Stay tuned.

I'll have a whole thread on it tomorrow

Eagle and ExpressJet pilot cost might make a few eye balls pop out.

But as a sneak peak -- 43.5% of total non fuel hourly block cost at ExpressJet on the E145 is crew. 44.1% at Eagle. ---Almost double competitors.

And don't get lured into only looking at hourly pay, labor cost is much deeper than the headline pay scale.
The salaries, wages, benefits category companies pay out include things like insurance, PTO, disability, per-diem, bonus, any retirement contributions, etc, so its much deeper than only the hourly pay.

Anyhow stay tuned..
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RyanairGuru
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RE: AE/Envoy MEC Reject AIP

Mon Feb 17, 2014 5:43 am

Quoting Shawn Patrick (Reply 135):
giving modest regional airline pilot pay increases will be necessary to protect the integrity of each mainline's regional network

The problem is that the mainline carriers are the ones that would have to pick up the tab, and it isn't clear that they are willing to ... yet.

At some point the mainline carriers are going to have to accept that if they want regional feed they will either have to pay more for the contract, or bring that flying in-house. At the moment it doesn't look like they are willing to do that.

Quoting Shawn Patrick (Reply 135):
On an EMB-145, that equates to about $1 per seat.
On a CRJ-700, that equates to less than $1 per seat.

ExpressJet is deeply loss making, the current costs aren't covered by the rates they charge the mainline carrier. Pinnacle, Mesa and RAH are teetering on the edge of profit/loss. Even SkyWest only made 100mn on its own flying last year. I don't know if they fly 100mn seats per year or not, but it must be close to that figure. That would wipe out their entire profit.

The point is that the regionals, at this time, can't afford that $1 extra. After all, if the legacy carrier raised the ticket price by $1 then that money isn't going to the regional (other than at-risk flying) but rather to the legacy. This is why the legacy carriers - not the regionals - have got to figure out what it is they want going forward, and pay appropriately.
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mercure1
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RE: AE/Envoy MEC Reject AIP

Mon Feb 17, 2014 6:13 am

In Europe you can contract E145 for about EUR800 (about USD1100), and in experience crew cost is about 30-40 percent of this. Both direct maintenance and maintenance accruals tend to account for 40-50%, rest of corporate overhead fall in rest.

Quoting norcal (Reply 132):
I don't know exactly what an ERJ burns per hour, but I'll guess it is in the neighborhood of 2,500 lbs of fuel, or roughly 373 gallons. At $3.00 per gallon, that is $1,119 for fuel alone (nearly $900 per hour if you assumed 2,000 lbs per hour which I think is likely low). If you max the pilot salaries out ($97 per captain, $44 per FO) you come up with $141 an hour. Now there are healthcare, training, retirement, and other benefits to consider. Even if you assumed all wages, benefits, and training for the flight crew was $400 an hour (nearly tripling the wage costs) it is no where near 50% of the total hourly operating costs. If you count just the fuel and pilot costs, the flight crew makes up 36%. Throw in flight attendants, rampers, catering, cleaning, gate agents, mechanics, mx costs, etc. and pilot portion plummets more.

Why are you counting fuel? To my knowledge that is not something the regional airlines control pay for in USA.

Also things like handling are often done my mainline.

You should only look at expense the regional manage and pay for.

So take your 400USD pilot portion divide in USD1100 lease and voila = 36%

Often all regionals control is pilots and maintenance. Some regionals in USA dont even have ownership stake in aircraft so at end they don't have many avenues to manage cost except labor.

Maybe too simplistic view, but regionals are often simply noting more than a generic staffing agency.

Quoting Shawn Patrick (Reply 135):
Just another exercise to put this in perspective...

You are doing lots of math exercise, but seemingly incorrect numbers.
mercure f-wtcc
 
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RyanairGuru
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RE: AE/Envoy MEC Reject AIP

Mon Feb 17, 2014 6:27 am

Quoting RyanairGuru (Reply 137):
I don't know if they fly 100mn seats per year or not, but it must be close to that figure. That would wipe out their entire profit.

So I decided to be slightly less lazy, and did some [very rough] back-of-a-napkin calculations. The figures aren't precise for either seat count or fleet number, but are close enough to get an idea.

(45*35)+(145*50)+(140*70)=18625 seats

Let's assume that each aircraft operates 8 flights per day

18625*8=149,000

149,000*365=54,385,000

54,385,000 seats per year, at $1 per seat, would half SkyWest's 2013 profit. And, IMHO, they are the only regional that could actually absorb such a cost increase.
Worked Hard, Flew Right
 
JA
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RE: AE/Envoy MEC Reject AIP

Mon Feb 17, 2014 6:42 am

I am currently sketching out a scenario to determine if buying a 50 seat airline (like a Chautaqua) is feasible. In it, I modeled increased FO rates starting at $50 and going up to $70 and CA rates from $72 to about $110. The only way an airline could swing that is flying prorate/at-risk only. Most 50 seat contracts are being flown at break even or a loss. In other words, the 50 seat business will only be profitable for a regional that accepts some risk. Everyone else will need bigger aircraft or they will go out of business.

In theory, the money is out there to finance divestitures of 50 seat business, but I expect that money to be gone after April.
 
norcal
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RE: AE/Envoy MEC Reject AIP

Mon Feb 17, 2014 12:36 pm

Quoting LAXintl (Reply 136):
But as a sneak peak -- 43.5% of total non fuel hourly block cost at ExpressJet on the E145 is crew. 44.1% at Eagle. ---Almost double competitors.

Again, no all maxed out pay scales on 50 seat aircraft. These are some of the cheapest regionals. PSA and Endeavour being the "standard" for pilot costs now.

ExpressJet Captain: $97
ExpressJet FO: $44

TSA Captain: $97
TSA FO: $41

Endeavour: $82
Endeavour: $37

PSA Captain: $87
PSA FO: $41

Republic Captain: $101
Republic FO: $37

We are talking at most $15 hour per difference between the highest paying captains. You go down to any part step on the pay scale and the story is the same.

And why are you so focused on non-fuel block cost hours anyways? Fuel is by far the single most expensive thing in operating a regional jet. Regionals don't pay the bill, but the fuel isn't free. In the grand scheme of things pilots are really not a big cost.

Quoting LAXintl (Reply 136):
And don't get lured into only looking at hourly pay, labor cost is much deeper than the headline pay scale.
The salaries, wages, benefits category companies pay out include things like insurance, PTO, disability, per-diem, bonus, any retirement contributions, etc, so its much deeper than only the hourly pay.

Yes it is, and I put that in my post. I nearly tripled the cost of the hourly wages to take into account all of those things, which is way more than it actually is.

- Take perdiem for example. The highest paying one of that group listed about $1.80 per hour, the lowest is $1.60. That is a maximum of 20 cents per hour, but it is more like 10-15 cents per hour.

- Retirement contributions are uniformly awful across the regional industry

- Bonuses are non-existent, or if they do exist they are about $50-200 a quarter

- Sick accrual and vacation are all pretty much the same.

Quoting mercure1 (Reply 138):
Why are you counting fuel? To my knowledge that is not something the regional airlines control pay for in USA.

Why wouldn't you count the fuel? Are you joking?!?!? Fuel is the single most expensive thing in operating an airline. Yes the regional doesn't pay for it, but someone does, it isn't free. It is an integral part of the overall cost of operating the flights.

If management has been ignoring fuel for all of these years, that definitely explains why they get their panties in a wad over a few bucks. They are missing the big picture if they ignore fuel, and because of that they've waged constant war on pilots and driven so many people away from the industry and killed their supply of new pilots.

Their war of nickels will cost them big time in the end. Check APC and look at the Age 65 retirements. over 7,000 mainline retirements occur in the next 5 years (or 700 regional jets worth of pilots). In less than 10 years time the cumulative retirement number is larger than the entire regional workforce. That $2.5 billion large regional jet order that AAG just made is in serious jeopardy of very early retirement. All because these bean counters got so worked up over a few pennies and ignored the big picture. Pilot costs compared to overall operation of these jets and the investment made in purchasing them are laughably small. It is just another illustration of how corporate America only cares about next quarter and the next big bonus and not about the long term viability of their industry.

It will be hilarious to watch the regional industry crumble in the next few years.
 
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jfklganyc
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RE: AE/Envoy MEC Reject AIP

Mon Feb 17, 2014 12:52 pm

Quoting infiniti329 (Reply 114):
That wasnt even enough to stop B6 pilots from seeking ALPA representation.

It was a paper raise. They raised the base rate 13.5% and got rid of premium pay. Premium pay used to be 1.5 times base rate at anything over 78 hours. JetBlue consistently builds lines in the mid to upper 80s. Take a variable and do the math. When management plays games, management gets a union.
 
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par13del
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RE: AE/Envoy MEC Reject AIP

Mon Feb 17, 2014 1:04 pm

Quoting tyler81190 (Reply 134):
Now the question I have, is how long will MQ continue to operate? By hook or by crook they will be closed, but which will happen?

To me MQ was always something that set AA apart from the other legacies when it came to regional feed, its demise will be unfortunate.
Folks may agree that regional holding companies supplying pilots to multiple legacies is not the way to go, but the response to that is to shut down the one operation which is not in that same mode.
I have no answers to the situation so can only say that it is unfortunate that the only thing both parties can agree on is to shut down the service.
 
Cubsrule
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RE: AE/Envoy MEC Reject AIP

Mon Feb 17, 2014 3:06 pm

Quoting Mir (Reply 128):
On the contrary, it gets them all of those things.

You understand that, and I understand that, but most passengers don't understand that. That's why, as I said before, it's a perception issue.
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LAXintl
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RE: AE/Envoy MEC Reject AIP

Mon Feb 17, 2014 3:06 pm

Quoting norcal (Reply 141):
And why are you so focused on non-fuel block cost hours anyways? Fuel is by far the single most expensive thing in operating a regional jet. Regionals don't pay the bill, but the fuel isn't free. In the grand scheme of things pilots are really not a big cost.

Because fuel cost has nothing to do with the business case from the regionals perspective unless the flying is own their risk.

They regional might get paid $1,000 per block hour from a major and must split that money up to cover all their own expenses from pilots, to maintenance, to dispatch, to corporate over head, etc, but not fuel.

Even DOT recognizes this and splits out fuel expense bucket when posting financials for regionals.

At the end of the day that $1,000 can only be go so far, and can only be sliced so many ways.

And lasts, in general if you look, even the majors report many of their cost ex-Fuel. Why because removing fuel which tends to move much provides a much better look at the underlying numbers of the company. Provides better quarter to quarter comparison, and peer to peer comparison.
From the desert to the sea, to all of Southern California
 
Mir
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RE: AE/Envoy MEC Reject AIP

Mon Feb 17, 2014 3:56 pm

Quoting Cubsrule (Reply 144):
You understand that, and I understand that, but most passengers don't understand that.

Most passengers don't care. They see the fare that's $3 higher and they pay it. Hell, fares go up all the time, by more than that amount, and airlines never seem to have a problem doing it. Increased costs, after all. Well, this is another cost increase, and not a very big one.

-Mir
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mercure1
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RE: AE/Envoy MEC Reject AIP

Mon Feb 17, 2014 3:59 pm

Quoting norcal (Reply 141):
Why wouldn't you count the fuel? Are you joking?!?!? Fuel is the single most expensive thing in operating an airline. Yes the regional doesn't pay for it, but someone does, it isn't free. It is an integral part of the overall cost of operating the flights.

When commuter carriers go to bid for contracts, they as general rule exclude fuel as they don't pay for it.

Actually I can even go rent a 747 Freighter, and the proposal from Atlas Air lets say will not include fuel either.

Remember these companies provide:
A = Aircraft
C = Crew
M = Maintenance
I = Insurance

In some cases its even only CMI as aircraft could be owned by major airline, and commuter is simply staffing the aircraft.

So it makes zero sense to look at fuel when looking at commuter airline financials as they are neither pay for fuel, or are reimbursed in any way for it.
You only look at the expenses based on cost inputs that exist in their financial world.

And as previously mentioned, even big airlines are required to report financials without fuel also, to see the underlying performance of the company itself. In USA they tend to report ex-fuel CASM for example as standard metric.
mercure f-wtcc
 
norcal
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RE: AE/Envoy MEC Reject AIP

Mon Feb 17, 2014 4:31 pm

Quoting LAXintl (Reply 145):
Because fuel cost has nothing to do with the business case from the regionals perspective unless the flying is own their risk.

Yes it does. The major contracts the regional to do the work, the major airline pays for the fuel bill as part of the total cost.

I understand the argument you are making, I've seen the same DOT numbers, however this is a completely stupid and faulty way of running the regional system and explains why it is on the verge of collapse.

Focusing on a cost that is so insignificant in the grand scheme of operating an airplane is stupid. In my past I've flown for three different regional airlines. All of them had this laser focus on labor costs while ignoring all the other poor operational practices around them. Poor winter ops, poor scheduling practices, poor ramp management, broken equipment etc.

- For example, I must have spend hundreds of hours waiting on gates or rampers to show up to marshall us in, that is a lot of money in wasted fuel burned while waiting, even single engine. It is a very common experience at every regional.

- Broken ground power and ground air was very common too, lots of wasted money from unnecessarily running the APU

- Poor scheduling practices. I don't know how many times I used to get lost in the system. Wait on hold for over an hour only to be told, "We are working on it, we'll call you back." I used to spend days in hotels on occasion waiting for scheduling to figure out what the heck they were doing. I used to call several times a day only to be told to wait while they figure it out

- Winter ops, so many delays from poorly run deicing programs

- inefficient use of dead heads

- All of this poor operations planning leads to misconnections and upset passengers, sometimes the company even has to pay for hotels rooms

There are a ton of examples of things like this that result from poor operational planning and bean counters trying to run everything on the cheap. It looks great on paper, but as soon as something goes wrong, which it does since it is an airline, the whole thing falls apart. We are talking easily millions of dollars a year, tens of millions in the case of larger regionals.

So many things that need to be fixed, but management always went after labor because it was easy. It was very easy to make up for losses from gross incompetence by threatening employees, especially pilots, with concessions.

That easy way out took its toll and now hardly anyone wants to be a pilot. Now all of these major airlines are refleeting the regionals (and trying yet again for concessions while there is a shortage) with larger jets and they won't have enough people to fly them. AAG's $2.5 billion aircraft order is at serious risk because of the shortsighted decisions of greedy and lazy management over the last 10 years. Not only is that a lot of capital, but that is a lot of revenue that could potentially be lost, not to mention the investment that will need to be made in growing mainline in order to pick up some of the slack. A lot of markets will be cut, frequencies will be reduced, but it won't be enough in the mid to long term. The overall economic costs to this country from the destruction of regional industry (50% of mainline flights) will be much higher than the raises they could have given pilots years ago to ensure continued interest in the profession.

Of course the CEOs won't take the blame for it and they are already trying to shift the blame of the regional pilot shortage onto the new ATP law but that is a false argument. There are plenty of well qualified individuals who meet the requirements for the near future, but will not work for the regional wages.

Quoting mercure1 (Reply 147):
So it makes zero sense to look at fuel when looking at commuter airline financials as they are neither pay for fuel, or are reimbursed in any way for it.

This is a stupid and shortsighted way of doing it, see above.
 
Cubsrule
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RE: AE/Envoy MEC Reject AIP

Mon Feb 17, 2014 4:37 pm

Quoting Mir (Reply 146):
Hell, fares go up all the time, by more than that amount, and airlines never seem to have a problem doing it.

Unfortunately, that's only half the story. Airlines never seem to have a problem doing it if everyone matches. If everyone does not match, carriers often withdraw/reverse the changes. And if we are talking about a fare increase due to regional costs, why in the world would WN (who initiates more of the increases than a lot of folks realize, by the way) match?
I can't decide whether I miss the tulip or the bowling shoe more

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