Delta to purchase $2.3 BILLION worth of RJ's
09-27-2016, 07:49 AM
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Delta to purchase $2.3 BILLION worth of RJ's
Delta Mulls $2.3 Billion Regional-Jet Purchase in Fleet Shift - Bloomberg
Delta Air Lines Inc. is studying a purchase of roomier regional jets with a list value of as much as $2.3 billion -- provided the company can get the pilots’ union to accept an overhaul of the small-plane fleet.
The Atlanta-based carrier told the Air Line Pilots Association it wants the option of adding as many as 50 more planes in the 70- to 76-seat range, according to a union memo sent to pilots on Sept. 10. Those aircraft, which can accommodate coach and first-class cabins, are more fuel-efficient and profitable than the all-coach 50-seaters now flying many short hops.
Delta also told the union it may eliminate the smaller planes from the fleet without giving a timeline, according to the memo, which was obtained by Bloomberg News. The potential cost of buying larger regional jets is based on list prices for aircraft in the 70-seat range made by Embraer SA and Bombardier Inc., before discounts that are customary for large orders.
The pilots’ union has objected to any additional 70- or 76-seat jets being flown by Delta’s regional affiliate airlines, ALPA Chairman John Malone said. A Delta spokesman declined to comment.
Up-Gauging
U.S. airlines have been cutting their use of 50-seat jets and switching to larger planes, a practice known as “up-gauging.” In addition to lacking a first-class cabin, the 50-seat planes have been criticized by passengers as cramped. Delta had 153 of the aircraft as of July, compared with 309 three years ago, according to regulatory filings.
The 50-seat jets are flown by Delta’s regional affiliate airlines under the Delta Connection brand. Any new 76-seat aircraft would also be flown by the affiliates.
Even so, under their union contract Delta’s own pilots have a say over which aircraft can be flown by the affiliate airlines. Such rules are spelled out in contract “scope clauses.”
Pilots for major airlines generally object to the practice of outsourcing any flights to the regional carriers and prefer that they be given all flights, said Louis Smith, president of consulting firm Future & Active Pilot Advisors. A looming shortage of people qualified to fly commercially may give them more clout, he said.
“With the bargaining power of mainline pilot unions increasing, I don’t foresee any pilot group relaxing any of the rules related to scope clauses,” Smith said.
In the long term, Delta probably will bring more flying in-house and cut down on the use of regional carriers, said Michael Boyd, president of aviation consultant Boyd Group International. Pay and costs are rising among the smaller airlines, making them less attractive, he said.
Delta Air Lines Inc. is studying a purchase of roomier regional jets with a list value of as much as $2.3 billion -- provided the company can get the pilots’ union to accept an overhaul of the small-plane fleet.
The Atlanta-based carrier told the Air Line Pilots Association it wants the option of adding as many as 50 more planes in the 70- to 76-seat range, according to a union memo sent to pilots on Sept. 10. Those aircraft, which can accommodate coach and first-class cabins, are more fuel-efficient and profitable than the all-coach 50-seaters now flying many short hops.
Delta also told the union it may eliminate the smaller planes from the fleet without giving a timeline, according to the memo, which was obtained by Bloomberg News. The potential cost of buying larger regional jets is based on list prices for aircraft in the 70-seat range made by Embraer SA and Bombardier Inc., before discounts that are customary for large orders.
The pilots’ union has objected to any additional 70- or 76-seat jets being flown by Delta’s regional affiliate airlines, ALPA Chairman John Malone said. A Delta spokesman declined to comment.
Up-Gauging
U.S. airlines have been cutting their use of 50-seat jets and switching to larger planes, a practice known as “up-gauging.” In addition to lacking a first-class cabin, the 50-seat planes have been criticized by passengers as cramped. Delta had 153 of the aircraft as of July, compared with 309 three years ago, according to regulatory filings.
The 50-seat jets are flown by Delta’s regional affiliate airlines under the Delta Connection brand. Any new 76-seat aircraft would also be flown by the affiliates.
Even so, under their union contract Delta’s own pilots have a say over which aircraft can be flown by the affiliate airlines. Such rules are spelled out in contract “scope clauses.”
Pilots for major airlines generally object to the practice of outsourcing any flights to the regional carriers and prefer that they be given all flights, said Louis Smith, president of consulting firm Future & Active Pilot Advisors. A looming shortage of people qualified to fly commercially may give them more clout, he said.
“With the bargaining power of mainline pilot unions increasing, I don’t foresee any pilot group relaxing any of the rules related to scope clauses,” Smith said.
In the long term, Delta probably will bring more flying in-house and cut down on the use of regional carriers, said Michael Boyd, president of aviation consultant Boyd Group International. Pay and costs are rising among the smaller airlines, making them less attractive, he said.
09-27-2016, 08:01 AM
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Originally Posted by Chris Hansen
http://www.bloomberg.com/news/articles/2016-09-27/delta-mulls-2-3-billion-regional-jet-purchase-in-fleet-shift?cmpid=yhoo.headline
No. no. No. no. No. please no.
No. no. No. no. No. please no.
First, it will permit the heaviest, most capable jet ever flown by a regional affiliate in the DL system. These are actually 90 seat jets, configured to 76 seats with a real first class cabin and transcon range... something that's never been permitted at our airline.
Second, this AIP will give a shot in the arm to the whipsaw model of regionals vs. mainline that has decimated our profession. If anyone thinks that this is the endgame, then consider--
Third, DL management plays chess. Look one or two moves ahead to see the real motive here. The next TA will be set up to permit more, heavier RJ's which can be used not for expansion, but for replacement of mainline flying and leverage against mainline pilots during negotiations.
In summary, this agreement doesn't do what DALPA says it does. It does quite the opposite. The regional model is on it's death bed. DALPA and the company want to give it an organ transplant and they're using our kidneys. Don't fall for the spin. This AIP is a very dangerous first step in the wrong direction.
We have the leverage here. DL has a plan B. There is no need for the good of our company to support this particular AIP, and there is every reason to oppose it.
09-27-2016, 08:20 AM
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Originally Posted by flyallnite
Third, DL management plays chess. Look one or two moves ahead to see the real motive here. The next TA will be set up to permit more, heavier RJ's which can be used not for expansion, but for replacement of mainline flying and leverage against mainline pilots during negotiations.
I can go either way on this to be honest. But I really don't see the current deal as anything to get my panties bunched. But going forward, what would be our incentive to allow larger/heavier RJs that you allege management would want? I think you are being a little paranoid about that frankly. I don't believe that the 'gap' that is filled by the 76s will be able to be filled by any larger airframes in the future because bigger with less frequency is not a real advantage.
09-27-2016, 08:21 AM
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Originally Posted by Mesabah
What Boyd fails to realize is when Delta went to terminate their ASA with RAH, the government wanted to renegotiate their market share flown by RAH. Delta was thus forced to sign a new deal with RAH.
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