Originally Posted by
sailingfun
Exactly, The big point missed in all the talk about DCI is that you can only bring the flying back in house if you can do it within a few percentage points of the costs at the regional carriers. If you can't the entire process is doomed to fail and you lose not only those jobs but the feed. Its a fine line about where you can make the cost issue work. I think it was crossed with the E-170/175. The company would disagree. Regardless if your going to convince the company to bring that flying back you have to produce a solid economic plan on cost and how you will equal the current regionals. There is a reason why all the airline managements fight the unions tooth and nail on this issue and its not that they hate pilots. Its cost pure and simple.
Let me ask another question. With the DAL-NWA merger, the annual report from 2009 says they expected to realize $2B in synergies from more effective aircraft utilization and reduced overhead and improved operational efficiency. It would also allow them to right-size the operation and to reduce fleet costs by removing things that don't make money, like freighters? Different subject.
Anyways, a CAPA article in 2009 outlined HH four tenets of Delta's strategies and I'll post it in its entirety because you look back and the Alaska thing just makes your stomach turn:
- Delta/Northwest synergies. While it has achieved most milestones including the October merging of Worldperks and SkyMiles, remaining action includes the single operating certificate expected by the end of 2009 and the technology cutover in the first quarter of 2010. The first quarter will also see the balance of the Northwest fleet completed in new livery. The only remaining sticking point will then be the merging of employee representation and seniority lists.
- Squeezing costs out of the system, including reducing overheads by USD200 million, as well as realigning capacity to get fixed and variable costs out commensurate with capacity changes. The airline is focusing on its network, realigning hubs and traffic flows so that the Northwest and Delta hubs do not compete with one another. Delta has seven hubs including Tokyo Narita and, has completely changed the traffic flows, so hubs complement each other, reallocating equipment and reducing capacity to ensure a given point can connect cross the system without going to two different hubs. It is also exiting the freight business by the end of the year, which lost it USD150 last year.
- Refocusing revenue efforts to drive a revenue premium by capturing a great share of the market including the lucrative New York market. “Combine [the US Airways slot deal] with the transcontinental and international flows over JFK, travelers have more opportunities to fly Delta than any other New York carrier.
- Joint ventures such as the Air France/KLM partnership, as well as growing domestic partnerships are delivering benefits. “That JV amounts to a USD12 billion revenue opportunity across the Atlantic. One in four flights is part of the JV.” Halter noted the airline recently cut a deal with Alaska Airlines to form an alliance that not only feeds passengers to its domestic network but to its four international gateways on the West Coast to Asia.
So, we combined the DAL and NWA fleet to create an over 700 aircraft combination. Today we have 711 aircraft and 618 regionals. Those regionals are operated by 7 "different" airlines (Skywest, Shuttle America, Pinnacle/Mesaba, Compass, Comair, Chautauqua, ExpressJet).
Those airlines combined operate 1,700 airplanes of which 55% is dedicated to Delta. Skywest operates 704 regionals between it's 3 airlines in its holding company. Republic operates 338 including 91 Airbus in its 6 airlines under it's holding company of which two fly for Delta as separate entities but the same seniority list which happens to be integrated with the Frontier list. Compass has 41, Comair 68 and Pinnacle 199.
And of course this doesn't include Alaska's 86 737s that "not only feeds passengers to its domestic network but to its four international gateways on the West Coast to Asia."
So my question, how can we not find some synergies by cleaning up that mess?
I mean if we found it combining DAL-NWA into a 700+ size fleet how can we not find synergies by combining 1,300+ airplanes?
Are we really supposed to believe having 7 airlines with overlapping everything plus a guaranteed profit and costing us in so many ways, many unexpected, is more affordable than a $57 increase per hour in pilot cost or a 2/10ths of 1 cent increase in CASM for a CRJ-900 or E175?
What is that? $32M a year on the entire 76 seat fleet? A 1.5% loss of a near $2B profit before you count synergies?
Seems as if it would make financial sense to combine DCI's together with DAL? Or at the least take the most profitable flying and combine it (all 70+ seaters to mainline)? No staple, no merger, just take the planes and hire for them.