Originally Posted by
gloopy
You've mentioned that split before, numerous times, and I'm sorry but it just destroys your credibility when you do so. Which is a shame, because you mostly make good arguments for many things.
I know you've quoted the (United I think? Whatever) official filings that "prove under penalty of intergalactic perjury" that 94% of their profits came from their express operation. I don't believe it, and neither does anyone else. Anyone. Not even you.
You really think an airline operation that has 800ish mainline planes and 400ish RJ's averaging about a quarter the size and carrying a quarter to less of the pax and almost none of the cargo could possibly make 94% of the profits? If so, why are all the airlines parking them and transferring block hours to their mainline? So they can make 94% less profits? You really think there is enough pilot or total labor cost differential to fuel that much of a profit differential? If so, from where? RJ's, even the big ones, are an expensive seat and labor per pax cost is actually fairly high.
You really, actually think, that these global behemoths printing billions per quarter are really just small regional powerhouse ticket agents carrying the deadweight of a massive global alliance?
I don't care what spreadsheet or filing form you think you saw, there is no way regionals are makins 94% of billion(s) per quarter per airline in profits. No way. And you don't believe that either.
Fred Reid, is that you?
The person who wrote those financial reports sure believes it. Look I don't know why you are mad at me, I'm simply showing what the data presents. Do I believe it? Well, I know that the airline pricing model is so convoluted that it doesn't surprise if this was the case.
To explain why mainline is getting rid of regional jets is very simple, they aren't, they are dumping unprofitable routes. Where demand is strong, they are switching to mainline planes. On the surface it appears that mainline is recapturing flying. However, they are simply consolidating flying so they can better utilize the aircraft they have in the profitable routes.
The pilot shortage is not yet an issue, but will be in a year or two(this is a direct quote from management at my last recurrent).
It may be hard for some to believe, but legacy's don't make money in the routes they compete with LCC's in. You have to have pricing power in a market to make money, that is business 101. If you look at the legacy network as a whole, the places they have pricing power, is where the RJ's are.
It defies logic, and I know what you are saying, but here is maybe a video that describes what I'm talking about. Fast forward in this CNBC video
http://www.hulu.com/watch/46550 to around 1:27 min, where he says the 767 transcon only makes $200. Just for reference, almost every RJ flight makes tens of thousands of dollars. Is it still so hard to believe?
I think the best way to sum this up, is Southwest has destroyed the Legacy model. It's now just a large operation that holds market share to feed the regionals.