Originally Posted by Bucking Bar

If an airplane's operation has to be subsidized by sub-standard pilot pay & working conditions, then the airplane's got a design problem. It really does not matter who's flying it.

Outsourcing is a false economy. Delta management, under Ed Bastian running the accounting, did a poor job of cost allocation from 1999 to 2008'ish and failed to understand the "overhead" costs of redundant flight operations. These costs run 7% to 10% over the all-in block hour costs for the jets. So, to break even by outsourcing, one would have to find $550 to $600 from somewhere.

What RJ's did do, momentarily, for Delta is introduce accidental, but effective, yield management. Pulling a 727, backfilling with a MD88 and sticking a 50 seat RJ on the remainder so constrained the available capacity that RSM did shoot up. The CASM shot up as well, as operations had fewer passengers to spread the costs around. Again, the capacity changes caused the data to jump around and Delta's 8-K reports from those days leading into bankruptcy were f'n near comical. As costs were passed through to mainline the regional operations became real darlings. Delta reported that regional jet outsourcing arrangements accounted for 21% of the company's 2011 revenues ($6.39b) but 47% ($929m) of Delta's 2011 operating profit.

ALPA (perhaps unwittingly) did a pretty good job of capturing the surplus of management's terrible math. Delta put a real premium on outsourcing and ALPA made the trade. Perhaps ALPA kept their brilliance hidden, but the people I've spoken with were true believers in management's numbers. The purpose of setting up ALPA's Scope Compliance and Analysis Committee was not just compliance, but also to create an economic skill set so that we could leverage these kind of errors to benefit labor. In an ideal world, we would be running live models and could calculate the effect of scope changes to the job level nearly instantly. As much as is possible, scope aligned with the company's cash flows, is effective and mutually beneficial. In effect, scope should mirror the company's economic structures, operated by Delta pilots.

I've not heard Paul Jacobsen speak on the subject. Just as they would be reassured by hearing a pilot state what they did wrong, lessons learned and promises not to repeat the error(s), it would be comforting to hear senior management admit to "peanut butter" cost allocation (definition: "just spread it around"). I'd like them to fess up to the fact somewhere in the vicinity of $20 billion was wasted on outsourcing and lesson learned.

Yes, Richard Anderson and others improved the operation. Glen Hauenstein and Ed Bastian have done wonders improving our product, network, yield and profitability. Delta's really become and epic success story and these men deserve the credit they are receiving for their current work.

United - from what I understand, is basically trying to copy our Contract 2012. Says a lot about where Delta is today.