Originally Posted by
Flex81
Your positive outlook for your job fascinates me. I wish I had the same positive outlook, but unfortunately I am a realist. Do you really think that a major airline will sign a contract with a regional that guarantees the major financial losses? Why do you think delta is trying to get rid of Mesa, AA is reducing Eagle's flying, Horizon is going to an all TP fleet, Frontier dropped RAH all-together, and CAL is reducing XJT's flying and replacing some of it with TP's.
If the price of the installed drywall is so much that the value of the home is less than the amount invested to build it, then the general contractor would put in some sweet 80's paneling instead. The writing is on the wall (no pun intended).
Flex
There are going to be reductions everywhere, but the entire airline industry is not going to vanish (assuming no large asteroid strikes or nuclear war).
A major has flexibility...it can add or delete flying at will, adjusting to market conditions such as oil prices. It has the risk, the potential for profit, and the flexibility to balance the two.
A regional on the other hand, has a CONTRACT to PERFORM a certain amount of flying. Are they going to guarantee that they will do the flying come hell or high-water, regardless of oil prices?
Not likely...under that scenario, what would happen if oil prices rise? The majors would cut mainline flying (which is now more expensive), but force the regional to keep flying since the extra fuel cost comes out of the regional's pocket, not mainline's. The regional would have to keep flying until it ran through all of it's cash, at which point it would liquidate. The regional would have no flexibility to compensate for higher fuel prices (marketing, route structure, etc)
What you are suggesting is ludicrous from a business perspective....the regional takes big risk, but has no potential for big profit if things go well. Most investors don't play THAT game
The only way you're going to see that kind of risk sharing is if a regional is in dire straights and has no other choice, or if a regional is able to negotiate a risk AND profit sharing plan...if both parties share the fuel costs, but also share profits derived from the feed and the subsequent mainline flights connected by the feed. This would actually make some sense, in that it would force some regionals to be more teamwork and customer service oriented.