Originally Posted by
Atwoo155
In the short run outsourcing is cheaper, however in the long run I would say that wholyowns are cheaper. Even if Airways isn't fronting the money for the RAHes airframes they are paying for them. In the case of PSA and PDT all the profit (if there is any) goes to Airways. In the Case of RAH all the profit stays at RAH.
Some of the profit from contractor goes to mainline, plus they get feed for their large airplanes. If most or all of your regional flying is wholly-owneds then they can bend you over a barrel by striking and demand ridiculous (from management's perspective) compensation.
I think about 30% wholly-owned is the maximum which makes business sense...that way mainline gets some profit but still has plenty of whipsaw leverage via the contractors.