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Old 04-25-2010 | 02:35 AM
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TANSTAAFL
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From: Still in one
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Originally Posted by acl65pilot
88;
Maybe maybe not. I would be very surprised to see a initial proposal that was not above what many have would like to see.

Raising ticket prices is a tricky game. Even a dollar difference can land you on the second page of a search engine. 25 buck takes you off the screen. We can do it, but it does come at a cost. The cost is tickets sold. If we were not debt burdened, I could see that and sticking to it. It would result in a big reduction in capacity but it probably would be sustainable.
RJs were initially designed to take capacity out and raise the RASM. It did not happen as all carriers did it. Cutting capacity when there is demand will raise the price, but arbitrarily raising the prices when others do not results in a significant drop in ticket sales. We do not see this data as it is closely guarded, and a trade secret. It is fact though. That is why some fare increases only last a day or two. We have data that extrapolates out sales given current volume and when these hit certain levels it shows an unsustainable price hike. It is quickly removed in favor of cash flow.

One thing that will help it raising prices and keeping them there is to retire debt. It allows flexibility that we do not currently have as a corporation.

Like I said about 10 pages ago, our initial proposal will limit the ceiling and the company proposal will set the floor. D-ALPA will cost everything out do an EFA and come up with what they know to be a good ball park. It will be forward looking and look at debt service, revenue trends, etc. It is three dimensional.

I hope we ask for a lot, I suspect we will. Our reps seem to think that way as well. I do not see us a limiting our top end, just framing our point of reference. Kind of like when I put a offer on a piece of land. I low ball the hell out of it, knowing full well what it is worth. I beleive we will ask, and make a valiant argument for a lot. In the end it is about economics.

Using history as a guide this PWA should be the best the pilots of delta have seen. We are entering a good time for the airline, and will be at the table at the correct time. If it is not what I expect we can get, I will vote no. If I feel it is as good or close to what I bet we can get, I will vote yes.

I am all for a shorter duration if the macro economic picture lends itself to a three year deal. It longer looks better, I will take that in to consideration as well. It is called being nimble and adapting to what is going on.
Good post. The MEC will do contract surveys (soon hopefully), analyze them, and the elected Reps will provide direction and priorities to the Negotiating Committee. The costing issue is very germane, as is determining the value each side places on a particular item and is it realistic in light of debt, revenues, profit, etc. We want get a steady and predictable supply of eggs from the corporate golden goose while not preventing it's laying nor killing it.

What we do need to do is get far away from the BK mindset and any of those are stuck in it. If the pie gets bigger our existing slice gets bigger without paying extra for it - we have been providing the ingredients for its growth already. We can no longer negotiate away an item at 10 cents on the dollar and then claim it we cannot get it back because the Co. is asking full cost for it.

Last edited by TANSTAAFL; 04-25-2010 at 03:20 AM.