Originally Posted by
gloopy
The airplanes we need going forward will cost Alaska or SkyWest/Republic/whoever just as much as they will cost DL mainline. Every penny.
Not really. Several factors come into play:
- SkyWest in particular has a very good looking balance sheet. They can obtain financing cheaper than anyone. Within the blood bath that is DCI bidding, SkyWest even uses this advantage to beat rivals for RJ flying while paying their pilots significantly more (and treating them better) than say, Mesa.
- Offshore carriers (if permitted) have subsidies and financing arrangements that make their jets significantly cheaper. Google, "Emirates, import export bank" I bet France (the government) gives Air France (owned by, guess who) quite a deal on Airbus (French jobs program, keeps the peasants from burning the place down)
- Not all costs are just pay rates. Longevity enters into the picture. Part of the reason for the constant shuffle among DCI partners is the destruction of pilot longevity to reduce costs. In my category the top FO earns 211% of what the new hire does. Second year that drops to 137%, but is really more due to vacation and other bene's.
- Delta has outsourced somewhere in the neighborhood of $28,000,000,000 to DCI going forward. Sure, that is enough to buy their jets. But Delta enjoys greater flexibility than if it had committed for these jets directly. If I recall, Republic actually (was dumb enough to) sign some three year deals on surplus jets coming off the US Air outsourcing disaster.
- In a game where a 5% margin is success or death, marginal differences make or break the airline. This debate started with me pointing out ALL of our profits this year could be summed up in two words, bag fees.
Last edited by Bucking Bar; 12-14-2010 at 08:52 PM.