Any "Latest & Greatest" about Delta?
01-27-2010 | 08:48 AM
:-)
Joined: Feb 2007
Posts: 7,339
Likes: 1
Respectfully, you are incorrect. The CRJ700 (40% more revenue for 9 to 11% greater cost) and the 900 (70% more revenue for 15% greater cost) are the second and third generation aircraft. Comparing a CRJ50 (200, or 200) and the newer generation jets is like comparing, well, a DC9 and a MD90.
Compare these CASM stats*:
9.5 to 11.1 = DC9
7.5 = MD88
10.0 to 13.4 = CRJ-2
7.9 = CRJ-7
7.3 = CRJ-9
*Source 2008 DOT Form 41 submissions by Delta, Northwest, Comair and Skywest (in in costs including ACMI).
What you see from the statistics is that replacement of a DC9 with a new generation RJ makes sense every time. Replacing a MD88 with an RJ is a wash and really depends on the capability needed for the route.
Now compare the costs for modern narrow body equipment:
6.1 = A320
5.6 = 737-800
5.4 = 757-200
4.2 = 757-300 (winner of most efficient airplane in the fleet, BTW)
The real risk that people like ACL and I see, is that our outdated narrow body equipment puts us at a disadvantage compared to our competition. This disadvantage skyrockets if fuel goes up. American, AirTran, Southwest, United, US Air, Continental and Virgin have all crunched the numbers and come up with a different answer than our management has.
Our loss last year was due to fuel hedging. Hedging that is made necessary due in part to the fact that we are more exposed to fuel price fluctuations than most of our competitors.
Can our marketing and network make up the premium revenue that we need to operate an outdated and inefficient fleet? I don't know. I think it is a gamble.
Also, we are failing to re-invest in a fleet that is a constantly depreciating asset. We are doing this because we already have a lot of debt on the books. But, when the bill comes due to fleet renewal it will be a big one.
Compare these CASM stats*:
9.5 to 11.1 = DC9
7.5 = MD88
10.0 to 13.4 = CRJ-2
7.9 = CRJ-7
7.3 = CRJ-9
*Source 2008 DOT Form 41 submissions by Delta, Northwest, Comair and Skywest (in in costs including ACMI).
What you see from the statistics is that replacement of a DC9 with a new generation RJ makes sense every time. Replacing a MD88 with an RJ is a wash and really depends on the capability needed for the route.
Now compare the costs for modern narrow body equipment:
6.1 = A320
5.6 = 737-800
5.4 = 757-200
4.2 = 757-300 (winner of most efficient airplane in the fleet, BTW)
The real risk that people like ACL and I see, is that our outdated narrow body equipment puts us at a disadvantage compared to our competition. This disadvantage skyrockets if fuel goes up. American, AirTran, Southwest, United, US Air, Continental and Virgin have all crunched the numbers and come up with a different answer than our management has.
Our loss last year was due to fuel hedging. Hedging that is made necessary due in part to the fact that we are more exposed to fuel price fluctuations than most of our competitors.
Can our marketing and network make up the premium revenue that we need to operate an outdated and inefficient fleet? I don't know. I think it is a gamble.
Also, we are failing to re-invest in a fleet that is a constantly depreciating asset. We are doing this because we already have a lot of debt on the books. But, when the bill comes due to fleet renewal it will be a big one.
01-27-2010 | 08:52 AM
veut gagner à la loterie
Joined: Apr 2008
Posts: 23,286
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From: Light Chop
If DAL was serious about fuel burn it would be in the market for a 100 seat high efficiency turboprop on the 500 mile or less segments. You just can't get that kind of CASM out of a 100 seat jet at that stage length. The DOT stats don't compare RASM over a standard stage length say 100 miles vs 1000 miles, that's why a 753 that flies farther more efficiently than say an a320. The A320 may actually be burning less fuel per ASM on the shorter routes than the 753; in fact it is.
01-27-2010 | 08:57 AM
seeing the country...
Joined: Oct 2006
Posts: 4,015
Likes: 41
From: 73N A
You see that announcement a few days ago about spending billions on upgrades? Of course you did. Just because it is DCI does not mean that they will not stick IFE's in the seats. If they can figure out a way to do it and no kill the product it will happen. They are adding FC seats to most of the jets that will remain as well. Notice that not all the 70's will be configured and we all know the 50's will be gone. Point is that the jets remaining will have extra weight avail to the MTOW for IFE's. Just sayin... They see DCI as a seamless to mainline and will do everything to marry the product.
It's poor customer service to provide a varying product. Some Delta 757s have TV - some don't. I DHed on a 757 yesterday and thought, "Great - my 757 should have TV - should make the flight go by quickly." Nope - no TV. What do you think a customer thinks? Now take the market that has a mix of 737s and RJs. We're screwing out customer depending on what time of day they want to fly.
Wifi mods went fast, probably because there it was pretty easy and provides revenue.
See above. There is no price elasticity for IFE's Someday but currently people buy tickets on price and price alone. We are seeing a shift away from 50 seaters for many reasons, but the main one is CASM which effects CASM, not comfort. If it made money we would fly it as is.
My point is the MD-90 is a great Band-Aid. Problem is that as we move later in to this decade and in to the 20's the 9, 88, 90, 320, 757's 767's 744's and even the 73N's will be 30-60 years old. All of that metal combined with fuel prices, carbon offsets etc will make it necessary to refleet the airline.
Simple supply chain economics, and airline economics will not allow 50 aircraft deliveries a year to refleet in 10-15 years. If we did this the cost is unworkable.
The baseline point was that airlines generally should be refleeting at a rate of about 10-20 jets a year continually so that there is not a bulge. It holds true with staffing as well, but does not work out that way. Reference the retirement numbers in 8-18 years.
It is my opinion that if we wait until the next gen 737/320 arrives in 2022 or later we are going to be in a position where it will cost DAL hundreds of billions of dollars over a few short years. We will not have the option to wait a few years like we do with the 787. The aircraft are going to be at the point where the HAVE to be replaced, it will not be just the desirable option. Boeing and Airbus will see that and the price per jet will be a lot less elastic.
Of course we could buy all of the used 73N WN is getting rid of, but we would not be able to compete with a competitor that is using a jet that will be 20-25% cheaper to operate.
Make sense?
Simple supply chain economics, and airline economics will not allow 50 aircraft deliveries a year to refleet in 10-15 years. If we did this the cost is unworkable.
The baseline point was that airlines generally should be refleeting at a rate of about 10-20 jets a year continually so that there is not a bulge. It holds true with staffing as well, but does not work out that way. Reference the retirement numbers in 8-18 years.
It is my opinion that if we wait until the next gen 737/320 arrives in 2022 or later we are going to be in a position where it will cost DAL hundreds of billions of dollars over a few short years. We will not have the option to wait a few years like we do with the 787. The aircraft are going to be at the point where the HAVE to be replaced, it will not be just the desirable option. Boeing and Airbus will see that and the price per jet will be a lot less elastic.
Of course we could buy all of the used 73N WN is getting rid of, but we would not be able to compete with a competitor that is using a jet that will be 20-25% cheaper to operate.
Make sense?
I guess the company's choices in the past are coming back to haunt us. But we have to fill the seats if we order more airplanes. ATA did a big fleet renewal early last decade, but couldn't make it work. There were more issues at ATA than just that, but that was one of them.
I think the "problem" is that our fleet is middle aged. Too young to replace but not old enough to retire. If I were in charge, I'd buy some 737s now at low prices, but lease them out for five years or so, then take them back and replace the MD88s with them. Yes, a few more seats to fill but the economy should be better and traffic would of grown by then.
01-27-2010 | 09:22 AM
Can't abide NAI
Joined: Jun 2007
Posts: 12,078
Likes: 15
From: Douglas Aerospace post production Flight Test & Work Around Engineering bulletin dissembler
If DAL was serious about fuel burn it would be in the market for a 100 seat high efficiency turboprop on the 500 mile or less segments. You just can't get that kind of CASM out of a 100 seat jet at that stage length. The DOT stats don't compare RASM over a standard stage length say 100 miles vs 1000 miles, that's why a 753 that flies farther more efficiently than say an a320. The A320 may actually be burning less fuel per ASM on the shorter routes than the 753; in fact it is.
I agree a turboprop is more fuel efficient. There were other problems that prevented DAL from buying large turboprops instead of RJ's aside from consumer preferences. One issue was the footprint a large, straight wing, aircraft has on the ramp. A Dash 8 - Q400 is a 737-800 sized airplane when it comes to ground servicing. There is also the slightly higher block time against headwinds and the fact the Brazilian and Canadian governments were heavily subsidizing the financing of these airplanes while the French / Italians were sitting on their hands.
Last edited by Bucking Bar; 01-27-2010 at 09:43 AM.
01-27-2010 | 09:45 AM
Gets Weekends Off
Joined: Jan 2010
Posts: 147
Likes: 0
Would it be cheaper just to buy an airline for its fleet. Say Delta decides to buy Jet Blue or Alaska. Keep their most profitable routes and dump the rest. Their fleets are generally more modern and more so with Jet Blue, they have the IFE.
01-27-2010 | 09:49 AM
Line Holder
Joined: Sep 2007
Posts: 73
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CASMs
Hey guys, stupid question;
I've looked but can not find it. What costs go into the Cost per Available Seat Mile? Is it everything, i.e. all variable and fixed costs related to the aircraft, lease payments, legal documents, mx hours, fuel, wages, coca cola, etc. Or is it just the variable costs like fuel and wages?
Thanks for the clarification. kargo
I've looked but can not find it. What costs go into the Cost per Available Seat Mile? Is it everything, i.e. all variable and fixed costs related to the aircraft, lease payments, legal documents, mx hours, fuel, wages, coca cola, etc. Or is it just the variable costs like fuel and wages?
Thanks for the clarification. kargo
01-27-2010 | 09:51 AM
veut gagner à la loterie
Joined: Apr 2008
Posts: 23,286
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From: Light Chop
Or a good ACL press conference and Q&A is good too. Day time viewing on the latest & greatest...
01-27-2010 | 09:53 AM
Gets Weekends Off
Joined: Sep 2007
Posts: 931
Likes: 0
From: B-7ER JFK
You know what they say about knowledge.....
WHEN IS EMPLOYEE BLOGGING PROTECTED BY SECTION 7 OF THE NLRA?
KATHERINE M. SCOTT
http://www.law.duke.edu/journals/dlt...06DLTR0017.pdf
WHEN IS EMPLOYEE BLOGGING PROTECTED BY SECTION 7 OF THE NLRA?
KATHERINE M. SCOTT
http://www.law.duke.edu/journals/dlt...06DLTR0017.pdf
01-27-2010 | 10:16 AM
Happy to be here
Joined: Jun 2006
Posts: 18,563
Likes: 0
From: A-320A
Most fleets are not owned by an airline these days, sans WN. You would be buying someone's leases. Generally speaking we have better pricing power than smaller operators.
01-27-2010 | 10:20 AM
Da Hudge
Joined: Oct 2006
Posts: 17,473
Likes: 0
From: Poodle Whisperer
Harvard? eh' no Wharton's a much better school in my opinion. The DOT repeats the information straight from the operator. I don't know how NWA operated the 757 and if there was a difference in stage lengths between the -300 and -200.
I agree a turboprop is more fuel efficient. There were other problems that prevented DAL from buying large turboprops instead of RJ's aside from consumer preferences. One issue was the footprint a large, straight wing, aircraft has on the ramp. A Dash 8 - Q400 is a 737-800 sized airplane when it comes to ground servicing. There is also the slightly higher block time against headwinds and the fact the Brazilian and Canadian governments were heavily subsidizing the financing of these airplanes while the French / Italians were sitting on their hands.
The DOT repeats the information straight from the operator. I don't know how NWA operated the 757 and if there was a difference in stage lengths between the -300 and -200.I agree a turboprop is more fuel efficient. There were other problems that prevented DAL from buying large turboprops instead of RJ's aside from consumer preferences. One issue was the footprint a large, straight wing, aircraft has on the ramp. A Dash 8 - Q400 is a 737-800 sized airplane when it comes to ground servicing. There is also the slightly higher block time against headwinds and the fact the Brazilian and Canadian governments were heavily subsidizing the financing of these airplanes while the French / Italians were sitting on their hands.
I think a next gen turboprop (something powered by something like a couple of those engines from the A400) may be the best answer for the 100 seat question. With the stage lengths they will typically be doing, it really makes a lot of sense.
Ironic that a turboprop, the idea at least, seems pretty promising... after so many years in the "jet" age.
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