Any "Latest & Greatest" about Delta?
04-07-2012 | 06:32 PM
The Brown Dot +1
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From: 777B
Hardy Har Har
04-07-2012 | 07:55 PM
veut gagner à la loterie
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From: Light Chop
Synergies in cleaning up outsourcing mess?
Exactly, The big point missed in all the talk about DCI is that you can only bring the flying back in house if you can do it within a few percentage points of the costs at the regional carriers. If you can't the entire process is doomed to fail and you lose not only those jobs but the feed. Its a fine line about where you can make the cost issue work. I think it was crossed with the E-170/175. The company would disagree. Regardless if your going to convince the company to bring that flying back you have to produce a solid economic plan on cost and how you will equal the current regionals. There is a reason why all the airline managements fight the unions tooth and nail on this issue and its not that they hate pilots. Its cost pure and simple.
Let me ask another question. With the DAL-NWA merger, the annual report from 2009 says they expected to realize $2B in synergies from more effective aircraft utilization and reduced overhead and improved operational efficiency. It would also allow them to right-size the operation and to reduce fleet costs by removing things that don't make money, like freighters? Different subject.
Anyways, a CAPA article in 2009 outlined HH four tenets of Delta's strategies and I'll post it in its entirety because you look back and the Alaska thing just makes your stomach turn:
- Delta/Northwest synergies. While it has achieved most milestones including the October merging of Worldperks and SkyMiles, remaining action includes the single operating certificate expected by the end of 2009 and the technology cutover in the first quarter of 2010. The first quarter will also see the balance of the Northwest fleet completed in new livery. The only remaining sticking point will then be the merging of employee representation and seniority lists.
- Squeezing costs out of the system, including reducing overheads by USD200 million, as well as realigning capacity to get fixed and variable costs out commensurate with capacity changes. The airline is focusing on its network, realigning hubs and traffic flows so that the Northwest and Delta hubs do not compete with one another. Delta has seven hubs including Tokyo Narita and, has completely changed the traffic flows, so hubs complement each other, reallocating equipment and reducing capacity to ensure a given point can connect cross the system without going to two different hubs. It is also exiting the freight business by the end of the year, which lost it USD150 last year.
- Refocusing revenue efforts to drive a revenue premium by capturing a great share of the market including the lucrative New York market. “Combine [the US Airways slot deal] with the transcontinental and international flows over JFK, travelers have more opportunities to fly Delta than any other New York carrier.
- Joint ventures such as the Air France/KLM partnership, as well as growing domestic partnerships are delivering benefits. “That JV amounts to a USD12 billion revenue opportunity across the Atlantic. One in four flights is part of the JV.” Halter noted the airline recently cut a deal with Alaska Airlines to form an alliance that not only feeds passengers to its domestic network but to its four international gateways on the West Coast to Asia.
Those airlines combined operate 1,700 airplanes of which 55% is dedicated to Delta. Skywest operates 704 regionals between it's 3 airlines in its holding company. Republic operates 338 including 91 Airbus in its 6 airlines under it's holding company of which two fly for Delta as separate entities but the same seniority list which happens to be integrated with the Frontier list. Compass has 41, Comair 68 and Pinnacle 199.
And of course this doesn't include Alaska's 86 737s that "not only feeds passengers to its domestic network but to its four international gateways on the West Coast to Asia."
So my question, how can we not find some synergies by cleaning up that mess? And of course this doesn't include Alaska's 86 737s that "not only feeds passengers to its domestic network but to its four international gateways on the West Coast to Asia."
I mean if we found it combining DAL-NWA into a 700+ size fleet how can we not find synergies by combining 1,300+ airplanes?
Are we really supposed to believe having 7 airlines with overlapping everything plus a guaranteed profit and costing us in so many ways, many unexpected, is more affordable than a $57 increase per hour in pilot cost or a 2/10ths of 1 cent increase in CASM for a CRJ-900 or E175?
What is that? $32M a year on the entire 76 seat fleet? A 1.5% loss of a near $2B profit before you count synergies?
Seems as if it would make financial sense to combine DCI's together with DAL? Or at the least take the most profitable flying and combine it (all 70+ seaters to mainline)? No staple, no merger, just take the planes and hire for them.
Last edited by forgot to bid; 04-07-2012 at 08:15 PM.
04-07-2012 | 07:59 PM
meh
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Exactly, The big point missed in all the talk about DCI is that you can only bring the flying back in house if you can do it within a few percentage points of the costs at the regional carriers. If you can't the entire process is doomed to fail and you lose not only those jobs but the feed. Its a fine line about where you can make the cost issue work. I think it was crossed with the E-170/175. The company would disagree. Regardless if your going to convince the company to bring that flying back you have to produce a solid economic plan on cost and how you will equal the current regionals. There is a reason why all the airline managements fight the unions tooth and nail on this issue and its not that they hate pilots. Its cost pure and simple.
I don't have ANY numbers, and don't really have a good idea of what all the costs are to run a regional op, nor what % of that cost is the pilot pay. However, this WOULD be a very interesting topic for more knowledgeable folks to cover. What GAINs do we get by moving the flying in-house (no assured profits to other airlines, no overhead to run 2nd separate airline, increased efficiency due to one true op, etc.)? What reductions do we get on the leases? What ARE the true differences in pilot costs, and what % of the bottom line is that?
Good post by sailing in any case.
And I can see now (after posting this) that 3 or 4 other guys are thinking along the same lines-- FTB right above here is asking the exact same thing, but in his generally more-thought-out and more-graphical manner
Last edited by Roadkill; 04-07-2012 at 08:29 PM.
04-07-2012 | 08:13 PM
veut gagner à la loterie
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From: Light Chop
I forgot, we also share the 737-800s via Alaska, so I updated the chart. We get the stuff in blue unless it was grandfathered in. Anything added outside the blue is a concession and we need to concede something of value to get it. If the rumors are true about the 717.
04-08-2012 | 04:40 AM
Line Holder
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04-08-2012 | 04:47 AM
Gets Weekends Off
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From: Still in one
That bar has moved significantly, but we can't even get the MEC to study the question. They don't want to examine the economics as they CURRENTLY exist.
The game of the next 24 months is not that of the last 24, nor the 10 years before that. FTDT will ravage the regionals, because their bag of scheduling tricks, like scheduled reduced rest and 16 hour duty days, are going out the window.
Their ONLY way to mitigate crew costs is to reduce pay and benefits. Yet they already find it VERY difficult to recruit people to work for their bottom basement wages...and yet here comes the 1,500 hour rule to haunt their dreams.
The game has changed. The only one singing from the old hymnal seems to be DALPA.
Nu
The game of the next 24 months is not that of the last 24, nor the 10 years before that. FTDT will ravage the regionals, because their bag of scheduling tricks, like scheduled reduced rest and 16 hour duty days, are going out the window.
Their ONLY way to mitigate crew costs is to reduce pay and benefits. Yet they already find it VERY difficult to recruit people to work for their bottom basement wages...and yet here comes the 1,500 hour rule to haunt their dreams.
The game has changed. The only one singing from the old hymnal seems to be DALPA.
Nu
Slowplay's answer is a half answer to a question that was not specific enough. I believe the resolution that addressed this was AI 11-95 from the Nov MEC Mtg (look on the comm committe page under resolutions, can't copy from my iPad). It was to study and report back on accounting practices and costs associated with various DCI flying to determine the true operating costs.
It was NOT a study of whether 76 seat flying, aka E-175, could be performed at mainline, with seat, route, GW limits and other restrictions lifted, and duplicate managerial and other costs eliminated, and at what pay rate that could still allow a margin for the company, per Sailing's post.
I believe that someone at ALPA has already decided they don't want to pursue this because while perhaps not a negative cost item, might detract from other possible PWA gains, so the question is not being seriously considered. Of course the company doesn't want to go there because with PCL in BK, they can keep whipsawing the DCI costs even lower. So we'll put them off the scent, trot out a few old power points and brush them off and say its not cost effective.
I asked my LEC reps if any analysis as above has been done and they said not that they had seen. I also asked if there was any truth to the rumors of letting the company outsource further 76 seaters and was told they cannot discuss negotiation specifics. ****?!?
My experience is that reps will usually tell you NO if there is no truth to a rumor, but when they can't discusses means BOHICA
04-08-2012 | 04:53 AM
Gets Weekends Off
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FTB,
You're right on! Just some round numbers:
255 70-76 Seat aircraft (you can throw 6 seats back in the other 100 jets)
12 hours / day block (assumes no spares and all jets fly every day)
365 Days / Year
$100 / Hr more to operate at mainline (yeah I know--it would be no where near this)
255*12*365*100 = $111M / year
Subtract out all the overhead, inflexibility, other costs associated with operating on another certificate. Gained synergies, extra seats,....
All this outsourcing is saving DAL less than 20M/qtr! Get this stuff back to mainline! By the way, the above are extremely conservative numbers!
You're right on! Just some round numbers:
255 70-76 Seat aircraft (you can throw 6 seats back in the other 100 jets)
12 hours / day block (assumes no spares and all jets fly every day)
365 Days / Year
$100 / Hr more to operate at mainline (yeah I know--it would be no where near this)
255*12*365*100 = $111M / year
Subtract out all the overhead, inflexibility, other costs associated with operating on another certificate. Gained synergies, extra seats,....
All this outsourcing is saving DAL less than 20M/qtr! Get this stuff back to mainline! By the way, the above are extremely conservative numbers!
04-08-2012 | 04:59 AM
Works Every Weekend
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From: 737 ATL
Are we really supposed to believe having 7 airlines with overlapping everything plus a guaranteed profit and costing us in so many ways, many unexpected, is more affordable than a $57 increase per hour in pilot cost or a 2/10ths of 1 cent increase in CASM for a CRJ-900 or E175?
What is that? $32M a year on the entire 76 seat fleet? A 1.5% loss of a near $2B profit before you count synergies?
Seems as if it would make financial sense to combine DCI's together with DAL? Or at the least take the most profitable flying and combine it (all 70+ seaters to mainline)? No staple, no merger, just take the planes and hire for them.
What is that? $32M a year on the entire 76 seat fleet? A 1.5% loss of a near $2B profit before you count synergies?
Seems as if it would make financial sense to combine DCI's together with DAL? Or at the least take the most profitable flying and combine it (all 70+ seaters to mainline)? No staple, no merger, just take the planes and hire for them.
Given that reality, the reason they have "7 airlines with overlapping everything" is the Comair strike. That disastrous strike was handled so horribly (on both sides) and so incredibly costly that management vowed "never again". They will never allow a single connection carrier pilot group to get that tight of a stranglehold over a hub. That strike led directly to the slow death of Comair and the slow death of CVG as a hub.
That's the real legacy of the RJDC boys and their captive MEC at Comair.
04-08-2012 | 05:03 AM
Kerbal Rocket Surgeon
Joined: Dec 2007
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From: DTW 717A
You forgot GoJet. Easy to do, since they are such a "high quality" operation and don't show up on the radar much.
04-08-2012 | 05:37 AM
On Reserve
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From: MSP7ERB
Delta Air Lines is considering a "blue sky" theory for how to meet future pilot demands. Called "CAPT," for Civil Airline Pilot Training programme, the carrier stresses the idea is conceptual in nature and that it is not committed to the implementation, nor is it engaged in discussions with potential sponsors.
Speaking at the World Aviation Training conference in Orlando, Florida on 19 April, Arnie Kraby, Delta's manager of pilot selection, said a dramatic pilot shortage is a "gathering storm" that industry must address. Delta alone in the next 15 years will lose 7,600 pilots who will reach age-65 and retire, says Kraby.
CAPT would mainly look to high-tier college aviation programmes as means of cultivating pilots. "Statistical data indicates that a quality college education from a top-tier university or college provides us with a much better pilot in terms of fewer training failures, overall performance and reliability," notes Kraby.
The programme would include advanced jet aircraft simulation training and would be on par with military training, which produces skilled pilots qualified to fly high-performance aircraft in a shorter period compared with the civil sector, says Kraby. He is a former US Air Force pilot who flew Delta aircraft for 38 years,
"First we need to educate, mentor and train students," says Kraby. The CAPT programme would invite stakeholders across industry to come onboard as sponsors and jointly work out solutions. One of the first goals would be to build an outreach programme focused on middle- and high schools in an effort to stir up enthusiasm for the pilot profession.
CAPT candidates would be carefully screened to choose only those who have skills necessary to become a pilot. The candidate would have to maintain a 2.75 GPA, and 3.0 GPA for aviation courses. Upon earning a degree, the candidate would be required stay on as CAPT member and accrue 1,000 hours as a flight instructor at the university, thus providing a stable workforce for the school and to acquire FAA-required flight hours.
Graduates of the programme would be guaranteed an interview at a sponsoring regional airline. Then, after meeting regional airline requirements and logging required number of hours for a mainline slot (Delta requires 1,200 hours), CAPT would offer an interview at a major airline sponsor-- "another light at the end of the tunnel", says Kraby.
With aviation training costs running $80,000-$100,000, Kraby stresses: "We've [industry] got to provide financial assistance for students if we are to get the [pilot] numbers." The programme might require that student loans be guaranteed by the sponsoring organisation. Another solution might be to have loans reduced by 5% per year up to a maximum of 50% for each year the candidate works for a sponsoring airline.
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