Crj550
02-07-2019, 02:24 PM
#32
Gets Weekends Off
Joined APC: May 2009
Position: 787
Posts: 454
CASM is the cost to fly one seat, one mile, normally expressed in cents. RASM is the revenue earned by flying that same seat one mile. In very basic terms, RASM-CASM=Profit. It is important to note that there are many different metrics that have to be considered when calculating or evaluating flight, network, and overall company profitability.
The traditional thinking is, the more seats you have on a plane, the more revenue opportunity you have, and concurrently more seats means more passengers, and thus more opportunity to offset the flight's cost. Most of an individual flight's overall cost is fixed and not related to how many passengers are actually onboard, such this idea makes sense.
That being said, what is becoming more and more apparent across the industry, is that some people are willing to pay a lot (sometimes $10,000+) more for their ticket, whether they desire added flexibility, more room, or a gourmet meal - the notion of just maximizing the seat count is not necessarily the best practice anymore in maximizing revenue. Thats what I think United sees in the CRJ-550. They know that people flying to Bentonville are not purchasing basic economy fares, and are betting on the CRJ-550 in shifting high yielding passenger market share from DL/AA - and that loss of seating density is just the cost of doing business. Additionally, UA gets to add EMB175s, which will further increase system profitability. Finally, whoever mentioned that Scott is using this to show Wall Street that there will be no scope relief I think is spot on too.
I saw this video earlier - this could help explain some of these concepts too.
https://www.youtube.com/watch?v=BzB5xtGGsTc
The traditional thinking is, the more seats you have on a plane, the more revenue opportunity you have, and concurrently more seats means more passengers, and thus more opportunity to offset the flight's cost. Most of an individual flight's overall cost is fixed and not related to how many passengers are actually onboard, such this idea makes sense.
That being said, what is becoming more and more apparent across the industry, is that some people are willing to pay a lot (sometimes $10,000+) more for their ticket, whether they desire added flexibility, more room, or a gourmet meal - the notion of just maximizing the seat count is not necessarily the best practice anymore in maximizing revenue. Thats what I think United sees in the CRJ-550. They know that people flying to Bentonville are not purchasing basic economy fares, and are betting on the CRJ-550 in shifting high yielding passenger market share from DL/AA - and that loss of seating density is just the cost of doing business. Additionally, UA gets to add EMB175s, which will further increase system profitability. Finally, whoever mentioned that Scott is using this to show Wall Street that there will be no scope relief I think is spot on too.
I saw this video earlier - this could help explain some of these concepts too.
https://www.youtube.com/watch?v=BzB5xtGGsTc
Last edited by FlyPurdue; 02-07-2019 at 02:25 PM. Reason: Added a YouTube Video
02-07-2019, 04:01 PM
#33
Gets Weekends Off
Joined APC: Mar 2017
Posts: 3,656
Originally Posted by FlyPurdue
CASM is the cost to fly one seat, one mile, normally expressed in cents. RASM is the revenue earned by flying that same seat one mile. In very basic terms, RASM-CASM=Profit. It is important to note that there are many different metrics that have to be considered when calculating or evaluating flight, network, and overall company profitability.
The traditional thinking is, the more seats you have on a plane, the more revenue opportunity you have, and concurrently more seats means more passengers, and thus more opportunity to offset the flight's cost. Most of an individual flight's overall cost is fixed and not related to how many passengers are actually onboard, such this idea makes sense.
That being said, what is becoming more and more apparent across the industry, is that some people are willing to pay a lot (sometimes $10,000+) more for their ticket, whether they desire added flexibility, more room, or a gourmet meal - the notion of just maximizing the seat count is not necessarily the best practice anymore in maximizing revenue. Thats what I think United sees in the CRJ-550. They know that people flying to Bentonville are not purchasing basic economy fares, and are betting on the CRJ-550 in shifting high yielding passenger market share from DL/AA - and that loss of seating density is just the cost of doing business. Additionally, UA gets to add EMB175s, which will further increase system profitability. Finally, whoever mentioned that Scott is using this to show Wall Street that there will be no scope relief I think is spot on too.
I saw this video earlier - this could help explain some of these concepts too.
https://www.youtube.com/watch?v=BzB5xtGGsTc
The traditional thinking is, the more seats you have on a plane, the more revenue opportunity you have, and concurrently more seats means more passengers, and thus more opportunity to offset the flight's cost. Most of an individual flight's overall cost is fixed and not related to how many passengers are actually onboard, such this idea makes sense.
That being said, what is becoming more and more apparent across the industry, is that some people are willing to pay a lot (sometimes $10,000+) more for their ticket, whether they desire added flexibility, more room, or a gourmet meal - the notion of just maximizing the seat count is not necessarily the best practice anymore in maximizing revenue. Thats what I think United sees in the CRJ-550. They know that people flying to Bentonville are not purchasing basic economy fares, and are betting on the CRJ-550 in shifting high yielding passenger market share from DL/AA - and that loss of seating density is just the cost of doing business. Additionally, UA gets to add EMB175s, which will further increase system profitability. Finally, whoever mentioned that Scott is using this to show Wall Street that there will be no scope relief I think is spot on too.
I saw this video earlier - this could help explain some of these concepts too.
https://www.youtube.com/watch?v=BzB5xtGGsTc
02-07-2019, 05:15 PM
#34
Gets Weekends Off
Joined APC: Aug 2011
Posts: 502
Originally Posted by FlyPurdue
CASM is the cost to fly one seat, one mile, normally expressed in cents. RASM is the revenue earned by flying that same seat one mile. In very basic terms, RASM-CASM=Profit. It is important to note that there are many different metrics that have to be considered when calculating or evaluating flight, network, and overall company profitability.
The traditional thinking is, the more seats you have on a plane, the more revenue opportunity you have, and concurrently more seats means more passengers, and thus more opportunity to offset the flight's cost. Most of an individual flight's overall cost is fixed and not related to how many passengers are actually onboard, such this idea makes sense.
That being said, what is becoming more and more apparent across the industry, is that some people are willing to pay a lot (sometimes $10,000+) more for their ticket, whether they desire added flexibility, more room, or a gourmet meal - the notion of just maximizing the seat count is not necessarily the best practice anymore in maximizing revenue. Thats what I think United sees in the CRJ-550. They know that people flying to Bentonville are not purchasing basic economy fares, and are betting on the CRJ-550 in shifting high yielding passenger market share from DL/AA - and that loss of seating density is just the cost of doing business. Additionally, UA gets to add EMB175s, which will further increase system profitability. Finally, whoever mentioned that Scott is using this to show Wall Street that there will be no scope relief I think is spot on too.
I saw this video earlier - this could help explain some of these concepts too.
https://www.youtube.com/watch?v=BzB5xtGGsTc
The traditional thinking is, the more seats you have on a plane, the more revenue opportunity you have, and concurrently more seats means more passengers, and thus more opportunity to offset the flight's cost. Most of an individual flight's overall cost is fixed and not related to how many passengers are actually onboard, such this idea makes sense.
That being said, what is becoming more and more apparent across the industry, is that some people are willing to pay a lot (sometimes $10,000+) more for their ticket, whether they desire added flexibility, more room, or a gourmet meal - the notion of just maximizing the seat count is not necessarily the best practice anymore in maximizing revenue. Thats what I think United sees in the CRJ-550. They know that people flying to Bentonville are not purchasing basic economy fares, and are betting on the CRJ-550 in shifting high yielding passenger market share from DL/AA - and that loss of seating density is just the cost of doing business. Additionally, UA gets to add EMB175s, which will further increase system profitability. Finally, whoever mentioned that Scott is using this to show Wall Street that there will be no scope relief I think is spot on too.
I saw this video earlier - this could help explain some of these concepts too.
https://www.youtube.com/watch?v=BzB5xtGGsTc
AA has shown that they are fundamentally more concerned about leveraging marginal revenue. That is, fill airplanes with bodies, irrespective of value, and grab incremental revenue through credit cards, etc. We compete with Spirit for discretionary travel in a bottom feeding segment simply to boost load factors and grab whatever dollars we can. The competition leverages high revenue passengers who have loyalty to a solid, competitive product. This business is much more dynamic than D-0/T-0, but I guess my MBA isn't as good as higher.
02-07-2019, 05:49 PM
#35
Gets Weekends Off
Joined APC: Feb 2007
Position: Pawn
Posts: 1,138
Originally Posted by Cyio
Any chance you could explain what the CASM and such mean?
02-08-2019, 01:29 PM
#37
Porco Rosso
Joined APC: Apr 2018
Posts: 2,522
Originally Posted by Soxfan1
As far as the 1-2 saved and 1-2 screwed, other than GoJet in the first catagory, who do you place in the other 3 spots?
Air Whiskey is on notice - if the 550 is UA's 200 of the future, then having a fleet of UA-painted 200s and no other potential partners can't be a good thing.
TSA might be in the same bucket as Whiskey, but the 145 isn't as obviously obsolete as the 200 when compared to the 550.
02-08-2019, 03:32 PM
#38
Gets Weekends Off
Joined APC: Nov 2016
Posts: 303
Originally Posted by ninerdriver
GoJet is saved. Maybe Mesa could be saved, too, depending on whether you thought they were toast in the first place.
Air Whiskey is on notice - if the 550 is UA's 200 of the future, then having a fleet of UA-painted 200s and no other potential partners can't be a good thing.
TSA might be in the same bucket as Whiskey, but the 145 isn't as obviously obsolete as the 200 when compared to the 550.
Air Whiskey is on notice - if the 550 is UA's 200 of the future, then having a fleet of UA-painted 200s and no other potential partners can't be a good thing.
TSA might be in the same bucket as Whiskey, but the 145 isn't as obviously obsolete as the 200 when compared to the 550.
If it’s the death of the all Econ 50 seater ERJ/CRJ, so be it. United - say they love it and want more of these. Scope would allow 300. So in this market no one company could take them all. So new contracts come up. AW has a slight leg up over ERJ companies being the common type rating. Maybe.
Or United kinda loves it but can’t justify 300 of them. Why? There are some markets that have too short a stage length or 0 premium demand. So maybe they want a mix. So some 50 seat regionals are still needed and others bid this “new” jet. The all Econ 50 seater goes back to its Turboprop roots and routes. More ORD to CWA/GRR/CID less ORD to HPN/SAV/CHS.
Or it’s a total and complete failure. And that is very possible too.
So there are many senerios off of each of these senerios above I can’t say what this means, yet.
AW has 2.5 to 4.5 years left on current contract. United still wants to grow 6% the next year or two, is still scoped out on 70/76 seaters, still has NO 100-130 seater on order and most of their 50 seater airlines can’t even staff the current demand (CA, half way to 60/EXJ not over 100 erjs, not at 20 CRJs yet and 0 out of 25 175s, plus AW not flying all 65 200s yet)
So short term and maybe even medium term, I’m not worried. UA will take any 50 seater that can be staffed right now.
So I’m still TBD on what I think about this. Could be the best or worse thing for us, or nothing at all.
02-08-2019, 04:00 PM
#39
Porco Rosso
Joined APC: Apr 2018
Posts: 2,522
Originally Posted by Soxfan1
Figured that’s about where you were at. I can totally see that point. Look - as an AW pilot I have thought hard about what this means and I have concluded that I don’t know if this is terrible news, no news at all, or great news.
If it’s the death of the all Econ 50 seater ERJ/CRJ, so be it. United - say they love it and want more of these. Scope would allow 300. So in this market no one company could take them all. So new contracts come up. AW has a slight leg up over ERJ companies being the common type rating. Maybe.
Or United kinda loves it but can’t justify 300 of them. Why? There are some markets that have too short a stage length or 0 premium demand. So maybe they want a mix. So some 50 seat regionals are still needed and others bid this “new” jet. The all Econ 50 seater goes back to its Turboprop roots and routes. More ORD to CWA/GRR/CID less ORD to HPN/SAV/CHS.
Or it’s a total and complete failure. And that is very possible too.
So there are many senerios off of each of these senerios above I can’t say what this means, yet.
AW has 2.5 to 4.5 years left on current contract. United still wants to grow 6% the next year or two, is still scoped out on 70/76 seaters, still has NO 100-130 seater on order and most of their 50 seater airlines can’t even staff the current demand (CA, half way to 60/EXJ not over 100 erjs, not at 20 CRJs yet and 0 out of 25 175s, plus AW not flying all 65 200s yet)
So short term and maybe even medium term, I’m not worried. UA will take any 50 seater that can be staffed right now.
So I’m still TBD on what I think about this. Could be the best or worse thing for us, or nothing at all.
If it’s the death of the all Econ 50 seater ERJ/CRJ, so be it. United - say they love it and want more of these. Scope would allow 300. So in this market no one company could take them all. So new contracts come up. AW has a slight leg up over ERJ companies being the common type rating. Maybe.
Or United kinda loves it but can’t justify 300 of them. Why? There are some markets that have too short a stage length or 0 premium demand. So maybe they want a mix. So some 50 seat regionals are still needed and others bid this “new” jet. The all Econ 50 seater goes back to its Turboprop roots and routes. More ORD to CWA/GRR/CID less ORD to HPN/SAV/CHS.
Or it’s a total and complete failure. And that is very possible too.
So there are many senerios off of each of these senerios above I can’t say what this means, yet.
AW has 2.5 to 4.5 years left on current contract. United still wants to grow 6% the next year or two, is still scoped out on 70/76 seaters, still has NO 100-130 seater on order and most of their 50 seater airlines can’t even staff the current demand (CA, half way to 60/EXJ not over 100 erjs, not at 20 CRJs yet and 0 out of 25 175s, plus AW not flying all 65 200s yet)
So short term and maybe even medium term, I’m not worried. UA will take any 50 seater that can be staffed right now.
So I’m still TBD on what I think about this. Could be the best or worse thing for us, or nothing at all.
02-08-2019, 04:16 PM
#40
Gets Weekends Off
Joined APC: Nov 2016
Posts: 303
Originally Posted by ninerdriver
That all makes sense. I'm just prognosticating, myself. I mean, hey, I'm a pilot. That's what I'm supposed to do.
