First off I'd like to express my disgust with how the regional system works in the cycle of contracted flying going back and fourth. Even if I get to keep my job for another day it still makes me sick that it comes at the expense of a large group of other people living life just like myself. I feel for you guys and wish it could be different. This actually effects the industry as a whole but many people just see the short term benefit to themselves. In the end it will all wash out.

I wanted to start a thread to see if anyone has any real information as to why AMR decided to start contracting out flying from their own contracting company to another. Not just the old cynical APC view but a realistic view of what logic they used in their decision and what long term financial benefits they are hoping to achieve with this movement.

It just doesn't make sense to contract out flying that has already been outsourced.

I can think of at least three things that really don't make sense with how they gave this flying away.

• Skywest and Expressjet are kind of what could be considered the premium of regional carriers. Sure they are just regional carriers but they have been around a while, have made a ton of money, never went BK, hardly ever lose money and have a wicked heavy pilot group with respect to seniority. I can't imagine SKW or XJT are doing the flying any cheaper. If anything you would think it would be more expensive. Why not some cheapo (Gojetz style) carrier?
• ERJ vs CRJ - Does anyone no for sure if one is more expensive to operate than the other? It would seem as if the CRJ is. I only say that because of the operational speeds and altitude differences. I know that ERJ can get up to the mid 30's easily fully loaded. That CRJ doesn't usually make it up there especially fully loaded. This has to impact efficiency.
• Transitional expenses - New paint, facility changes, and certification process have to cost money as well. Seems like more unnecessary spending.

I'm sure there are other drawbacks to the whole CPA that I'm not thinking of. So what factors were so cost beneficial that swayed them into the shift in flying. I have some understanding of business principals but the normal ethics seen in everyday business do not apply to aviation for some reason.


Thoughts?

 

If you are looking for "real information" as you say...you better ask AMR, because they are the only ones who know why they are changing their model or what influenced their decision to decide on SKW. Besides in the grand scheme of things it doesn`t really matter who, what, where or why because as past indicators have shown it has happened before and it will happen again.

 

He's really got a point here, guys.

 

Well the 200's out of DFW will not need to get up into the mid 30's cause they will be doing all the short haul flying.
As for the reason, well AMR doesn't want all it's eggs in one basket - Eagle. They want to be able to play regionals against each other to get the lowest price. Right now they must be willing to pay a little premium to farm out that flying so they can scare the AE pilot group into a concessionary contract.
Closing LAX as an Eagle base - well it's the only domicile that other bases don't fly thru. Meaning a DFW pilot will pass thru ORD or MIA on their sequence, but not thru LAX. This creates issues with spare planes, crews, etc. Not to mention its a pretty small base to begin with.
Just my $0.02.

 

I'm willing to bet its an issue of aircraft financing / leasing terms. SkyWest INC and Eagle have similar operating costs, but INC has a AAA credit rating and can get significant discounts on financing terms compared with AMR's bankruptcy credit rating. These savings in financing add a lot of money to the bottom line and allow INC to bid very competitively with other regionals.

 

To the OP. We've seen this play out before. Whether or not it was USAir in the 90's playing their regional feed providers against one another, or though the BK era when it happened in a grand scale. Unfortunately, your questions are ALL valid and they ALL make sense. Problem is, this industry and the way it trickles down to the regional level DOESN'T make any sense. Yet seems to function on a daily basis. And if you think about it, almost all your questions have been answered before piece meal in one variation or another.

The ORD -700 guys I talk to have trips that fly through LAX.

 

You sure or do I only imagine all of my trips on the 700 go through LAX.

 

He did say DFW pilot fwiw

 

Unless your -700 has a full EMB reserve crew DH'ing and you're towing a spare 140 behind you glider-style, I'm pretty sure the point av8 made is still valid.

 

What I find interesting is that I read somewhere that when AA first asked SKW to do the Eagle flying, SKW told them no, because they wouldn't do it at a loss.

Isn't it funny that SKW is now doing Eagle's flying?

To be clear, nothing against SKW pilots; they had no say in the matter. It's just another move in the regional game.