Tracking Regional Outsourcing
07-20-2013 | 06:09 AM
#81
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Joined: Sep 2010
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From: UAL retired
I admit that I had been an optimist regarding Scope at major airlines after the recent UAL "Scope Choke" clause, but an underlying assumption for that model's success was the long term death of the 50 seat fleet which I had thought Delta started. It appears now that was a dream. Based on the information below, I now believe Delta will increase the percentage of flying done by RJs in the coming years and has simultaneously pushed the pilot labor costs to an new all time low and can use contractual language to beat the other RJ carriers down to that new low bar AND thus force the whole industry to a new low AND therefore airline management has come one step closer to eliminating mainline domestic flying:
Delta has agreed to extend Pinnacle’s CRJ200 contract by four and a half years, which means it will be saddled with 145 50-seaters that it takes great pains to declare are uneconomical until 2022.
Delta has since made public a significant point: It can reset the hourly rates it pays its regional partners to match the rate paid to the second lowest of its partners.
“As a result, Delta’s announcement made public its ability to drive all of its regional feed costs near Pinnacle by the end of 2017,” Gutierrez wrote. “Because nearly fifty percent of all mainline departures are flown by regional partners, the competitive advantage that Delta is threatening to realize is massive.”
“As a result, Delta’s announcement made public its ability to drive all of its regional feed costs near Pinnacle by the end of 2017,” Gutierrez wrote. “Because nearly fifty percent of all mainline departures are flown by regional partners, the competitive advantage that Delta is threatening to realize is massive.”
Delta already has the lowest percentage of 50-seat aircraft in its regional fleet among its peers, at 58%. Smaller 50-seat jets comprise 63% of US Airways’ fleet and nearly 62% of United’s. If Delta’s pilots approve the tentative deal, the carrier achieves a first-mover advantage in ridding itself of the undesirable and uneconomical aircraft while keeping its capex at levels that allow it to achieve its return on invested capital target of 10% to 12%. During 1Q2012 Delta recorded a ROIC of 10.6%, compared with 6% for Southwest, which has declared its goal is to reach a 15% ROIC. Southwest has opted to defer 30 737-800 deliveries from 2013/14 to 2017/18 in an effort to move closer its stated return targets.
Endeavor Air (formerly Pinnacle Airlines, and before that, Express Airlines I) is an American regional airline, which is a subsidiary of Delta Air Lines,[1] operates as Delta Connection for Delta Air Lines.[2] Pinnacle Airlines Corp. emerged from chapter 11 reorganization as a wholly owned subsidiary of Delta Air Lines which became official on May 1st, 2013.[3] It is based in Minneapolis-Saint Paul International Airport,[4] with hubs at Detroit Metropolitan Wayne County Airport, Minneapolis-Saint Paul International Airport, and New York's John F. Kennedy International Airport. Until the restructuring, Endeavor also operated hubs at Delta's Atlanta Hartsfield-Jackson International Airport and Memphis International Airport hubs. [5]
07-20-2013 | 06:45 AM
#82
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Joined: Oct 2006
Posts: 13,088
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From: B757/767
I think you mean only older 320s. The oldest 319 was delivered in 1999. Younger then over half of Delta's B747s. The A319s are likely not being parked anytime soon. And I thought the 737-900ERs were replacing the older 320/757s? Because several Delta people are complaining about how it's replacing 757 flying, but pays less. So 88 B717s are replacing 16 DC9-50s?
Last edited by johnso29; 07-20-2013 at 10:21 AM.
07-20-2013 | 06:52 AM
#83
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Joined: Oct 2006
Posts: 13,088
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From: B757/767
Independent unions are really hitting it out of the park.
Last edited by johnso29; 07-20-2013 at 10:23 AM.
07-20-2013 | 10:25 AM
#84
Moderator
Joined: Oct 2006
Posts: 13,088
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From: B757/767
I admit that I had been an optimist regarding Scope at major airlines after the recent UAL "Scope Choke" clause, but an underlying assumption for that model's success was the long term death of the 50 seat fleet which I had thought Delta started. It appears now that was a dream. Based on the information below, I now believe Delta will increase the percentage of flying done by RJs in the coming years and has simultaneously pushed the pilot labor costs to an new all time low and can use contractual language to beat the other RJ carriers down to that new low bar AND thus force the whole industry to a new low AND therefore airline management has come one step closer to eliminating mainline domestic flying.
http://www.airlinepilotforums.com/ua...cs-future.html
