That was a long time ago, the details are fuzzy. As well as the FTA was altered a few times. Don't quote me, but something like;

When your number came up, you went, THEN, had to be a CA, THEN had to be a jet CA, THEN had to be a jet CA one year.

Like I said, DON'T quote me on the above, I'm probably forgetting something, but something similar to that.

There was also the language of 1/3 of classes had to consist of FTA's, IIRC.

 

Yes. You are speaking of the MFN clause Delta has where every regional has to reset rates based on whatever the 2nd lowest barrel scraper will charge. Brilliantly diabolical plan!

 

I don't remember the details, but doesn't the "2nd lowest carrier in the DCI portfolio" only apply to ASA, ooops, I mean ExpressJet?

 

I thought it was said dal was not going to push the reset?

 

It was also their opportunity to get rid of 141 50-seaters without having to pay any penalty for breaking contractual agreements.

 

Actually, this isn't quite true. I was at Comair when we were bought, so I will indulge you in a little history here. Prior to capacity purchase agreements wherein the mainline buys all the seats on all the jets at a regional, there were true codeshare agreements. When I got hired at Comair in 1996, the company had its own marketing department, its own ticketing, reservation, sales, ground personnel, accounting, etc. In fact, its marketing and PR departments were the envy of the industry--we used to run 1/4 page to 1/2 page ads in the USA Today several times a week.

The arrangement at the time was that Comair owned the planes and the seats. Both Delta and Comair could book and sell said seats, and Comair got 35% of the revenue from all of Delta's sales, and 100% of their own. This was not an atypical arrangement, and it worked well. It allowed DL to make money in Florida, and the RJ allowed new markets to be developed. Often, Comair and ASA would start them up, and mainline would take over.

Everything changed with the RJ. All of a sudden, Comair became the most profitable airline in the world in terms of the profit margin. In fact, in the summer of '96, they announced plans to buy Spirit; the deal only fell apart because of the ValuJet crash and concerns about LCC's and the DC-9.

The current capacity purchase agreements and fee for departure arrangements began to become prevalent in the late 90's as regionals began buying jets. They needed the FFD's to fund the transition.

Delta bought ASA because ASA management was so cheap (miserly) and the company so poorly run that it was hampering the DL image in ATL, which helped grow AirTran. They bought Comair because the 10 year code sharing agreement had expired, and the two companies could not agree on how to operate going forward. Comair wanted to continue on the same arrangement so that they could market their own flights and possibly get bigger planes.

Delta wanted to fix its costs and have more ability to move the planes to right-size markets.

At stake was Cincinnati, which at the time was Delta's second largest hub, and there was a big gap between CVG and whoever was number 3. Delta could not afford to lose CVG, and they knew that if Comair branched out on its own, Comair could take over CVG--and probably would have. Comair was the local airline, and there was a lot of local loyalty to it. Comair, on the other hand, knew that a battle with Delta would be costly and set it back years on its growth plans.

Delta had another concern: Comair actually had the cash to buy any other regional it wanted to, and was seriously considering a move on SkyWest. Further, Comair had the cash to buy...Delta.

They agreed to let the stock do its annual 2-for-3 split, the price dropped from $40 or so a share to $12 or so, and Delta came in and offered $17, a 30% premium. The rest, as they say, is history.

ALPA could have, and should have, insisted on mergers with ASA and Comair, but they chose otherwise. That decision was the first in a long line of bad ones by all parties involved, and is in many ways one of the reasons the race for the bottom continues. Imagine how different things might have been had the idea of true brand scope been embraced in 1999-2000, versus where we are today.

And now you know...the rest of the story.

 

This shouldn't even warrant 3 replies much less 3 pages.

 

Please explain Beer. I just was only looking for historical reference when mainline buys regionals and or how well (or not) ALPA has represented regional pilots in said buyouts. There hasn't been the usual name calling or grade school sandlot arguments. I am not looking to pick any fights with mainline pilots or throw insults their way. You cant blame management. They just try to reduce competition, cut costs and increase profit margin regardless of ethics. If you think your company is so great and trust your management why have negotiations? Pilots joined ALPA for collective bargaining and merger fragmentation agreements. I don't think there is any language to protect regional pilots when mainline buys regionals based on what has happened in the past. If there is ALPA doesn't seem to care because its to busy ensuring mainline pilots are well represented. Am I wrong?

 

It was Ransome. A friend of mine was #1 at Ransome, merged into PAA in a merger agreement, then retired at DL. Quite a career.

GF

 

It's for (possibly) every dci carrier at their reset time.