From the SKYW 10K:
The Delta Connection Agreements also provide that, beginning with the fifth anniversary of the execution of the agreements (September 8, 2010), Delta has the right to require that certain contractual rates under those agreements shall not exceed the second lowest of all carriers within the Delta Connection program. During the fourth quarter of 2010, SkyWest Airlines and Atlantic Southeast reached an agreement with Delta on contractual rates satisfying the 2010 rate reset provision and the second-lowest rate provision and agreed to rates through December 31, 2015. Delta additionally waived its right to require that the contractual rates payable under the Delta Connection Agreements shall not exceed the second-lowest rates of all carriers within the Delta Connection program through December 31, 2015.

The way I read this (disclaimer: no legal training) on January 1, 2016 the existing agreement ends. SKYW can either match the second lowest rate and continue to be a DAL Connection Carrier, or perhaps negotiate something else. A big part of the contract is the rate. If SKYW can't (or won't) match it, I see the contract as ending. Why would Delta want to pay more?

Richard Anderson, Delta's CEO, is a tough negotiator who doesn't like to pay a nickel more for something than he absolutely has to (and he probably loses a little sleep questioning that last nickel).

Just look at the recent aircraft purchases. A bunch of used MD-90's that Delta is buying for cheap and the Boeing 717's that are coming from SWA at supposedly ridiculously low lease rates. Just last week there was a WSJ article about Delta trying to negotiate the purchase of some new deeply discounted current generation B-737's or A-320's...

 

FYI, this is straight out of the Skywest Inc 2011 10K:

The SkyWest Airlines Delta Connection Agreement is subject to early termination in various circumstances, including:

• if SkyWest Airlines or Delta commits a material breach of the SkyWest Airlines Delta Connection Agreement, subject to 30-day notice and cure rights;

• if SkyWest Airlines fails to conduct all flight operations and maintain all aircraft under the SkyWest Airlines Delta Connection Agreement in compliance in all material respects with applicable government regulations;

• if SkyWest Airlines fails to satisfy certain performance and safety requirements;

• if, under certain circumstances, Delta has a right to terminate the ExpressJet Delta Connection Agreement;

• if the other party files for bankruptcy, reorganization or similar action (subject to limitations imposed by the U.S. Bankruptcy Code) or if either party makes an assignment for the benefit of creditors; or

• if SkyWest Airlines fails to maintain competitive base rate costs (provided that SkyWest Airlines has the right to adjust its rates prior to any such termination).

The agreement for ExpressJet DCI flying is identical.

 

There is no way to match how cheap Pinnacle is going to be, we will have virtually no overhead when we start using Delta's facilities and IT systems. We basically will only have pilots and FA's and a skeleton crew in management. Every single cent left over goes straight to Delta.

 

Now what IF, DAL sells 9E to SKW cheap? Delta doesnt want to put itself on the line owning a regional. My guess is DAL will sell off 9E when out of BK and SKW will negotiate a new rate with the MRJs.

 

All true, but your second-to-last paragraph is the key point...

Shortage or not, the Sky-Gods are dead...there's no fat left, and precious little meat...nothing left to cut but bone. Airlines (regionals or otherwise) CANNOT pay pilots any less or they won't have any pilots. The only reason people put up with FO pay now is because they are working towards CA pay and/or TPIC to move on. Take away those opportunities and student pilots will dry up (well they already have, but it will get much worse)

Inflation marches on...less than $70K is getting quite painful for a real adult with spouse/kids/responsibilities/hobbies.

The only way a regional could get away with a significant cut right now is if they a very deep bench (ie PCL furloughs) or if majors start hiring gang-busters and it looks like a new-hire could move up and out in 3-5 years.

 

Nope. Not likely to happen. DAL owning 9E is their way of driving down DCI costs. It's the ultimate whipsaw. Selling 9E to Skywest has little to no benefit.

 

Exactly, for the next 7 years at least, Delta has the most efficient DCI carrier on their own books. Not saying thats good, just it is what it is. Longevity will never go above year 12 for ca and year 4 for fo's.

 

Yes but how profitable will a 40 crj900 fleet be?

 

The Pinnacle CRJ900 fleet count will be 81 when the transition is complete. Pinnacle currently operates 57 CRJ900s. But 16 will be removed in BK, and then 40 will be added as the CRJ200s are parked.

 

Whoa there yourself. Don't put words in my mouth... Never stated that "SKYW could go it alone and compete head to head w/DAL,AMR,UAL, etc" !
I do think that all the regionals will have a much tougher time filling their cockpits with crews, and those with the worst pay and conditions will probably not find new "victims" without stepping up to the plate and improving said pay and work conditions. I hope/believe the day will come when the regionals will be forced to "compete" for pilots with better pay and working conditions, or they won't be able to attract enough qualified candidates!

This means the ones with the worst pay, benefits, and work rules will be the first to start having operational difficulties due to lack of crews!!