Bombshell: Comair to cease operations

[ContUNITEus]

ATLANTA, July 27, 2012 /PRNewswire/ -- Delta Air Lines (DAL) today announced its subsidiary, Comair, Inc. will cease operations after Sept. 29, 2012.
(Logo: http://photos.prnewswire.com/prnh/20090202/DELTALOGO )
In a memo issued today to the Officers and Directors of Delta Air Lines, Don Bornhorst, Senior Vice President of Delta Connection, said:
"While regional flying has and will remain a key component of Delta's network, customer expectations and the unit costs of regional flying have evolved. In response, Delta recently announced its plans to reduce the total number of regional jets in its network while adding more mainline flying. This includes reducing the number of 50-seat regional jets from nearly 350 aircraft to 125 or fewer in the upcoming years. As a result of this reduction and changes to its customer-focused business strategy, Delta has made the difficult decision to cease Comair's operations."
Ryan Gumm, President of Comair, communicated Delta's decision this morning to Comair employees in a memo, the full text of which is included below.
The discontinuation of Comair's operations will not result in any significant changes to Delta's network, which has enough flexibility to accommodate these changes. Currently, Comair accounts for approximately one percent of Delta's network capacity. There will be no disruption to customers and no significant adjustments to Delta's flight schedule or locations served. All customers who travel on the Delta network, whether on Delta Connection flights or mainline aircraft, can continue to make travel plans with Delta as they have in the past.
Cincinnati will continue to be an important market in Delta's worldwide network. Over the past several years, working with community leaders, Delta has right-sized capacity at Cincinnati to better match service to local passenger demand. Cincinnati is now a profitable market for Delta and the city continues to enjoy over 120 peak daily flights, with non-stop service to 49 destinations. No reductions in the number of Delta flights are planned at Cincinnati as a result of this decision.
To All Comair Employees
From Ryan Gumm, President
Subject Comair to Cease Operations
Date July 27, 2012
All,
Today, I am writing to let you know that Delta has made the difficult decision to cease Comair's operations after September 29, 2012.
Delta recently announced its intent to reduce the overall number of 50-seat regional jets in its network from nearly 350 to 125 or fewer in light of the significant changes in the economic and competitive conditions in the airline industry. We believed this announcement would have a negative impact on Comair because we operate some of the oldest 50-seat aircraft in the Delta Connection fleet, which also have the highest unit cost per flight hour. And, in fact, Delta has decided to remove the remaining 16 Comair 50-seaters from the Delta network, leaving Comair with only 28 aircraft in scheduled service. This further reduction of Comair's active fleet will only create higher unit costs, which equates to a business model that is no longer sustainable in this competitive regional environment.
I understand that today's news is very difficult and raises many questions for you and your family. Human Resources is prepared to directly assist you during this time. They will post a memo and other documents on the Human Resources Epic page to keep you informed of the assistance available and to help answer many of your questions. We will also have staff available over the weekend to answer questions if needed. If after reviewing the information on Epic you have any additional questions or concerns, please do not hesitate to reach out to your departmental leadership as well.
The discontinuation of Comair's operations is in no way a failure or a reflection of your work – it is an unfortunate necessity due to the economic limitations of our aging aircraft, cost structure, the long-term outlook for 50-seat aircraft, and our challenging industry and economy. The quality of our operations has continued to be outstanding during our lengthy restructuring efforts, and I am honored to have had the opportunity to lead such a committed team. I am asking that each of you recognize the importance of remaining focused on safety and the job at hand as we continue operations throughout the wind-down period. Your continued commitment and your dedication to a safe and reliable operation is a testament to the professional team we have built here at Comair.
About Delta Air Lines
Delta Air Lines serves more than 160 million customers each year. During the past year, Delta was named domestic "Airline of the Year" by the readers of Travel Weekly magazine, was named the "Top Tech-Friendly U.S. Airline" by PCWorld magazine for its innovation in technology and won the Business Travel News Annual Airline Survey. With an industry-leading global network, Delta and the Delta Connection carriers offer service to nearly 350 destinations in 65 countries on six continents. Headquartered in Atlanta, Delta employs 80,000 employees worldwide and operates a mainline fleet of more than 700 aircraft. A founding member of the SkyTeam global alliance, Delta participates in the industry's leading trans-Atlantic joint venture with Air France-KLM and Alitalia. Including its worldwide alliance partners, Delta offers customers more than 13,000 daily flights, with hubs in Amsterdam, Atlanta, Cincinnati, Detroit, Memphis, Minneapolis-St. Paul, New York-LaGuardia, New York-JFK, Paris-Charles de Gaulle, Salt Lake City and Tokyo-Narita. The airline's service includes the SkyMiles frequent flier program, a world-class airline loyalty program; the award-winning BusinessElite service; and more than 50 Delta Sky Clubs in airports worldwide. Delta is investing more than $3 billion through 2013 in airport facilities and global products, services and technology to enhance the customer experience in the air and on the ground. Customers can check in for flights, print boarding passes, check bags and review flight status at delta.com.

 

[ContUNITEus]

If this is not the biggest example of corporations always winning, then what is?

I guess this serves also as a message to AA employees.

Comair employees were strong; their unions were extremely good. Unions at this company managed to get extremely good contracts - in comparison to even mainline employee unions. Throughout the turmoil of Delta trying to force lower wages, and substandard working conditions, the unions and employees at Comair never budged.

But in the end, Corporate America found a way to win - yet once again. They figured: "If we can't control them and force them to lower their working (and living) standards, then we'll just squash them and close them down."

Yes... It's evident to me now that the "America West's" of this world will always prevail.

I blame companies like America West and Mesa for companies like Delta, American and others to adopt the business strategy of making employees a liability instead of an asset.

I mention "America West (yet again) because they truly managed to get away with this business model for the last 30 years. Probably Mesa is the only other comparable company that has been in business for as long as AWA. Nowadays we have the Spirit Airlines and others as well opening their doors with substandard working conditions and wages. Fortunately some still abstain to completely pay their employees sh!t: example: Jetblue and Virgin America.

In any event, I guess that the lesson learned with Comair is: Anytime a workforce tries to stand up for certain level of decency - corporate America will find a way to defeat it.


To all American Airlines employees: "this is what a strong union will get you." It's sad, I know, but it is reality.

 

[eolesen]

This has been coming for years, so how can you call it a bombshell? The lowest cost provider who can maintain acceptable standards of service always wins. The guys at SkyWest get that. Not quite so much at ASA, ExpressJet, and ACA/Independence.

 

[Kev3188]

I think most people figured OH would be the odd man out in the restructuring. The only "bombshells" for me are that the wind down will come so soon, and that they only account for about 1% of total network traffic. For the latter, I guess I shouldn't be surprised, since it's been death by 1k cuts for them since their strike...

 

[wings396]

Delta kicked off the 50 seat RJ craze with Comair, and now they are the first ones to kill it. I can still recall US Mgmt. preaching to all of the employee groups how we had to jump on the RJ bandwagon, and now it turns out that it wasn't all that it was cracked up to be.
While it is welcome news to any airline employee that Mainline flying is replacing these RJ's, I feel for all of those at Comair that will be affected due to this chain of events. Hopefully Delta will offer some preferencial hiring to these poor folks who will be on the street in a few months. Sadly, this won't be the only regional carrier to fade away......

 

[WorldTraveler]

Comair did a lot of things great - but by virtue of being a wholly owned subsidiary and being one of the oldest regional carriers, they have some of the highest costs.

This wasn't a surprise - DL tried to sell them for quite some time.

The regional carrier industry is evolving. DL is initiating some of the same leadership in bringing an end to the end of the 50 seat era as occurred when DL gave support to OH in its early days through codesharing.

OH people are good people - they have always been one of my favorite DCI carriers.

The world moves on and I hope OH's good people will land well on their feet.

 

[USFlyer]

Delta kicked off the 50 seat RJ craze with Comair, and now they are the first ones to kill it. I can still recall US Mgmt. preaching to all of the employee groups how we had to jump on the RJ bandwagon, and now it turns out that it wasn't all that it was cracked up to be.

In the Wolf days in the late 1990s and early 2000s, the focus on adding RJs was not misplaced. However, the economics no longer work with fuel prices at the current levels.

 

[wings396]

Mr. Dave was the big RJ advocate. It's funny how things have gone full circle over the years. At one time all mainline flying got the job done, then somebody figured that all of these RJ's were they way to go. Years and millions of dollars later, they are no longer the right tool for the job. I have always said that they were nothing more than a tool for the airlines to eliminate decent paying mainline jobs. Increase scope to as many seats as the pilot group will give up, and slap an Express label on the side of it. There is no dispute that Delta got the ball rolling with all of this crap...

 

[Kev3188]

At one time all mainline flying got the job done...

One nice silver lining here is that DL will be replacing a lot of CRJ-700/900 & E75 flying currently done by regionals with mainline equipment.

 

[WorldTraveler]

One nice silver lining here is that DL will be replacing a lot of CRJ-700/900 & E75 flying currently done by regionals with mainline equipment.

correct.
the perspective that alot of people lose in all of this is that DL created the Delta Connection program in order to create a lower cost subcontractor that was a key part of building DL's network and of sustaining it during periods of decreased demand such as post 9/11 where mainline jets couldn't be filled. Working as a subcontractor for any company involves a risk that they will change strategies and find another way to do the work.
The fact that OH is wholly owned and 9E is in BK gives DL alot of flexibility to push the changes forward right now - and that is a big reason why there was a sense of urgency to getting the pilot contract done when they did.

It is also true that this type of RJ for mainline aircraft swap and RJ upgauging is possible because of the domestic mass that DL has in the eastern US as a result of the NW merger and growth of NYC as hubs at two airports. The NW merger provided the ability to consolidate most flow capacity on the easter part of DL's interior US network over ATL and DTW. Add in that NYC is a huge local market and the top market to most cities in the eastern US and it isn't hard to fill 70-110 seats or more to the top 40-50 cities from NYC when you can throw in some connecting traffic as well.

What DL is doing with the RJ upgauging and RJ for mainline aircraft swap won't work for every US airline. And it is the competitive advantage of DL's network that they hope to use to support the refleeting effort.

 

[Newman]

I can still recall US Mgmt. preaching to all of the employee groups how we had to jump on the RJ bandwagon, and now it turns out that it wasn't all that it was cracked up to be.

I remember US mgmnt saying the RJ's are the future. As was Independence Air, Seriously.

 

[wings396]

They all figured that they would cram the passengers on a "Jet", that was in reality a commuter and hoped that they wouldn't notice. I have said all along that a true express flight should be a 35 seat a/c, not a 75 seat RJ.

 

[Kev3188]

+1...

 

[ContUNITEus]

There was a time when Delta was very publicly taunting the fact that they owned their regional airlines and that it was this fact that helped Delta avoid losing money - vs. other carriers filing bankruptcy.

Delta and Comair executives were trying hard to convince everyone that regional jets were the GOD-SENT solution to the USA's aviation problem.

I can't find the specific articles anymore but they were some that sounded more or less like this: http://www.bizjourna...1.html?page=all

http://www.enquirer.com/editions/2003/12/10/biz_comair10.html

Not long thereafter, perhaps starting around late 2004, when Comair executives were trying to re-negotiate the recently agreed-to F/A contract (as in buyers regret), they were trying to convince people that regional jets were a burden.

....and then there went ASA out the door.....



I am still confused about which truth is actually true.

 

[wings396]

It was all good until the employees of the regionals realized what they were doing, and wanted to be paid accordingly. Soon afterwards the big cost advantage went away.