DL creates LAX-SFO Shuttle

[Airlinelifer]

Sad, but true. This is why I laugh when DL's C-suite tries to convince everyone that we're doing a lot of insourcing. They aren't. When they staff places like CLT, MIA, and RDU, then I'll maybe take them seriously.

FWIW, I had RDU & CLT backwards when i posted earlier. CLT's daily average departures are pushing 50...



I know.

...And really; I should've known that LAX-SFO was at the level it's at for AS. Still surprised me, though... When I think of AS, I still imagine what/where they flew 10-12 years ago... What can I say?

Kev, you non-conformist you, don't ya know that were "too expensive" to operate in those stations, even though they can staff them with a LARGE percentage of "non-benefited" DL RR's, at whatever % of total heads at said stations. Boy did I get grief from the anti-union crowd about the 50% FT/PT ratio (at spoke stations) we had to endure at NW during the BK / concessionary contract.

Now a couple of years later, we have the ATL "talking suits" visit us at the spoke stations and say that DL's goal is 50% "benefited" and 50% non-benefited, and the ratio of FT and PT "benefited" lines is at the whim of the company.

I sure miss the days of 49 weekly flights would have that station OPEN for rampers.

Much of the insourcing was from the NW ramp stations (40) compared to DL's (15) ramp stations at time of the merger.

 

[WorldTraveler]

First, it is good to see a DL thread with good participation and a healthy discussion about what otherwise would have been a relatively trivial topic.

Regarding LAX-SFO:
DL is already flying the route now but with CR9 aircraft and a single mainline flight thrown in and not with a full hourly schedule. The announcement involves switching the route to Ejets, having a full hourly schedule, and enhanced amenities.

Based on the most recent DOT data, UA, VX, and WN each have about 25% of the local market. AA and DL each have about 10% with AA slightly larger.

WN and VX carry much larger percentages of local traffic while the big 3 network carriers have more connections. AA and DL’s connections are LAX focused based on the their larger operations there while UA’s is more heavily focused on SFO connections.

AA and DL have lower average fares by a few dollars which is driven by their smaller size.
DL is reemphasizing its west coast operations because they are completing their major strategic initiatives in NYC and recognize the importance of LAX. Those who argue that DL has had a history of failures in LAX fail to understand that DL’s focus has been on protecting its position on the east coast. Post Western merger, DL cut back a lot of north south west coast flying in order to focus on protecting the east coast. With the failure and shut down of Eastern, DL had the opportunity to gain significant market share and DL succeeded. The early 90s saw AA, DL and US all pull down west coast flying and each of those carriers had their own strategic reasons to do so. DL operated a great deal of direct operating cost flying at LAX during BK and early post BK because LAX is an easy city to add eastern US flights (the bulk of where DL’s network strength lies) without committing large numbers of fully allocated resources. When fuel prices jumped, those flights didn’t make sense but DL had gained the benefit of direct operating flying: decent incremental revenue increases, increased fleet and crew efficiency with l little additional capital. DL also ramped up flying with RJs during BK to have a large enough operation to prevent LAWA from arguing in BK that they should take some of DL’s gates. DL also was able to renegotiate its RJ operation with some carriers because of the added flying they had at LAX at the time. DL has succeeded at LAX in the past based on its objectives at the time – which did not involve building a long term permanent operation.
DL’s strategic focus at LAX is shifting to LAX. LAX is also in a unique situation because the domestic facilities are basically as large as they are going to be for each carrier because of agreements with communities around the airport. Thus, as demand grows, fares will only increase and there is the potential for existing carriers to increase. UA has reduced its LAX presence in favor of a hub in SFO but continues to hold onto its gates which are operating at less-than-full capacity. AA’s facility is well used but US is in a separate terminal and there is no clear idea how AA and US can operate out of a single terminal; AA also has regional operations from a remote terminal accessible by bus. Thus, there is a great deal of opportunity for market share changes at LAX between AA, DL, and UA. WN’’s operation at LAX will also grow limited by facilities but DL has shown a better ability to compete against WN than other network carriers; DL’s mainline ex-fuel CASM was lower than AA or UA in the most recent quarter and the difference will grow in the next few quarters.

LAX is important as a local market and the intra-west markets are part of that necessity. DOT data also shows that the stronger operations by AA and DL at LAX do have a halo effect on the rest of the state allowing connections at LAX to other markets.

With the retirement of DL’s 767-300 domestic fleet (DL’s largest domestic aircraft) over the next couple years), DL’s capacity at LAX would shrink because of gate limitations if it doesn’t add more flights or upgauge existing flights, largely from 150 class aircraft to 180 class aircraft (739ERs and potentially A321s). DL could reconfigure its terminal to maximize the use of smaller aircraft including the Ejet or the 717 which has a wingspan that isn’t a whole lot larger.

DL also says it wants to continue to grow its LAX int’l operation, probably with TATL service, of which an LHR flight is most likely and with service to Asia other than to Japan. A stronger domestic operation can provide feed and help gain business preference.

A great deal of AA and UA’s LAX operations include east coast transcons which have been negatively impacted for years by Virgin America. DL’s NE transcons are large limited to JFK. VX continues to lose money and face strong competitive reactions from UA and AA and there appears to be resolution in sight. It is possible that DL’s focus on LAX-west coast routes which overlap with VX will put even more pressure on VX and help to force resolution of the situation to the benefit of the network/legacy carriers and DL’s ability to grow in the transcons which it does not feel it can profitably do because of VX’s presence.
AS also figures into all of this. AA’s currently larger size at LAX gives AS reason to continue to maintain its strategy of maintaining codeshares with AA and DL. By reducing the number of markets that AA uniquely serves, DL is in a better position to argue that there is less value to AS in maintaining dual codeshares with AA and DL. DL also has realized that the west coast load factors on AS are high enough that they have to fly some of their own feed flights to SEA in order to feed their own int’l operation which reduces the value of the AS relationship to DL. However, DL will introduce LAX-PDX this fall showing the issue is not just seat availability to SEA. Finally, DL subsidized part of the remodeling of the end gates at LAX T6, partly in hope that the tunnel between T5 and 6 would help funnel more passengers to DL than AA. But DL also gained preferential rights to some of those T6 gates which means that DL’s growth could squeeze AS’ ability to maintain the size of its present LAX operation; AS flights at LAX are now facing delays because of gate availability and the situation will only grow worse if DL keeps growing at LAX.

For those who want to throw in a discussion of staffing, please show us a list of the cities that will be staffed by mainline employees at AA and UA after those carriers make cuts that their unions agreed to.
Please also note that LAX is a mainline staffed operation, and as at LGA, DL mainline personnel ground handle many regional carrier flights. Please also let us know where that happens at other large stations for other carriers. It may not change the reality at DL but it does show that DL’s policies are in line or better than the rest of its network/legacy peers and that other carriers continue to cut mainline jobs while DL is not. It is a commendable goal to increase benefitted, full-time positions within the airline industry. But it is also important to note that other airlines, even with unions, are succeeding at reducing full-time benefitted, in-house jobs and, more importantly, that this trend is being seen thoughout the larger US economy as a whole, largely because health care costs continue to increase. Creating more full-time benefitted jobs in the airline industry must reflect improvements in the US as a whole.

DL may not start CLT-EWR or CLT-PHL but they are starting RDU-PHL with RJs in a market that is right in the heart of US’ network. There is a good chance DL is doing it to gain a corporate contract since there is a great deal of high-value corporate travel from RDU, a city where DL has grown to be the largest revenue carrier. DL’s revenue growth is being driven by its ability to pick up key corporate revenue contracts even in markets where other carriers are strong.

DL’s RDU operation is larger than at EWR by about 15 flights/day… with the difference almost entirely accounted for by RJs. DL has about 15-18 mainline flights/day at both cities. Many of these key medium sized cities will likely see a lot of 717 activity giving DL a higher percentage of mainline flying than other carriers in non-hub markets.

The size of operations in medium sized but non-hub cities like CLT and RDU will grow as a result of the mergers. DL’s size advantage at RDU came in part from the NW merger and DL’s growth after the merger; AA and US will attempt to the do the same thing in other cities, including possibility ATL where they combined will have a decent sized operation, even if it is likely they will have to operate from separate locations.
LAX is and will be a strategically important city in part because it is divided between multiple airlines. Its limited facilities mean the economics of growth are favorable while the strategic opportunities at LAX and DL’s completion of its major strategic objectives in the NE and the increasing importance of its growth in the west make this the right time for DL to shift its focus to LAX. The LAX-SFO is a strategically important route that is part of larger strategic objectives.

 

[LD3]

DL may not start CLT-EWR or CLT-PHL

Just stating what local management told us, but their probably not in the loop....Their looking to take their 5th exclusive use gate as soon as AA/US combine ops...

 

[Glenn Quagmire]

First, it is good to see a DL thread with good participation and a healthy discussion about what otherwise would have been a relatively trivial topic.

If only Silver Meteor and Spectator were close by we could have a Delta family love fest and reunion...

 

[Kev3188]

Kev, you non-conformist you, don't ya know that were "too expensive" to operate in those stations, even though they can staff them with a LARGE percentage of "non-benefited" DL RR's, at whatever % of total heads at said stations. Boy did I get grief from the anti-union crowd about the 50% FT/PT ratio (at spoke stations) we had to endure at NW during the BK / concessionary contract.

Now a couple of years later, we have the ATL "talking suits" visit us at the spoke stations and say that DL's goal is 50% "benefited" and 50% non-benefited, and the ratio of FT and PT "benefited" lines is at the whim of the company.

I sure miss the days of 49 weekly flights would have that station OPEN for rampers.

Much of the insourcing was from the NW ramp stations (40) compared to DL's (15) ramp stations at time of the merger.

Silly us, and our refusal to "go along to get along." 🙂

 

[Kev3188]

If only Silver Meteor and Spectator were close by we could have a Delta family love fest and reunion...

Lol. Awesome.

 

[WorldTraveler]

Just stating what local management told us, but their probably not in the loop....Their looking to take their 5th exclusive use gate as soon as AA/US combine ops...

since I said "maybe" then DL very well could start the routes, couldn't they? It would be a whole lot more "ballsy" than I would have expected out of DL but DL clear seems to be dead set on building its network and doesn't really care who stands in their way. They also seem to be more than certain they can make sure that AA/US don't gain any benefit from their merger in key markets on the east coast that DL has been successful in winning from AA and US individually over the past 10 years.

If only Silver Meteor and Spectator were close by we could have a Delta family love fest and reunion...

It ABSOLUTELY frosts you to admit that someone could recognize that I have been right about DL's strategic moves all along, including its ability to keep its people from further unionizing.
You were a card-carrying AMFA member weren't you and that was the same union whose complete lack of strategic awareness put 5000 people on the street, right?

Silly us, and our refusal to "go along to get along." 🙂

Who said any thing about "Silly" or your "refusal to get along?"
Who is "US" anyway? There are a whole lot of jets that still have "US" on them but they fly under DL colors and put money in DL's bank accounts.
I commend your efforts to push the middle class and union agendas but "US" decided they don't want any more unions, undoubtedly in part because they need only look at the continued outsourcing of the ramp at AA and UA and WN and realize DL people don't have it so bad after all.
THAT is what "US" thinks.

And it also doesn't change the fact that many of the grievances you cite against DL are reflective of what is happening in American business and the American job market as a whole, yet you apparently believe that DL should hold onto yesteryear policies when Washington fails to provide policies that help US businesses create more middle class jobs and also harm US airlines' abilities to compete around the world.

If "YOU" (meaning you and the rest of "US" as you define it) would focus your energies on solving the political challenges that create the environment in which neither union or non-union employees win, then you might begin to see success.

That is not personal but it is fact-driven reality. I know, I know.


I have yet to see anyone post a list of DL mainline-staffed stations vs AA and UA now that they have all made their cuts.
I have also yet to see a list of cities where those carriers' mainline employees handle regional jets even though DL has a larger mainline-handled RJ operation in ATL than most carriers have for mainline operated flights at many of their hubs.

And yes I am aware that DL is counting on gaining more gate space at CLT since DL operates right next to AA and will use that extra space to the greatest strategic benefit.

 

[spectator]

Spectator gets a kick out of your "silly" group think and collective inability to address real problems while throwing stones at those who call spades what they are.

 

[Glenn Quagmire]

It ABSOLUTELY frosts you to admit that someone could recognize that I have been right about DL's strategic moves all along...

What are you talking about? I have said that you were correct on many of your predictions.

I bet it "frosts" you knowing that Delta was doomed without the joint bankruptcy with NWA. That, with the acquisition of the Asia service, along with having NWA leadership taking control of the company is what allowed Delta to be the success they are today. I hope they continue that success. I still have a pension waiting for me from them.

What "creeps" me is someone, with an ego so large, needing multiple identities patting each other on the back on an Internet chat forum to be fulfilled.

 

[WorldTraveler]

I don't need to pat myself on the back to fulfill anything but why do you and your fellow group think members continue to feel a need to try to tear down something that is working despite the fact it works isn't the way you wanted it to? Why can't you acknowledge that in the strategy that matters the most to you as promoters of the union movement, I was dead right on the success of DL's strategies regarding its employees, who have recovered more of their pay and benefits post BK than any other group of legacy employees and have received greater gains in compensation than ANY other large group of airline employees in the US. Period.

IT frosts you to admit that DL did all of this without unions telling them they had to do it and at the very same time that other legacy airlines continue to outsource more and more jobs.

You do realize that the 717s will start to arrive within weeks and will bring thousands of new jobs to DL, don't you?

Yes, I know you have a pension and I want you to be sure and receive it... for your sake and those of many other DL employees, DL is accelerating pension funding which will make your pension more secure.
It doesn't change that your union seriously miscalculated and you and others were sent packing while NW sent thousands of jobs overseas to outsourced MROs. Your unions miscalculation only helped fuel the growth of those very MROs.

I don't doubt what NW gave DL and have always been very generous and acknowledging it but the simple fact is that DL's RASM growth was far stronger than NW's throughout BK and until the merger. The success of DL's financial strategies is because they have successfully reallocated assets including building NYC while reducing other hubs which were deemed less strategically necessary. The NW merger has allowed that process to continue with the downsizing of CVG and MEM in favor of DTW and ATL but the process was well underway with DL.

Further, the future of NW's Asian operation was cloudy at best because they didn't have airplanes or a hub that could fly the west coast-Asia and was dependent on NRT to distribute traffic which required heavy discounting in a number of US-Asia markets and the inability to effectively compete in the top west coast markets.

NW might have been able to address those problems in time but let's remember that they passed on the 777 in hopes of waiting for the 787 which has not exactly been a reliable airplane even yet. On the day of the merger, DL had the resources in hand to begin building out Asia to reflect the changing marketplace. SEA is now the 3nd largest US carrier gateway to East Asia behind UA at SFO and DL at DTW precisely for that reason. Yes, DL operates the #2 and #3 largest gateways to Asia from the US mainland. NW did a great job with the assets it had but DL has moved the ball very far forward in Asia in just five years since the merger was announced. And DL's Asia growth will only continue in the next couple years with the delivery of new aircraft, many of which will be placed on the west coast.

You would like to think its still about "US" vs "them" and PMNW vs PMDL. It's not. DL employees have said so. The company has said so by using the assets where they most make sense and by elevating the level of the product and operation around the world such that DL customers are willing to pay premiums for DL services compared to what they pay other airlines.

 

[Glenn Quagmire]

You have me mistaken with someone who is a "promoter of the union movement."

The industrial unions today have nothing to do with what I supported when I was still with the airlines. I was an AMFA Supporter.

I am not a union member and have not been for some time. If Delta employees want a union, they will get one in time. If they end up with one like the TWU, IBT, or IAM, they deserve what they get. The only group that might be able to benefit from a union would be the ramp and CS group.

BTW, I am a supporter of the 717 philosophy. I was part of the team at NWA that saved them by maintaining the DC-9 fleet for 10 years past their life cycle.

 

[WorldTraveler]

thanks for clarifying those points.
I still have yet to see any logical reason why any other DL employee groups stand to benefit from unions when their union peers are outsourcing more and more flying to regional jets while DL is bringing flying back to DL mainline (a net of about 40 more RJs are supposed to leave the DCI fleet during the 2nd half of this year while 717s arrive). DL employees make at or above average compared to their peers and are receiving larger profit sharing than nearly any other US airlines' employees.

I am totally supportive of DL employees seeking a union if they believe it is in their best interest. But there is no evidence that the majority of people think that way.

DL's older aircraft strategy combined with appropriate older technology purchases of new aircraft such as the it-should-be-announced-any day now-order for 777s or 330s and supporting 739s or 321s will make all the difference in the financial health of DL vs its peers over the next few years. And yes NW was instrumental in pushing that philosophy among US carriers. The fact that DL has retained the DC9s for years into the merger shows how durable that aircraft is and how the economics continue to work even with the much higher cost of fuel than existed when you helped stretch their life out even further.
The future of the 717s and M90s should be equally impressive and long.

Thank you, BTW, for acknowledging that many of my strategic assessments of the industry, have been completely accurate.

 

[700UW]

Majority of DL's ramp is outsourced, just as their heavy maintenance is.

 

[WorldTraveler]

yet DL has more mainline staffed ramp stations than AA, UA, and US after all of the cuts are made and DL has a higher percentage of in-house maintenance than any other US carrier except AA - based on the most recent data - and thousands of those employees are being sent home with the future of the TUL base very cloudy beyond a couple years.

Perhaps you can help us with a list of stations where a unionized US airline ground handles more of its regional partners than DL does at ATL (about 350 flights/day).

BTW, here is DL's latest traffic report that shows that DL mainline grew by 3 1/2 percent while Delta Connection shrunk by 4%...

http://finance.yahoo.com/news/delta-reports-financial-operating-performance-133400525.html

no one is doing a better job of moving jobs back to DL employees than DL is doing.

And, BTW, a significant portion of DL's outsourced maintenance budget is for aircraft interior mods... after those mods are done, the aircraft come back in service and will likely need more maintenance over time than the new aircraft which other carriers are buying - while stretching their balance sheets and justifying the layoff of thousands of maintenance employees.

BTW, the percent of non-maintenance work outsourced by US airlines is pretty consistently at 10% even for carriers like WN.

 

[700UW]

US has around 6,000 fleet, I dont believe DL does.

DL still outsources more of their heavy checks than US does.