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Some points to discuss/elucidate:
1. AFAIK , the fuel used by express operators is paid by mainline.
Yes. Most fuel is paid under the mainline fuel contracts
A - Are fuels costs from Express subject to adjustment?
no
B - Do express carriers have any incentive to save fuel?
fuel burn is monitored and is part of the "incentive" program. they get points for using less, and lose points for using more (I believe its based on per 1,000 #s).
2 How accountable is Express for delays/cancellations? Any financial penalties.
If you followed the Delta-Mesa deal, USAirways can cancel any express flight, for any reason. Flow control, weather, gate space, etc. (Delta does this to EVERY carrier, btw. Mesa & SkyWest are the only 2 to complain about it - SkyWest is suing Delta for almost the same thing as Mesa, but the SkyWest reductions were not as severe as YV). The USX carriers are all franchised deals. USAirways pays for the plane & block hours per month... the carrier just provides the plane specified and crews. So when ya'll #### and moan at Mesa for not having a spare, its NOT mesa's fault.. USAir has to pay for it. It costs money to have a plane sitting all day and not flying. Mesa just tells USAirways how often planes need to go in for maintenance and builds the lines accordingly. Now if Mesa cancels a flight, it does get reported to USAirways and its part of the incentive program - they are allowed to cancel up to 4 or 5% of all flights before they get penalized. For instance, if I remember, a "0" point for the month means mesa gets nothing, if they are +1, they get like $50,000 extra, +2 is $125,000, +3 is $200,000, etc etc. and its the reverse if its in the negative, but a bit higher. I remember Mesa had a $160,000 penalty one month for the PHL ops when they were transitioning out the ERJs.
3 If there is a sytemwide pulldown of capacity, can Express RPMs be cut accordingly? Or is US stuck with having a certain amount of flying by the likes of Air Wisc and Republic, even if mainline cuts flying?
the contracts are based on minimum number of block hours flown and equipment adjustments. So if USAir promises my airline, XYZ Airlines 5 jets and 400 hours a month, we get paid for 400 hours a month + 5 aircraft costs regardless if they fly or not. Now if USairways wants to void our contract, there are some strict financial penalties involved. USAir builds us a schedule, sends it to my planning guys, who sends it to maintenance, financial planning, customer service, and crew scheduling.. everyone looks at it, makes adjustments (for instance if they want us to do a 30 minute turn at XYZ, but we know it takes 35, we can adjust the time)... planning then takes all the feedback, rebuilds the schedule, and sends it back to USAirways. USAirways can either accept or reject the schedule, but if they reject things and makes XYZ airlines fly it, then the carrier is pretty much exempt from any fines or operational clauses.
