Us Airways & Industry Analysis

[funguy2]

Boeing Boy:

You bring up good points.

On the RJ CASM vs. Prop CASM, I believe you are correct. I almost included a disclaimer along the lines of "Mom&Pop with their leased 1900D could make a low-fare/low-cost AOO-PHL work where US Airways could not" on the very basis of your point, in addition to small business entreprenurial spirit, no big res system, but rather a local phone # and a PC, etc.

I am, however, not sure of your assumption on the res/sales costs, etc. My recollection is that UA dumped Great Lakes as an Express partner. And they were never a full partner to Frontier. Thus, they are like the UA-US codeshare, where UA and F9 place their code on Great Lakes flights, which you can purchase independent of UA or F9 (as opposed to say Horizon, whom to fly on you MUST purchase through AS or F9). I believe in most res systems the local segments (from DEN to wherever) are listed under their own "ZK" code, where connecting segments (like WAS-DEN-CYS) would be listed as F9/F9* or UA/UA*. Also, they have a booking engine and res number on the first page of their website. Although, to be fair, they probably book maybe 10-20% of their own tickets... And even that may be high. I'm not sure how the other costs would be handled in their case, as I am not overly familiar with them... I just went searching for a reasonable turboprop CASM number. I was surprised it wasn't 25-30cents, honestly, but I presume the ownership/MX costs are less due to being less complicated and less desired equipment, which helps keep CASM down on props (vs. RJs).

I do understand that the Q400 (70 seats) has lower costs than a CRJ700 (70 seats). But I think that customers have demonstrated a clear preference for jets, and that the company would have to deal with that...

 

[JS]

So what? Why does everything have to be super-cheap? Besides, even if you did fly a 737 into AOO or BGM and sold tickets for $29, would you fill the plane? There just aren't that many people who live there or wish to visit. I'm sick of everything being Walmartized into garbage or out of existence.

Funny you mention Altoona, PA. I flew to AOO from NYC recently for $215 roundtrip including tax with a Saturday night stay. I could fly to the West Coast for roughly the same price, but I've been to the West Coast enough times and just wanted to go someplace different.

Poking around, I've seen that fares to small cities a couple hundred miles away are roughly $200-$300 roundtrip. Sometimes a Saturday night stay is required for the lowest fare and sometimes it isn't. I can't figure it out.

Airfare pricing is not a simple subject, and even in just one market, there are many variables at play, and even with the LCC, different fares are charged for the same route.

I don't see anything wrong with charging more to a small city with few carriers (or just one in the case of AOO) to cover the cost that is spread out over fewer seats, and charging less to the big cities with fierce competition and economies of scale.

For example, someone can buy one low-quality whiskey on a plane for five bucks or a huge bottle of Jack Daniels at a liquor store for $19.99, but that doesn't mean the liquor producers are headed for bankruptcy.

 

[BoeingBoy]

I am, however, not sure of your assumption on the res/sales costs, etc. My recollection is that UA dumped Great Lakes as an Express partner. And they were never a full partner to Frontier. .....

[post="237735"][/post]​

I just noticed that their website showed both United and Frontier on it. A closer look just now revealed the "code share". One thing interesting is that they only show about 50 cents per passenger in commissions and no separate line item for sales expense - don't know exactly what that means. In short, their listed CASM could be pretty accurate.

Just for info, Back Aviation Solutions did a cost analysis of regional aircraft using 1q02 data for all domestic operators. Direct operating cost per block hour for the B-1900 was $454.07, the E-120 was $872.63, the Dash 8-100 was 945.37, the -300 was $1,020.47, the E-145 was $1,233.76, the -400 was $1747.55, and the CRJ-700 was 2071.72.

Jim

 

[Dog Wonder]

"I flew to AOO from NYC recently for $215 roundtrip including tax with a Saturday night stay. I could fly to the West Coast for roughly the same price, but I've been to the West Coast enough times and just wanted to go someplace different."

So how did the Horseshoe Curve compare to the Golden Gate Bridge?

 

[JS]

Much more interesting!

 

[whlinder]

As funguy posted, ZK can sell its own flights DEN-ZK city and UA/F9 cannot. UA/F9 can sell WAS-ZK city with the DEN-ZK city as a codeshare. The only fares UA/F9 file for DEN-ZK city is their prorate values. ZK uses the Radixx booking engine, which is also used by Hooters Air, USA 3000 and some other goofy airlines.

 

[funguy2]

JS - re-read my posts... I never suggested flying 737's into AOO.

What I suggested was that areas with several smaller cities which are located relatively close to each other with turbo-prop service could potentially be better served with RJs (or larger RJs) at one airport. My opinion was this would help the airline to lower costs and deliver more of what customers want (lower fares and jet equipment). My reading of your posts is that I offended you, and that was not my intention.

Many years ago, there was a push by some in upstate NY to build a new airport about half way between BUF and ROC, since BUF and ROC are about an hour apart by car. The idea was that a combined BUF/ROC metro area airport would be able to capture better air service than the two airports individually. This is a concept that seemed to have worked for the DFW area (maybe Dallas and Ft. Worth are a bit closer than BUF and ROC). The concept I am discussing is similar in nature, just on a smaller scale. Since I realize that building new airports is outside the airline's direct control, I am suggesting that they consolidate that the most convenient airport (or perhaps best for operations, really, whatever is in the airline's best interests) in those areas.

 

[mweiss]

The distance between downtown Buffalo and downtown Rochester is about 75 miles. Compare that to about 35 miles between downtowns Dallas and Fort Worth.

 

[JS]

JS - re-read my posts...  I never suggested flying 737's into AOO.

What I suggested was that areas with several smaller cities which are located relatively close to each other with turbo-prop service could potentially be better served with RJs (or larger RJs) at one airport.  My opinion was this would help the airline to lower costs and deliver more of what customers want (lower fares and jet equipment).  My reading of your posts is that I offended you, and that was not my intention.
...

No offense at all! I think the problem with your proposal is that it's not going to help the airline -- while you save some money by closing a station, the proposal will lose money by selling lower fares and using higher-cost regional jets. Best case scenario, the net effect will be zero and all you've done is eliminate service to some small airports.

Many years ago, there was a push by some in upstate NY to build a new airport about half way between BUF and ROC, since BUF and ROC are about an hour apart by car. The idea was that a combined BUF/ROC metro area airport would be able to capture better air service than the two airports individually. This is a concept that seemed to have worked for the DFW area (maybe Dallas and Ft. Worth are a bit closer than BUF and ROC). The concept I am discussing is similar in nature, just on a smaller scale. Since I realize that building new airports is outside the airline's direct control, I am suggesting that they consolidate that the most convenient airport (or perhaps best for operations, really, whatever is in the airline's best interests) in those areas.

[post="237984"][/post]​

Sounds about as stupid as the idea for a 100% connecting airport in far north Texas (or was it Oklahoma) to allow DFW to concentrate on O&D. This was back in the days when it seemed that air travel and the economy were going to grow at high rates forever.

 

[funguy2]

JS - you could be right about the zero-sum gain. My gut tells me that its an improvement over the current model of serving every small town with small turbo props, a model which is clearly no longer working.

I would disagree about the "higher" CASM RJ's. Higher CASM than a 737, yes, but I don't think they are high CASM than 19 and 34 seat props. In the numbers provided by Boeing Boy, all of the aircraft models noted ran about $22-$25/seat/hour. The exception was the CRJ700, at nearly $30/seat/hr costs. Given that the jets are faster, I will presume that they fly more miles in the same hour than the prop, thus creating more ASMs to spread similar costs over.

 

[JS]

Not over a short distance. A regional jet on a short route wastes a lot of fuel.

There was an article in USA Today about airlines halting their plans to replace turboprops with RJ's. Turns out that with high fuel prices, the fuel efficient turboprop isn't so bad after all.

Besides, if you already have RJ's, use them for what they were intended -- long routes!

 

[BoeingBoy]

In the numbers provided by Boeing Boy, all of the aircraft models noted ran about $22-$25/seat/hour. The exception was the CRJ700, at nearly $30/seat/hr costs.

[post="238067"][/post]​

funguy,

One thing to remember is that both the CRJ-700 and Dash 8-400 were both fairly new in the timeframe the data is based on - there weren't large numbers flying. The CRJ-700 had 5,000 departures in 1Q02 while all the other models had 50,000, the Dash -400 had 9,000 while all other models had 62,000.

That probably makes both look more expensive per hour.

Jim