US Airways Trims Capacity for 2nd Half

[diogenes]

Jim,

Could it be worked the other way?

I assume US discloses total costs and we can calculate mainline costs. What's left would be express, right?

Plus, work it the other way (adding known express costs to express costs we'd need to approximate).

If the two results are close, voila!

FWIW, I don't know of any union eager to do this kind of work. I know a few good ideas got dropped down the right person at IAM's shorts regarding FMLA, and they did nada.

Too busy appeasing the man!

aquagreen,

Re Parker: Dontcha just love how management justifies their big paychecks on their skills and knowledge, and then have them go stupid on you when you ask a basic 101 question? I'd bet the farm Doug knew the answer out to four decimal places, and that'd he'd rather eat his children than tell you.

 

[BoeingBoy]

Could it be worked the other way?

Between the SEC filings and BTS, there's a fair amount of data to work with. The problem would come from 2 places (at least) - finding the cost of the whole list of things that are absorbed by either mainline or one of the wholly owned and adjusting the figures accordingly, and then breaking it down to a specific contract carrier or plane type.

For example, mainline CSR's work the Mesa CRJ900's in CLT - ticket counter, gate, special needs passenger carts, etc - so how do you extract that cost from mainline employee cost so it can be added to Mesa's cost? Likewise, how many employees does Air Wisconsin have in PHL beyond flight crews and the staff associated with them? What cost gets absorbed by either mainline or the wholly owned to provide all the services that should properly be allocated to Air Wisconsin?

It goes without saying the any express plane has a higher CASM and lower segment cost than mainline, even on the same route. But the $64 million question is whether it would be cheaper to fly those Express planes in house at either mainline, PSA, or PDT.

In short (??), somebody might could do it but it's way above my pay grade.

Jim

 

[whlinder]

Probably because it would be almost impossible to do because a significant percentage of the cost of outsourced Express flying is hidden from all but the company. How much does the average contract RJ operator pay for advertising (what little there is), res system, ticket sales, ticket counter space, gates & gate space, baggage handling, food/lodging vouchers for misconnects/cancellations, misplaced baggage delivery, etc, etc? Little to none - those costs are borne by mainline or the wholly owned carriers.

Without allocating their share of all those costs to the contract operators, there's no way to determine their true CASM vs the wholly owned.

Jim

Independence Air had a few quarters of operations before running out of cash. They had to have reported a CASM for a fleet of 50 seat jets with all of those additional items allocated to the operation for at least a few quarters before running out of money. IIRC they were approaching 20 cents.

 

[diogenes]

Jim,

I understand your point. Until a few years ago, a station I'm familiar with handled mainline and express. Mainline absorbed most of the costs (jetways, ground equipment, staffing, catering, etc., and I always wondered who actually paid for the fuel).

The only way I could figure to allocate costs would be to split the total costs according to scheduled seats offered.

Assume a daily total cost of $10,000, express seats 400 and mainline seats 600. Express costs are $4,000 and mainline $10,000. Still not 100% accurate, but closer than how the scoreboard reads today (express costs $0, mainline $10,000).

I suspect the reason management does not want to disclose this is this has been a handy tool to show mainline costs higher than they actually are at the bargaining table. The major reason RJ's exist is to alter mainline contracts (Just call me Dave was quoted in PlaneBusiness as saying RJ's are scope-busters). Going forward, I predict RJ's will recede, having served their purpose.

Given that, it is a dereliction of duty for unions not to have extrapolated those costs for their use - they have coveys of analysts. Imagine the bargaining table scene:

Company:"CASM is 15 cents - you must make immediate concessions."

Union: "Our research indicates mainline CASM is 10 cents."

Company: "Those numbers are in gross error!"

Union: "Unless you can provide us with authoritative numbers indicating otherwise, 10 cents will be our negotiating basis. Additionally, our research indicates contract CASM is 18 cents, so our position on cost-cutting is to convert contract flying back to mainline."

Too late now, but it would have been fun back in 2002!


PS: If any union wants to hire me to get the real numbers, I'm easy but not cheap! Plus, now I have the credentials!

 

[john john]

Jim,

The major reason RJ's exist is to alter mainline contracts (Just call me Dave was quoted in PlaneBusiness as saying RJ's are scope-busters).

And the blame lies directly on ALPA shoulders for not negotiating a scope with main line growth.

 

[BoeingBoy]

Diogenes,

Breaking it down on a per seat mile basis is about the only way I can think of to do it too. If anyone wants to tackle it, BTS offers a wealth of data but it's scattered among several different large databases plus they would have to extract just the flights operated as USX from most of the contract carrier's individual data. And of course, they'd have to break down mainline, PSA, and PDT data the same way to factor in the costs that should be shifted to the contract carrier.

For anyone that might want to take it on, here's a link to ATA's methodology showing which items of what BTS database various costs are taken from.

Jim

 

[NewHampshire Black Bears]

Hey Jim(BB),

On a scale of 1-10, where would you put the number at....that might explain why LLC is "buffing up"(cleaning up the rough edges/shrinking mainline), to get ready to "do the Nasty" with UAL/Tilton, as I believe that LCC and UAL are the ONLY ONES who still want to go out on the "dance floor" ??


Enjoy retirement(BEWARE the HDL list)

NH/BB's

 

[BoeingBoy]

On a scale of 1-10, where would you put the number at

If you mean contracted Express CASM, it depends on equipment and to a lesser extent carrier. My purely gut feeling? The wholly-owned could fly the same airplane for about the same cost. As a pure guess, I'd say a large RJ (CRJ900/E175) on a long leg is in the 14-15 cent CASM range while a small RJ (CRJ200/E145) on a short leg is up around 25 cents CASM.

My personal belief is that we've ended up with all these contract carriers for primarily two reasons - to avoid the up-front costs of acquiring the airplanes, hiring & training employees, etc (i.e. - pay it out over time in fee-for-departure payments) and financial necessity (Air Whiskey and Republic basically bought their way in when US desperately needed the cash in BK 2).

Jim

 

[foreright]

Actually, express is going to grow, with a projected gain of 14 E175's (Republic) vs a loss of 5 E170's (Republic), 2 E145's (Chataugua), and 2 CRJ200's (???).

Jim

its going to be a year from hell at republic. with this growth, additional attrition, about 80 j4j pilots leaving in the next 9 months and limited sim time i assure you that the only solution will be to park these brand new shiny jets. it just sickens me to sit in row 22 of on of these airplanes and here the flight attendants say "welcome aboard usairways express operated by republic airlines"