Work Rules/Pay

[eolesen]

I'm sure that labor would love having the Eagle business folded into AA, but I think everyone (even you) know what would eventually happen if you started applying AA work rules & pay rates to the Eagle operation. Go buy a subscription to Plane Business, and read this week's piece on how much Eagle is losing per departure compared to the others. It ain't pretty. If Eagle could offer more markets or frequencies, those costs might go down. But they can't, and they don't.

The point NYG made about other carriers owning their regionals also flies in the face of your argument. Everyone else has divested or is in the process of divesting of their regionals. DL will eventually shut down Comair because Skywest is the regional model to follow for cost control, and there's no way that PSA and Piedmont will ever survive in their current form when they have to be cost competitive with post-bankruptcy Mesa or always efficient RJET. Jetblue can fly 90 seaters and still eek out a profit, but they've avoided the 70 seaters and smaller.

The fact is TWU and APA scope clauses remain barriers. Instead of protecting AA jobs and keeping customers, you're seeing the opposite. AA can't adjust aircraft size to the market, so AA simply pulls out. Those customers go away.

I suspect places like PVD might have thrived with 70-90 seaters. Instead, the market was handed over to other airlines because the 50 seater didn't fit. With its proximity to BOS, losing those customers starts to erode your position at BOS.

The same story could be told about STL. With TW's costs and workrules, it made some sense. Not a lot, but enough to hang on. With AA's costs, it has been a disaster. But put 70-90 seaters in there, and maybe it wouldn't be such a ghost town. You'd still have AA mainline flying in the key markets. The feeders would be thriving better than they are today.

Maybe you haven't figured out after 30+ years of deregulation, but people tend to fly on the guy with the lowest price. The guy with the lowest price who can still turn a profit is the one who ultimately survives. The first and second batches of new entrants (Midway, Tower, People Express, Jet America, MarkAir, Kiwi, Vanguard) didn't survive ten years, but the third wave (Jetblue, Spirit, Airtran, Virgin America) have done quite well, and almost entirely at the major's expense.

You see it as a race to the bottom, but it's the same in every line of business where you have multiple providers offering the same basic product. Lower costs is what allows a company in a highly competitive industry to survive.

 

[will fix for food]

Since it is somewhat of a given that a sub 90 seat aircraft is marginally profitable at mainline rates why doesn't AMR place a bunch of 190's at mainline and a bunch of 170's/175's at Eagle. After all the mainline furloughs are recalled they could allow any further openings to be bid from the Eagle ranks. Likewise, if there is a mainline RIF the common fleet type at the overlap point between AA and Eagle would allow for a fairly painless flowback process.


I think financially this makes sense from a lot of perspectives, common parts, training, etc. It would also allow for the Eagle revenues to be kept inhouse as opposed to being given to another entity. (Republic) I'm sure the pilots could somehow build one list around this idea which would give them a negotiating "win" which might break the stalemate there also.

The sub 70 seat fleet remains a question mark though. Although there will always be a market somewhere for that type of flying the margins might not be large enough to justify keeping an aging EMB fleet on the books. That type of flying might be better handed off to an RJet type operator so they can assume the substantial maintenance costs that are coming up on those planes.

There would be alot of details to work out but on the face of it it seems like a fairly workable solution.

 

[Duke787]

Since it is somewhat of a given that a sub 90 seat aircraft is marginally profitable at mainline rates why doesn't AMR place a bunch of 190's at mainline and a bunch of 170's/175's at Eagle. After all the mainline furloughs are recalled they could allow any further openings to be bid from the Eagle ranks. Likewise, if there is a mainline RIF the common fleet type at the overlap point between AA and Eagle would allow for a fairly painless flowback process.


I think financially this makes sense from a lot of perspectives, common parts, training, etc. It would also allow for the Eagle revenues to be kept inhouse as opposed to being given to another entity. (Republic) I'm sure the pilots could somehow build one list around this idea which would give them a negotiating "win" which might break the stalemate there also.

The sub 70 seat fleet remains a question mark though. Although there will always be a market somewhere for that type of flying the margins might not be large enough to justify keeping an aging EMB fleet on the books. That type of flying might be better handed off to an RJet type operator so they can assume the substantial maintenance costs that are coming up on those planes.

There would be alot of details to work out but on the face of it it seems like a fairly workable solution.

AA use to fly the Fokker F100, the pilots loved them, they were a great overtime machine for maint, becasue they were so unreliable. If I remember right they carried 98 pax, AA modified some with 56 seats to drive Legend airlines out of business. Anyway AA retired them it seems that under 100 seats isn't a money maker for big airlines, the same reason why Delta didn't replace the dc9-30. They same reason the 717 and 737-500 aren't big sellers. I get your thought process, but it just doesn't work at a big airline.

 

[Hopeful]

AA use to fly the Fokker F100, the pilots loved them, they were a great overtime machine for maint, becasue they were so unreliable. If I remember right they carried 98 pax, AA modified some with 56 seats to drive Legend airlines out of business. Anyway AA retired them it seems that under 100 seats isn't a money maker for big airlines, the same reason why Delta didn't replace the dc9-30. They same reason the 717 and 737-500 aren't big sellers. I get your thought process, but it just doesn't work at a big airline.

Ah yes the F100...Who could forget accessing the engine ignition system through the lavatories.

 

[chris perry]

I'm sure that labor would love having the Eagle business folded into AA, but I think everyone (even you) know what would eventually happen if you started applying AA work rules & pay rates to the Eagle operation. Go buy a subscription to Plane Business, and read this week's piece on how much Eagle is losing per departure compared to the others. It ain't pretty. If Eagle could offer more markets or frequencies, those costs might go down. But they can't, and they don't.

The point NYG made about other carriers owning their regionals also flies in the face of your argument. Everyone else has divested or is in the process of divesting of their regionals. DL will eventually shut down Comair because Skywest is the regional model to follow for cost control, and there's no way that PSA and Piedmont will ever survive in their current form when they have to be cost competitive with post-bankruptcy Mesa or always efficient RJET. Jetblue can fly 90 seaters and still eek out a profit, but they've avoided the 70 seaters and smaller.

The fact is TWU and APA scope clauses remain barriers. Instead of protecting AA jobs and keeping customers, you're seeing the opposite. AA can't adjust aircraft size to the market, so AA simply pulls out. Those customers go away.

I suspect places like PVD might have thrived with 70-90 seaters. Instead, the market was handed over to other airlines because the 50 seater didn't fit. With its proximity to BOS, losing those customers starts to erode your position at BOS.

The same story could be told about STL. With TW's costs and workrules, it made some sense. Not a lot, but enough to hang on. With AA's costs, it has been a disaster. But put 70-90 seaters in there, and maybe it wouldn't be such a ghost town. You'd still have AA mainline flying in the key markets. The feeders would be thriving better than they are today.

Maybe you haven't figured out after 30+ years of deregulation, but people tend to fly on the guy with the lowest price. The guy with the lowest price who can still turn a profit is the one who ultimately survives. The first and second batches of new entrants (Midway, Tower, People Express, Jet America, MarkAir, Kiwi, Vanguard) didn't survive ten years, but the third wave (Jetblue, Spirit, Airtran, Virgin America) have done quite well, and almost entirely at the major's expense.

You see it as a race to the bottom, but it's the same in every line of business where you have multiple providers offering the same basic product. Lower costs is what allows a company in a highly competitive industry to survive.

E ,I have a question? If Eagle is such a losing concern why did they not share in the concessions? SecondI truly think they {EAGLE} are losing buckets of money!!!!!! AMR preached eagle was their lower cost airline,but face it the RJS are a failure {always were} The scope Airplanes special built sit in the dessert. AMR went to great lengths to skirt scope even if it meant losing millions and still counting. RJS are gone they are now replaced with Guess what? full size Jets 90-100 seats or more. Eagle is nothing now but a lead brick in the backpack......

 

[eolesen]

Lots of reasons the Fokkers should have gone away, but IIRC the last straw was an AWD on the engine nacelles that was going to run $2M each.

RJ's with fuel at 2003 prices and at 2010 prices are two different stories, Chris. Same thing with the MD80s.

The explanation given to me in 2003 was Eagle didn't share in the concessions because they were already paid near the bottom of the scale.

 

[will fix for food]

Lots of reasons the Fokkers should have gone away, but IIRC the last straw was an AWD on the engine nacelles that was going to run $2M each.

RJ's with fuel at 2003 prices and at 2010 prices are two different stories, Chris. Same thing with the MD80s.

The explanation given to me in 2003 was Eagle didn't share in the concessions because they were already paid near the bottom of the scale.

Definitely true that the times and have changed and so has the potential for profitability of the smaller RJ's.

Even AMR realized they couldn't take away what we don't have when it comes to pay and benefits. Eagle mechanics have a 12 year progression to $26/hour. I vaguely remember a short time before you took your concessions you received a substantial raise. We would have gladly taken the same percent cut if we had received your same percent raise. But we didn't.

In fact I literally can't remember the last time I got a pay raise and they just passed a 2 year contract that provides for NO additional raises again. Yep, no raise at all. None.