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09-04-2008, 06:42 AM
#41
Can't abide NAI
Joined APC: Jun 2007
Position: Douglas Aerospace post production Flight Test & Work Around Engineering bulletin dissembler
Posts: 12,037
Hey Bar,
I don't disagree with you on these numbers at all but they hide a major cost that's not factored into these equations, acquisition costs. The RJs I was referring to are the 50 seaters. However, the only RJ that might make money is the 90 seater when oil is above $100 barrel. If you factor in the acquisition costs, lease rates, whatever, you double these numbers. This is where even the MD80s and DC9s depending on HMV issues get compelling. DAL can pick up MD90s right now for around $2 mil apiece. A new 70 seater is around $23 mil. You can get nearly 12 aircraft for the price of one. Post bankruptcy DAL is leasing 757s for nearly 1/4 in some cases as the what they are paying on CRJ700s.
I don't disagree with you on these numbers at all but they hide a major cost that's not factored into these equations, acquisition costs. The RJs I was referring to are the 50 seaters. However, the only RJ that might make money is the 90 seater when oil is above $100 barrel. If you factor in the acquisition costs, lease rates, whatever, you double these numbers. This is where even the MD80s and DC9s depending on HMV issues get compelling. DAL can pick up MD90s right now for around $2 mil apiece. A new 70 seater is around $23 mil. You can get nearly 12 aircraft for the price of one. Post bankruptcy DAL is leasing 757s for nearly 1/4 in some cases as the what they are paying on CRJ700s.
Acquisition, and / or leasing costs are included in the Bureau of Transportation Statistics numbers. ALPA's own E&FA of the merger overlays the data, perfectly. Turns out, they got their data from the same source.
From the charts, Aircraft cost:
DC9-50: $138 per hour (adjusted down for block hur utilization, SkyWest operated their CRJ9's 11.1 Hours per day compared to NWA's 7.6)
CRJ9: $462 per hour
In a year it adds up:
DC9-50: $193,200
CRJ9: $1,617,000
But so does the gas:
DC9-50: $5,985,000
CRJ9: $3,668,000
The savings in acquisition costs (~1.4 million) are surpassed by the fuel in 2007 (~2.3 million). Yes, the DC9-50 does carry more, giving it a CASM advantage, but it costs a whole lot more to maintain, almost $400 an hour. Compared to $39 an hour for the newer jet. Throw in that SkyWest's crew costs are half of NWA's (longevity effect more than pay rates) and the numbers add up. All put together, it costs ~ $3,000,000 a year less to outsource a CRJ900 to SkyWest than to fly it with NWA in 2007. I don't know how much more revenue NWA brings in with their DC9 (the airlines don't break that down by type that I've found), but still - the outsourcing makes sense on paper to management. That's why they are doing it.
The numbers for 2008 will be different and much more highly favorable to the more efficient aircraft. This is why Delta/NWA is continuing their plan to outsource most DC9 flying to Compass and Mesaba. (and maybe Mid Ex) The 2008 numbers will permit me to directly compare NWA, Compass and Mesaba when it comes out next Spring.
I'll be happy to e-mail you this documentation so you can draw your own conclusions from the source.
I'm glad you brought this up, since there are many pilots out there who have the same "common knowledge" that is completely wrong. Thanks for being patient with my long and convoluted posts. I know this is unpopular information, but it is what it is. The right answer for you and me is to not outsource this flying. Overall the JPWA was a great deal and I liked bringing NWA to parity. However, I could not vote for it because of the plan to outsource most of NWA's DC9 flying, as well as their codeshare with Alaska and MidEx... it felt like I was being asked to vote for a furlough and I just could not do it.
Last edited by Bucking Bar; 09-04-2008 at 07:13 AM.
09-04-2008, 08:09 AM
#42
Gets Weekends Off
Joined APC: Aug 2008
Posts: 799
Good point
Excellent post BB
I still don't think that most Delta pilots have their heads around LOA 19 and what we gave away. The common response was "it's just NWA + DAL RJ's combined". True, but that doesn't make it right. IMO the replacement for the DC-9's is already on property and it won't be flown by main line DAL pilots. I did see similiar numbers to those that BB posted and the newer RJ CASM is almost identical to an 88 / 9.
To me the Joint Contract was really just fluff. Yes it needed to be done. Where (The Delta Pilots) should of played hard ball was with 19. The company didn't just want the items in LOA19, they NEEDED them.
What strikes me as funny is now the DAL pilots are all thumping their chests saying that "the JC didn't have enough pay raises in it, we're locked into BK rates until 2013" etc. The JC was not a good time to negotiate with the company. LOA 19 was the time; again, we had something they needed. Oh well, just my .02
The last time the DAL pilots voted for something containing scope in the contents and it turned out to be a good thing was? We are STILL giving away our jobs.
I still don't think that most Delta pilots have their heads around LOA 19 and what we gave away. The common response was "it's just NWA + DAL RJ's combined". True, but that doesn't make it right. IMO the replacement for the DC-9's is already on property and it won't be flown by main line DAL pilots. I did see similiar numbers to those that BB posted and the newer RJ CASM is almost identical to an 88 / 9.
To me the Joint Contract was really just fluff. Yes it needed to be done. Where (The Delta Pilots) should of played hard ball was with 19. The company didn't just want the items in LOA19, they NEEDED them.
What strikes me as funny is now the DAL pilots are all thumping their chests saying that "the JC didn't have enough pay raises in it, we're locked into BK rates until 2013" etc. The JC was not a good time to negotiate with the company. LOA 19 was the time; again, we had something they needed. Oh well, just my .02
The last time the DAL pilots voted for something containing scope in the contents and it turned out to be a good thing was? We are STILL giving away our jobs.
09-04-2008, 09:21 AM
#43
Gets Weekends Off
Joined APC: Apr 2008
Position: LAX ERA
Posts: 3,457
The Delta proposal was to use the respective business plans each airline had for future near term growth. NWA agreed to this concept. NWA's committee however failed to model this in advance. Once they saw it translated to a seniority list they did not like what they saw and came back with a counter to what they had already agreed on that was far worse from the Delta side. The whole concept of a dynamic list is a can of worms and one that I would like to avoid. It would certainly help NWA senior pilots but would crush their junior pilots.
Speaking of the dynamic list concept, I remember laughing with a friend that the young Delta guys would beg us older NW guys to stay till 65 just so they wouldn’t get jumped so often in the near term. Since the dynamic list has never been done, I’m sure it won’t be used by the arbitrators. Case closed?
Back then there was almost NO desire to merge with not only you guys but anyone. The greenbook guys had only about a year to use their seniority after 20 years of fences and weren’t about to give it up again to anyone. Hard position? Maybe, but put yourself in their shoes. Maybe just their way of “keeping NW our NW? Don’t know.
As I’ve said, this is all a moot point and I don’t see the value of rehashing history that never took place. Yeah yeah, not doing it then cost US all money, but we really didn’t want to merge. I’m not sure most of us want to merge now, but our new bankruptcy owners don’t give us much of a choice.
We are alike you Delta dudes and us. I think we were hired with the same personality types in mind and we are going to work well together. How do I know? Look at the humor on the board. Beer is always on me……..I’ve got that government pension thing, so the beer is really on you
.Ferd
PS………I finished annual training/torture last week so when I get a few minutes I’ll post what I learned. NATCO (still what we call the training center) is the petri dish of all rumors
09-04-2008, 06:02 PM
#44
Gets Weekends Off
Joined APC: Apr 2008
Posts: 581
BB,
A number of years ago Air Transport World had a very interesting analysis of cost of operation of aircraft. Most of the analysis had to do with the cost of capital versus the cost of fuel. For example; if fuel is cheap and interest (leasing) rates expensive, a 727 may be the cheaper route. Conversely, if money is cheap and fuel expensive a new aircraft may be the way to go.
Getting back to your post, I think there are a number of other "actual" costs that are not reflected in the numbers, as well as a number of "intangibles".
For example: When the destination weather requires an alternate and the RJ can't carry fuel, pax and bags what is the "cost" of getting the pax and their mis-connected bags together? ( I highly doubt the connection carrier pays the $116.00 average cost per bag). What is the cost of poor customer service when the passengers are on a skiing vacation and their clothes, skis, etc. don't show up?
When a mainline aircraft operation is running behind, the powers that be can delay flights for incoming passengers. When those pax are connecting to a RJ flight, well, they're out of luck and the mainline has to buy them a hotel room.
My impression is that at first the bean-counters thought that the RJ was a wonderful concept, however the reality, in terms of the operation having major hiccups and not being under the mainline's operational control, is different.
Again, it's just my personal opinion, but I think DAL management is fed up with taking the heat for lousy customer service from their connection carriers. I think they are willing to increase their costs slightly for a better product to the customer, and one they have control over.
I think this is especially true for the 50 seat RJ. I sincerely hope that ALPA (for once) holds the line on scope and prevents ANY increases in usage of larger RJ's .
A number of years ago Air Transport World had a very interesting analysis of cost of operation of aircraft. Most of the analysis had to do with the cost of capital versus the cost of fuel. For example; if fuel is cheap and interest (leasing) rates expensive, a 727 may be the cheaper route. Conversely, if money is cheap and fuel expensive a new aircraft may be the way to go.
Getting back to your post, I think there are a number of other "actual" costs that are not reflected in the numbers, as well as a number of "intangibles".
For example: When the destination weather requires an alternate and the RJ can't carry fuel, pax and bags what is the "cost" of getting the pax and their mis-connected bags together? ( I highly doubt the connection carrier pays the $116.00 average cost per bag). What is the cost of poor customer service when the passengers are on a skiing vacation and their clothes, skis, etc. don't show up?
When a mainline aircraft operation is running behind, the powers that be can delay flights for incoming passengers. When those pax are connecting to a RJ flight, well, they're out of luck and the mainline has to buy them a hotel room.
My impression is that at first the bean-counters thought that the RJ was a wonderful concept, however the reality, in terms of the operation having major hiccups and not being under the mainline's operational control, is different.
Again, it's just my personal opinion, but I think DAL management is fed up with taking the heat for lousy customer service from their connection carriers. I think they are willing to increase their costs slightly for a better product to the customer, and one they have control over.
I think this is especially true for the 50 seat RJ. I sincerely hope that ALPA (for once) holds the line on scope and prevents ANY increases in usage of larger RJ's .
09-04-2008, 06:54 PM
#46
Can't abide NAI
Joined APC: Jun 2007
Position: Douglas Aerospace post production Flight Test & Work Around Engineering bulletin dissembler
Posts: 12,037
Wasach & Ferd,
Delta (and I assume NWA) do hold and re-route RJ's in their service. Most commonly they delay the RJ's when they are constrained by flow.
Who operates a 727? The Donald? Fuel burn of a 767 with the abilities of a 737-800. I think the market spoke clearly.
The 737NG beats a RJ, or a DC9, or a MD88, by the numbers. The 2007 number is 5.6 CASM for Delta's 737-800's. That's why Southwest buys new 737's to replace their older and less efficient 737's. If anything, this illustrates the value of newer more efficient airplane - SWA buys new airplanes because they are worth it, even though the old ones are paid for.
The days of romantic notions about airplane acquisitions are gone. Boeing committed to its Sonic Cruiser, it had the intangibles better than any jet in history. No airline ordered it. Boeing answered the demands of their customers with the efficiency of the 787 and it has sold faster than any jet in history. Of course NWA figured that out & acted faster than anyone else.
Those who are still in this business, realize it is, first, a numbers game.
BB
Delta (and I assume NWA) do hold and re-route RJ's in their service. Most commonly they delay the RJ's when they are constrained by flow.
Who operates a 727? The Donald? Fuel burn of a 767 with the abilities of a 737-800. I think the market spoke clearly.
The 737NG beats a RJ, or a DC9, or a MD88, by the numbers. The 2007 number is 5.6 CASM for Delta's 737-800's. That's why Southwest buys new 737's to replace their older and less efficient 737's. If anything, this illustrates the value of newer more efficient airplane - SWA buys new airplanes because they are worth it, even though the old ones are paid for.
The days of romantic notions about airplane acquisitions are gone. Boeing committed to its Sonic Cruiser, it had the intangibles better than any jet in history. No airline ordered it. Boeing answered the demands of their customers with the efficiency of the 787 and it has sold faster than any jet in history. Of course NWA figured that out & acted faster than anyone else.
Those who are still in this business, realize it is, first, a numbers game.
BB
Last edited by Bucking Bar; 09-04-2008 at 07:45 PM.
09-04-2008, 08:08 PM
#47
Gets Weekends Off
Joined APC: Mar 2007
Position: 88B - Loud Pipes Save Lives
Posts: 1,597
Wasach & Ferd,
Delta (and I assume NWA) do hold and re-route RJ's in their service. Most commonly they delay the RJ's when they are constrained by flow.
Who operates a 727? The Donald? Fuel burn of a 767 with the abilities of a 737-800. I think the market spoke clearly.
The 737NG beats a RJ, or a DC9, or a MD88, by the numbers. The 2007 number is 5.6 CASM for Delta's 737-800's. That's why Southwest buys new 737's to replace their older and less efficient 737's. If anything, this illustrates the value of newer more efficient airplane - SWA buys new airplanes because they are worth it, even though the old ones are paid for.
The days of romantic notions about airplane acquisitions are gone. Boeing committed to its Sonic Cruiser, it had the intangibles better than any jet in history. No airline ordered it. Boeing answered the demands of their customers with the efficiency of the 787 and it has sold faster than any jet in history. Of course NWA figured that out & acted faster than anyone else.
Those who are still in this business, realize it is, first, a numbers game.
BB
Delta (and I assume NWA) do hold and re-route RJ's in their service. Most commonly they delay the RJ's when they are constrained by flow.
Who operates a 727? The Donald? Fuel burn of a 767 with the abilities of a 737-800. I think the market spoke clearly.
The 737NG beats a RJ, or a DC9, or a MD88, by the numbers. The 2007 number is 5.6 CASM for Delta's 737-800's. That's why Southwest buys new 737's to replace their older and less efficient 737's. If anything, this illustrates the value of newer more efficient airplane - SWA buys new airplanes because they are worth it, even though the old ones are paid for.
The days of romantic notions about airplane acquisitions are gone. Boeing committed to its Sonic Cruiser, it had the intangibles better than any jet in history. No airline ordered it. Boeing answered the demands of their customers with the efficiency of the 787 and it has sold faster than any jet in history. Of course NWA figured that out & acted faster than anyone else.
Those who are still in this business, realize it is, first, a numbers game.
BB
I agree, but one of the reasons SWA is able to secure new aircraft is because they have the highest financial stability rating of any airline. As such, they are able to get the best financing on those aircraft. One of the promises of this merger is that 1 + 1 =3. Putting both balance sheets together with the efficiencies of a SOC will allow us to have the best financing rates of any legacy carrier. What may be to prohibitive now as far as orders go could become attractive in the future.
However, older aircraft shouldn't be knocked. Look at UPS and FDX. They have bought used models of the same aircraft types we find efficient for years. The lower acquisition costs of a used 757 for example could easily outweigh the increased costs of higher maintenance. I don't discount your thoughts, but I also think we are thinking smarter than we have before. The TWA 757ER's come to mind. We were able to get these aircraft for very reasonable costs and the fleet of them was cheaper than buying a new 777. We now have I think 17 of these aircraft doing a great mission for us. We know how to maintain 757s better than anyone so this aircraft should fit us well for the next 10 years.
09-04-2008, 08:17 PM
#48
Can't abide NAI
Joined APC: Jun 2007
Position: Douglas Aerospace post production Flight Test & Work Around Engineering bulletin dissembler
Posts: 12,037
Dal4,
You are right on the money. The 757 is still the most efficient narrow body jet ever built and NWA's 757-300 is the winner of the numbers game with a CASM of 4.2. The next runner up is the A330 at 4.3.
UPS and FedEx don't use their airplanes like pax carriers. Delta runs their 764's 15.6 hours a day and their 777's an amazing 17.8. Even the CR9's go 11.1 hours a day on average. In comparison, many FedEx airplanes only go a fourth of the hours ours' operate in a year. As a result the savings on newer equipment take longer to rationalize against the purchase costs.
You are right on the money. The 757 is still the most efficient narrow body jet ever built and NWA's 757-300 is the winner of the numbers game with a CASM of 4.2. The next runner up is the A330 at 4.3.
UPS and FedEx don't use their airplanes like pax carriers. Delta runs their 764's 15.6 hours a day and their 777's an amazing 17.8. Even the CR9's go 11.1 hours a day on average. In comparison, many FedEx airplanes only go a fourth of the hours ours' operate in a year. As a result the savings on newer equipment take longer to rationalize against the purchase costs.
09-05-2008, 04:21 AM
#49
Happy to be here
Joined APC: Jun 2006
Position: A-320A
Posts: 18,563
All very good points and all hold their merit.
Fact is that all of you are correct to some degree. Where the issue lies is this. Management of all airlines sees the CRJ 900/1000, E-170,175,190,195 as mainline aircraft that should be flown by third party operators. Make no mistake in our next round of negotiations we will be asked to give these up. The assume/hope that because they are bigger second generation RJ's that their dispatch rates and payload issues will be a non starter. Alas they can bring the Connection performance number up to that of main line. The fifty is a dead bird, but it is suffice to say that our management will do everything in its power to replace every 50 with a airframe with 76+ seats. Why, pure economics.
A "D" check on a 757, or 767 cost what the acquisition cost of a shiny new CRJ 900 does. Now that is an uphill battle that will be hard to fight. These airframes are cheaper to operate than most narrow body jets. They allow the flexibility that a 150 seat main line jet does not. I hate that fact, but it does not change it.
We as main line pilots need to realize one thing. We need to recapure scope in any way possible. If that means taking DCI wages to get the airplanes back on or ticket, so be it. If it means putting Compass, Mesaba, Pinnacle, OH and other on the bottom of or list, so be it. The politics and polices that worked during Regulation do not work today. It is time that we realize that we as a union need to catch up to the way our business is played.
If you truly question managements intentions look at two things. One RA wants this to be a truly seamless experience between DCI and Mainline. Two, what is going on an MEH is one of the biggest loop holes of Scope and code share alliances today.
Fact is that all of you are correct to some degree. Where the issue lies is this. Management of all airlines sees the CRJ 900/1000, E-170,175,190,195 as mainline aircraft that should be flown by third party operators. Make no mistake in our next round of negotiations we will be asked to give these up. The assume/hope that because they are bigger second generation RJ's that their dispatch rates and payload issues will be a non starter. Alas they can bring the Connection performance number up to that of main line. The fifty is a dead bird, but it is suffice to say that our management will do everything in its power to replace every 50 with a airframe with 76+ seats. Why, pure economics.
A "D" check on a 757, or 767 cost what the acquisition cost of a shiny new CRJ 900 does. Now that is an uphill battle that will be hard to fight. These airframes are cheaper to operate than most narrow body jets. They allow the flexibility that a 150 seat main line jet does not. I hate that fact, but it does not change it.
We as main line pilots need to realize one thing. We need to recapure scope in any way possible. If that means taking DCI wages to get the airplanes back on or ticket, so be it. If it means putting Compass, Mesaba, Pinnacle, OH and other on the bottom of or list, so be it. The politics and polices that worked during Regulation do not work today. It is time that we realize that we as a union need to catch up to the way our business is played.
If you truly question managements intentions look at two things. One RA wants this to be a truly seamless experience between DCI and Mainline. Two, what is going on an MEH is one of the biggest loop holes of Scope and code share alliances today.
09-05-2008, 05:48 AM
#50
Can't abide NAI
Joined APC: Jun 2007
Position: Douglas Aerospace post production Flight Test & Work Around Engineering bulletin dissembler
Posts: 12,037
I've got to go back through NWA's scope and find the provisions relating to the Mid-Ex codeshare.
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