Airtran Taking Over Us In Pit?

[ClueByFour]

BieingBoy:

BoeingBoy said: "What will keep the LCC's at bay in PIT?"

USA320Pilot comments: A passenger processing cost of about $10. 00 per passenger in Pittsburgh, which is more than 7 times that of Charlotte.

Assuming a constant number of pax, that cost will go down by 30-40% once the funds earmarked from the slot bond in conjunction with the PFC redirection to debt service go into effect in the next year or so, at which point PIT will have a cost/pax that's plenty competitive.

However, LCCs don't really care about that, since they fly point-to-point and thus can base their fares on the premise of getting folks from one place to the next (not have to stash or eat the charge for connecting a pax). That's the thing.

In that sense, PIT is more attractive than CLT for an LCC, simply because the O&D numbers are higher.

 

[RowUnderDCA]

That's because we are losing our customer base. There are folks lining up everywhere and not enough personnel to handle the normal operation let alone any type of cancellation or weather.


Yea, you MAY have pointed that SW would be coming into PIT, but nobody remembers your prophecy.

Right, no one EVER uses U at PIT... .it's too crowded!!

 

[mweiss]

Right, no one EVER uses U at PIT... .it's too crowded!!

Thanks, Yogi. But her point is valid. Considering the relative presence, US has a surprisingly low share of O&D.

 

[BoeingBoy]

USA320Pilt answers: A simple crew scheduling system, a point-to-point business model, and more productivity.

Now let's look at some facts...

A simple crew scheduling system - conceded to in previous concessions, with the plus of 104 new protected days a year that I haven't seen in the JetBlue or America West contract. In short, a management failure to implement something it has already been given.

A P2P business model - I certainly don't remember anything in our contract that specifies that US Airways MUST operate a hub/spoke system (and an inefficient one at that). However, if you'd like to quote the section of the contract that does specify that I'm sure everyone would be interested. Could it be that this is yet another management failure?

More productivity - let's really look at productivity. First, we will never get the productivity as measured by block hours per month of a Southwest or JetBlue - their single fleet type assures that. So let's look at another type of productivity, one used by management when they talk about labor cost per ASM - ASM's generated per month. Now I can get my monthly time by flying 5 legs a day that are 1 hour block time each, or I can get my monthly time by flying 2 legs a day that are 2-1/2 block hours each. Which way do I produce more ASM's (and remember that taxi time produces no ASM's). Now who controls the scheduling? Could this possibly be (gasp) another management failure.

USA320Pilot says: BoeingBoy, you know full well the company can barely man the current schedule with flight crews, never mind more flying.

With over 1600 pilots on furlough, does the company have any excuse for not being able to man the current schedule. As I've said several times, recalling crews so that the aircraft utilization can be increased is almost as cost effective as using existing crews. In fact, I came up with a "penalty" of 0.06 cents CASM vs using existing crews but a "plus" of lowering overall mainline CASM about 1 cent, and this assumes that a) only the little Buses and 737's increase utilization, b)the additional flying is just like the current flying (primarily hub/spoke), c)the average stage length is the same, and d) the acquisition cost of the airplane was included in the extra flying (which it should not be).

USA320Pilot says: Finally, when US Airways pulls down Pittsburgh flying, without any changes to the airport's debt structure, the passenger processing fee will go up to a level much higher than $10 per passenger.

You forget (or choose to ignore) a couple of things. First, the leases at PIT are not based on a "per passenger" charge. We pay the same whether we use the 50 gates to handle 1 B1900 flight per day or 200 A330 flights per day, but the "passenger processing fee" (as you call it) would be drastically different. Second, that ACAA will increase the per gate cost to all tenents as we pull down service (or more accurately, as we relinqusih gates). Our management has chosen to continue to lease 50 gates and use them for smaller aircraft (less passengers) and fewer mainline flights (less passengers). The result is the "passenger processing fee" that you mention. How many management failures are we up to now?

As I said before, I don't see Southwest, JetBlue, AirTran, etc, leasing 50 gates in PIT to operate 100 flights a day. First, they don't have any express operations, so that eliminates the 25 gate on A concourse. Second, they operate as many as 10 flights per gate per day, so there goes most of B concourse. So let's say they eventually lease 12 gates to operate those 100 flights. Their "passenger processing fee" would automatically be about 1/4 of ours, or $2.50 (assuming they handled the same number of passengers - considering their fare structure, a pretty safe assumption). For the worst case, assume ACAA doubles the gate lease rates. That would result in their "passenger processing fee" being a whopping $5.00 - still 1/2 of ours. So dream on if you think that the $10 "passenger processing fee" will keep the LCC's out of PIT. It won't because they'll never see a "fee" nearly that high.

USA320Pilot said: BoeingBoy, the new business plan will take a long time to implement and management is peddling as fast as they can.

If the progress made in the last 15 months is "peddling as fast as they can", we're doomed. If the progress made in the 4-5 months since Lakefield took over is "peddling as fast as they can", we're doomed. You posted the articles quoting Lakefield as effectively saying that time is running out. Those are not my words, they're his. Yet management talks about getting our costs down to where we'll be competitive with the better legacy carriers current costs in 1-1/2 to 2-1/2 years. Will they stand still during that time? Will the LCC's costs amazingly increase 25% or more in that time? Will the ATSB (and the lenders) give us that much time?

Jim

 

[mweiss]

Jim,

Well said! Especially about the passenger processing fee. I'm astonished that US plans on having an average of just two flights per gate per day.

The possible reason to keep 80% of the gates (what their original lease guaranteed) would be monopolization of resources. However, US has proven to (somehow) be unable to make a profit that way. So if only 100 US flights per day will be going through PIT, I wholeheartedly agree...get a dozen gates. Maybe even a baker's dozen. But not fifty!

 

[BoeingBoy]

Well, the gates are utilized more than that. The 25 B concourse gates are used by mainline and MDA. The 25 on A are used by Express (don't know how many flights either MDA or Express have per day.

On a slightly different note, does anyone know if we still lease the E gates? Seems like I almost never see any airplanes over there except the occassional B1900, Saab, or D328.

Jim

 

[javaboy]

JavaBoy, PLEASE PLEASE PLEASE get your facts straight. You said, CAL had over 70% in EWR when PE started...........Now that is Funny. When PE started, CO had very LITTLE of the EWR market. When PE started, CO had TWO DC-9's to IAH and THREE flight to DEN, a DC10 ( Pub Flight )and two 727's for a total of FIVE flights per day. When PE was at its Peak, its Largest Competitor was.........PIEDMONT, with over 100 Jets Departures and an additional 75 PI Commuter flights. The CAL you see today, is actually the CAL of old, PE, Fontier and New York Air. And a question Java Boy, we know it as Jet Express today, but what carrier was it that started all this CAL Express service in EWR?

As far as a LCC going into a Hub, what about WN going into STL?

Well my deepest applogies if i posted incorrect data of course in 1982 continential was part of texas air so you would have to include the family of airlines that served EWR under different names but under one holding company (Franks). just saying Peoples went from nothing to several hundered aircraft many fleet types in cluding the 747, and overseas flying


In February of 1986, PEOPLExpress purchased a small Midwestern regional carrier, Britt Airways, for some US$40 million. At the time of the acquisition, Britt was operating feeder services out of Chicago (ORD) and St Louis (STL) to cities in Kentucky, Illinois, Missouri, Indiana, Iowa and Wisconsin with a heterogeneous fleet of 11 Beech 99s, 18 Fairchild Metros II, 14 Fairchild F-27s and 2 BAC-111s. A second regional carrier was purchased to feed to PEOPLExpress' flights in April 1986; Provincetown-Boston Airways (PBA), which had filed for Chapter 11 after having encountered problems following a crash., A bargain, PBA was acquired for less than US$2 million. PEOPLExpress cashed out some US$25 million to pay the secured creditors, plus a further US$700,000 to provide the airline with rolling funds. The airline, which had previously cooperated with Eastern and Delta Air Lines (DL), was flying commuter routes from Boston and also maintained a regional network in Florida from a base at Naples (APF). PBA's antiquated fleet consisted of 52 aircraft, mainly Martin 404s and DC-3s but also a couple of Embraer Bandeirantes, Cessnas and Pipers. Not only had the two airlines cost PE arguably more than what they were worth, but the acquisitions drove PEOPLExpress further away from its original spirit


needless to say i think we can all agree that there have been numerous incidents of LCCs coming into established hubs. which was the orginal point.

to clarify my personal point of view, in addtion to the above, PIT i feel wont see that type of "invasion" of LCCs to "fill any void" left by UAIR retraction of flights. i simply believe most of the traffic is through not o/d traffic, which is what the LCCs are looking for. Further expanding upon that, the LCCs might in the short term determine the direction of some airline business models but will not become the standard for all airlines in the future going forward. For the same reason we all do not drive KIAs or whatever the cheapest car is... all kinds of people drive all kinds of different cars across all income levels (and revenue levels). SWA has been doing the low fare thing (even though on many routes they are not the LOWEST fare) for what 31 years and they only go to 60 cities, no international flying, ever ride them across the Atlantic? Pacific? Smaller towns cities like CAE? AVP? RIC? and so on there is another service provided by legacy carriers. and yes that comes at a price (higher priced tickets than SWA) but at least you have service.

now back to the real story.... WHO is running the show? What is the game plan? Where will this company be in 1, 3, 5 years?

 

[mweiss]

PIT i feel wont see that type of "invasion" of LCCs to "fill any void" left by UAIR retraction of flights. i simply believe most of the traffic is through not o/d traffic, which is what the LCCs are looking for.

I disagree with you there. Not that I believe that most traffic in PIT is O&D; it is. I just disagree that there isn't enough O&D demand for an LCC to have a significant presence here.

Take a look at the BTS data, and look at past instances of WN moving into a city with a similar O&D profile. Unless there's something unique to PIT, there's enough demand to support a substantial number of flights.

I believe WN would be able to fly from PIT to PHL, ISP, MHT, PVD, BWI, MCO, FLL, HOU, MCI, MDW, LAS, LAX, SAN, and maybe MSY, all profitably. I'm probably missing a couple, too.

Further expanding upon that, the LCCs might in the short term determine the direction of some airline business models but will not become the standard for all airlines in the future going forward.

I agree. I've said as much for a while. So has BoeingBoy, and several others.

 

[orville]

Express operates about 230 flight per day on both A concourse and the E concourse

 

[BoeingBoy]

Thanks, orville.

Jim

 

[orville]

Your welcome...but i'm very certainthat number won't last long with the PIT draw down. We were told to expect a loss of about 20 flights per month over the next couple months and most of the flights listed at the begining of this post are operated by express :down:

 

[orville]

my mistake not the begining of this post...its the one titled discontinued service

 

[LiveInAHotel]

It's 1 hr 54min according according to mapquest, airport to airport -- it's a little closer than CLE (2 hrs 8 mins according to MapQuest)

US had two hubs closer then that. When BWI was a hub it was only a 14 minute flight and a 75 mile drive from PHL.

 

[funguy2]

Two comments:

1. PE clarification

For clarification, when PEOPLExpress began service, it was an independent company. Its only affiliation to Texas Air was that Donald Burr and several others left Texas Air to start PE.

At the time PE started service at EWR (1981-1982), Texas Air controlled two airlines, Continental and New York Air. Continental had a handful of flights, and NYAir was primarily running service from LGA.

By 1985, Texas Air had control of Eastern Air Lines as well, yet PEOPLExpress' operation at EWR was larger than anyone else. NY Air began adding some service to EWR as well, however by 1986 most service began migrating to New York Air's new hub at IAD (competing with Presidential for domination of IAD). However, CO+EA+NY would still be less than 1/2 the size of the PE operation, in terms of flights/day (this is my estimation).

In late 1986, Texas Air acquired PE, and merged CO+NY+PE, and the merger was "complete" (officially) in Feb 1987. When Texas Air acquired EWR, then they acquired the vast amount of traffic, which they still hold today... However, I doubt CO has 70% of EWR traffic... they probably have closer to 50%.

2. Will LCC's come to PIT

I would guess that LCC's will expand their positions in PIT. If you want examples of legacy abandoned hubs, look at SJC, RDU, and BNA... AA kept some limited point-to-point service from these locales, but largely dropped their connecting hub structures... Southwest swooped in for all 3 cases... SJC facilities were sold/leased to Reno Air and then re-acquired.

If you assume PIT will be something of a Smaller hub or large focus city, then your examples of LCC invasion are STL and SLC, where LCC's have grown as the legacy retrenched. Recall that when AMR announced its STL reduction, America West and Frontier added additional service. I believe LUV has added some STL service, more slowly, as well.

My personal opinion is that LUV has other fish to fry than PIT, particularly if US Airways fails... (i.e. PHL). But I think the other "lesser" LCC's might fight over an abandoned PIT... AirTran and JetBlue particularly, since they both have a hundred or so new airplanes in their delivery streams, and will need to fly them someplace.

 

[USA320Pilot]

Mweiss:

Mweiss said: "The crew scheduling system, point-to-point business model, and more productivity are in the pilot's contract?"

USA320Pilot comments: Literally "yes", practically "no". Like every other work group the pilots are "bare bone" staffed. With the current contract the airline can run normal operation with a few extra pilots, but as soon as there is one hicup there are not enough pilots to fly the schedule.

Thus, to increase ASM's to average down unit costs with the same headcount the company wants productivity improvements to mirror the LCC labor pilots.

Respectfully,

USA320Pilot