Bombshell: Comair to cease operations

[WorldTraveler]

I would have loved to see WN handling mail along w/ everything else on the ramp w/ the 20 minute turns they have done in the past.

Their most recent annual report does not contain any references to mail so I presume they don't carry it anymore.

BTW, speaking of reliability, there is a fair amount of talk about reliability at airlines, esp. during the busy summer. While there has been a fair amount of weather around the US over the past week or so, flightstats shows DL running a 94% on-time as of this hour - more than 10 points better than one of their network competitors and the highest among the network carriers - and with one-fifth of the cancellations that one of its competitors has.

Operating in the NE used to automatically result in lower operational numbers but not anymore. DL's LGA and JFK operations have comparable OT to the rest of their system - and US' PHL hub usually has OT stats as good as the rest of their system.

Perhaps airlines really are learning to compete in the NE and create operational reliability - which is valuable to more than just the USPS.

Hats off to those of you who make operational reliability a reality, including to those who helped give DL more than one less-than-flattering nickname... yet few of those people - or their dawdling ways - seem to be around anymore.

 

[700UW]

Isnt this thread about Comair shutting down?

WT, this isnt about DL and mail.

 

[eolesen]

Comair's shut-down had been expected by some for the past six years, so there's really not much to discuss that hasn't already been said...

 

[WorldTraveler]

Isnt this thread about Comair shutting down?

WT, this isnt about DL and mail.

Comair's shutdown is directly related to its decision to reduce the number of small RJs particularly and the size of the RJ fleet overall, thus minimizing the need for multiple DCI carriers.

The discussion about mail is a by product of what DL might potentially gain by having a higher percentage of large RJs and mainline aircraft in its domestic network.

You are free to participate on the basis of where the discussion - or not.

 

[WorldTraveler]

For those who have missed it, DL has apparently renegotiated contracts with OO to reduce 50 seaters and place some of OH's aircraft w/ OO and its subs. Combined w/ OH's 50 seaters, DL has identified opportunities to remove about 80 more 50 seaters.

 

[eolesen]

And what about OH's employees?...

 

[Kev3188]

On the street, "Transitioned."

 

[WorldTraveler]

actually, several media reports are saying that:

OH's unions are negotiating separation (transition ) payments w/ OH/DL; non-contract employees already have been given a package (not sure what).

some of their HDQ people will stay for several additional months to wind down the operation

job fairs have been scheduled in Cinti/N. Ky and OH is planning a reverse job fair.
http://www.bizjourna....html?ana=yfcpc

apparently, some OH employees will be offered positions with Pinnacle - but who knows how long they will be around.

DL's new pilot contract has a clause about providing a certain number of jobs to ALPA represented DCI pilots.



Given that OH employees have above average seniority and experience, pilots and mechanics esp. will likely fair well in the job market.

SInce the fate of OH was expected for some time, I doubt if there are too many OH employees who didn't have a plan B in their back pocket.

OH, IMHO, had some of the best DCI employees. I wish them all; good people do land well on their feet.

 

[Kev3188]

In other DCI news, DL announced today that Regional Elite is to be wound down by the end of this year, and their work will be "transitioned" (yes, they used the term) to other 3rd party providers. REAS handled operations at ~ 100 airports. DGS recently "won" RFPs at 72 of 'em...

 

[WorldTraveler]

yes, thanks, Kev.

...including the DTW and MSP hub operations.
Expectations are that current employees will be transferred with the contract in cities where a DL-related entity wins the contract, as is expected in DTW and MSP.

Collapsing organization structures, even among DCI carriers and DL owned ground handlers, does not necessarily mean that the people will end up on the street.

"transition" might well just mean a change of employer within the DL organizational structure.

But let me ask you, Kev, since you are a smart and rational guy and have a whole lot of knowledge about the airline industry.

What would you do to help mitigate the effects of reducing the number of DCI carriers and moving to larger aircraft will have?

The whole DCI program has been one big shuffle of resources - but how would you propose it have been any different and obtained the same results - if not better.

Can you work a 76 seater w/ the same number of people on the ground as you do for a 50 seater?

I think it is valid to consider the thoughts of people who are on the frontline but don't necessarily see it the same way mgmt might have.

 

[Kev3188]

Collapsing organization structures, even among DCI carriers and DL owned ground handlers, does not necessarily mean that the people will end up on the street.

...Doesn't mean they won't, either...

"transition" might well just mean a change of employer within the DL organizational structure.

Word is maybe keeping seniority, but going to day 1 pay.

But let me ask you, Kev, since you are a smart and rational guy and have a whole lot of knowledge about the airline industry.

What would you do to help mitigate the effects of reducing the number of DCI carriers and moving to larger aircraft will have?

Not sure what specifically you're asking...

That said, I'd lower the number of providers further than they have. With the draw down, I think it's doable. My votes to go would be RP (and S5), and G7. The former due to it's small size in the network. The latter won't happen, since they just got a bunch of frames from other carriers, and are cheap, which DL loves, operational metrics be damned.

I'd also go back to a more (roughly) geographically traditional lineup (ie OO out west, EV in the South/SE, and CP/9E in the middle). 9E needs to get it's act (back) together in my scenario, though. Last week's meltdown was absolutely inexcusable.

I'd also prefer M/L do all the DCI handling in MSP/DTW/JFK/LGA/MEM. They're doing it in ATL & CVG, and mostly in SLC. No reason not to continue that trend.

Can you work a 76 seater w/ the same number of people on the ground as you do for a 50 seater?

An E75 is infinitely easier than a E-145/CRJ-200/700/900. In fact, I'd say working an A319 is easier than these.

My hope is that as the 76 seat flying increases, it shifts to the E70/75 family. They're much easier to work (both above wing and below) and anecdotally, pax love 'em. Not so with the CRJ family...

I think it is valid to consider the thoughts of people who are on the frontline but don't necessarily see it the same way mgmt might have.

The widget can't be bothered with the great unwashed's opinions...

 

[WorldTraveler]

Who cares if DL or anyone else is not interested in your opinion about anything? Most people participate in internet chat forums because they want a voice and don’t mind “hunting” for like-minded people. Decidedly, few will find those among mgmt.


Based on what any of us can know about DL’s DCI strategy, I think your recommendations are wise. The whole DCI program has been based on playing one supplier against another for years which isn’t totally unexpected in purchaser-supplier relationships. What makes a lot of people uncomfortable when it is done with regional carriers is that there is a pretty thin line between their employees and mainline employees.

I was a bit surprised by your suggestion that there needs to be more consolidation – and I think as long as DL can get the price controls it wants, it would rather deal with fewer players.
Consolidating companies – ground handling or regional airlines – does entail costs; companies may have have to pay unemployment and separation payments to employees – so I don’t think the point is to throw people out on the street. Starting over at the bottom of the pay scale does nothing to develop longevity – but I would bet that there are a whole lot of DCI employees who factor in flight benefits fairly significantly in their choice of whether they work for a regional airline / handling company or Target.
As you know, DL began to put a lot of pressure on its DCI partners regarding costs not long after the Comair strike – but that also coincided with 9/11, BK etc. Not sure that it is really necessary to have as many DCI carriers now –but relationships with every one of them were created or expanded in order to solve one problem or another than cropped up.
The Comair strike also lead to DL’s decision to spread its DCI carriers out across DL’s network in order to prevent one DCI carrier’s problems from affecting mainline or giving one DCI carrier enough power to affect DL. Spreading regional carrier operations out all over the country does add costs while at the same time creating a certain amount of scheduling efficiencies by allowing an aircraft arriving at a spoke station to be scheduled on a flight to another hub station. Pros and cons for sure. You do have to scratch your head when you hear regional airline crews announcing their base on a flight that is landing on the other side of the country from their base.
Pulling a net couple hundred aircraft out of the DCI program does allow the possibility to gain operational efficiencies which may be a bigger part of what DL wants to do over the next couple years – and the regional carrier industry apparently is heading in that direction anyway w/ a handful of holding companies with multiple operating brands.

RP is a relatively decent airline but they also are viewed w/ suspicion by the pilots because of Frontier. Perhaps if Frontier separates from the company as they plan, RP will be back on the same page as other regional carriers.

I think the chances are pretty high that DL will move more regional carrier ground handling to its own employees. Faced with a certain shrinkage in the mainline airline that comes from higher fuel prices and reduced demand, bringing more work in-house is a way to reduce pressure on mainline to cut employees – and a lot of ACS jobs are being filled with RRs, as you well know.

I hope with you that the next few years will also result in a movement to take the DCI product even more upscale. The CRJ and ERJ were good airplanes to start the regional carrier movement but there are better airplanes available today. The CR9 found its place at DCI as much as it did because DL and NW needed to swap out a lot of early generation CRJs and Canadair was willing to make good deals in order to keep its foot in the door. I’m sure that is still a factor, but I am certain DL is looking at – if not hoping they can get similar trade-in deals from some of the other manufacturers. The Mitsubishi RJ might be an option that wasn’t on the table before – and it is a better fit to the aircraft size DL is permitted in the mainline pilot contract than the C series jets. Embraer has also talked about putting new generation engines on their E jets along w/ other upgrades – but not sure where any of that stands – or any other potential players, including the Chinese. Any other product would be an improvement over the CR9.
Notably, DL has strategic interests in all of the countries that produce regional jets and it wouldn’t surprise me in the least if a DL purchase of regional jets is tied to DL gaining some of the strategic benefits it wants; when regional carriers like Skywest and Trans States step away from the traditional Canadair/Embraer regional jet suppliers, it is probably solely on the basis of the regional jet alone. When the network airlines themselves place orders – as AA, DL, and perhaps UA are all likely to do, then there is the possibility for a lot of strategic wheeling and dealing to be part of the order. The importance of any of those manufacturers to the economies of the countries where they are based is no less significant that Boeing is to the US.
Add in that w/ upgrades of the existing 70 seaters, the order could easily top 100 firm orders and this order will be one that every one of the manufacturers want a piece of; and the likelihood is that AA and UA will also be announcing large RJ orders as well.


On a related note, Kev, you should take a lot of satisfaction in the spread of fame that a certain 32 year old NASA engineer has found this week. Intelligent and articulate, he obviously does his job very well – to be entrusted w/ leading a team landing a spacecraft on another planet. But no one for one minute would put him in the same mold as those in NASA who have gone before him. He clearly marches to his own drummer and has managed to attract a fairly large group of followers in the process.

 

[WorldTraveler]

And what about OH's employees?...

DL has apparently come to agreement w/ all of OH's workers.

Samuel said Delta will pay between four and 16 weeks of salary to the roughly 240 Comair employees represented by his union (mechanics). Delta also agreed to modify its policy on flight benefits so 50 additional machinists will be able to fly free in retirement. Another concession involved Comair employees who have borrowed from their retirement plans. Delta worked out a deal with Fidelity Investments to allow Comair workers to pay down their 401(k) loans without a payroll deduction. That should prevent employees from defaulting, he said.

“I can’t say we were treated unfairly,” said Samuel, who told the Business Courier that unions for Comair pilots and flight attendants also struck deals with Delta last week.

http://www.bizjournals.com/cincinnati/blog/2012/08/delta-comes-to-terms-with-comair.html?ana=yfcpc

 

[eolesen]

How generous -- working out a plan to pay down 401K loans. That'll remove some of the sting...

Kev, gotta agree that having a couple less players sounds good, but it tends to drive up the prices come negotiations when you don't own them.

Starting out at the bottom rung for pay but keeping date of hire isn't what I'd call optimal, but I guess it is better than nothing.

When AA pushed people to Eagle, I'm pretty certain their company seniority was grandfathered for pay, which meant more than a few were at Eagle's max, instead of everyone being just above minimum wage. Still resulted in pay cuts, and huge haircuts on retirement and benefits, though.

Taking company seniority into consideration for pay purposes would be the fairest way in my opinion, but probably kills off the business case for changing providers if both are subsidiaries...

 

[WorldTraveler]

sounds like you are mixing regional carrier issues and ground handling companies?

Coming up w/ a plan to pay down 401k loans prevents pay from being withheld... and I'm sure the issue is not one for DL/OH but for Fidelity... and to avoid the possibilty of being hit w/ early withdrawal taxes.

The issue about keeping date of hire but starting at the bottom for pay is for ground handling companies.

I'm not sure what the offer was or is if OH employees want to switch to other DCI airlines.

AA continued to maintain Eagle as the majority provider of regional services as a wholly owned subsidary. Most other airlines moved to the model of contracting out the majority of their regional feed years ago.
All kinds of things between a wholly owned subsidiary compared to a contractor.