Dal V Us Rj Position

[sfb]

Perhaps it's because the less-well-compensated non-MBAs who post here don't read the financials enough to notice that WN's revenue model generates less revenue than US's.

For Q1 2004, as reported by BTS
RASM: US 14.44, WN 8.06
Yield: US 14.43, WN 11.76

This means that not only is WN getting fewer dollars per flight (RASM), they're even getting fewer dollars per paid ticket (yield).

Perhaps that is why the focus is on cost?

Well, though those numbers are generated by the government, they seem a bit questionable in that RASM is reported to be higher than yield for US -- unless the "RASM" number is for mainline + Express while "yield" is for mainline only. WN's numbers are pretty transparent given they have no regional flying.

The real point of the article on Delta's use of RJ's is that they're reevaluating how appropriate they are to longer routes (i.e. 2 hours or more). But that's not how they did the most damage to US Airways; they did it by offering RJ's in many markets where US only/mostly used props. And most passengers simply don't like them. My opinion is that Delta will probably end up offering more mainline service on those longer RJ routes if they manage to get the concessions they seek from their pilots.

I'm not sure if it's completely true that the intent of their use of RJ's was as "career busters" -- but management certainly did want them as leverage against DALPA. That's completely unsurprising, though, given that the pilots always demand an "industry-leading" contract. If you're management, you've got a choice between flying RJ's where you might be able to make a profit by restricting capacity or mainline where pilot contracts make it impossible to make a profit. In this case, it may well be part of the negotiations with the pilots; i.e. Delta will increase mainline flying in exchange for getting the concessions they want.

 

[mweiss]

Interesting point. I should have caught the RASM/Yield inconsistency. I wonder what's causing that.

 

[BoeingBoy]

There's an even bigger discrepancy in DL's RASM/Yield numbers. I think these come from the 10% ticket survey (at least the $ part) so maybe the "random" 10% wasn't so random after all - at least for U & DL.

Jim

 

[mweiss]

Ironically, this problem is caused by the fare structure; it wouldn't be as significant for the WNs of the world. The error that comes from a 10% sampling would be a certain multiple of standard deviation for the tickets. Since the variance of WN's fares is smaller, so is the standard deviation and thus the error that would appear in the 10% sampling.

 

[diogenes]

I'm not sure if it's completely true that the intent of their use of RJ's was as "career busters" -- but management certainly did want them as leverage against DALPA. That's completely unsurprising, though, given that the pilots always demand an "industry-leading" contract. If you're management, you've got a choice between flying RJ's where you might be able to make a profit by restricting capacity or mainline where pilot contracts make it impossible to make a profit. In this case, it may well be part of the negotiations with the pilots; i.e. Delta will increase mainline flying in exchange for getting the concessions they want.

dave himself identified the EMB's as scopebusters back in 99

 

[Light Years]

Not to defend him, but he was actually talking about the ERJ140 when he made that comment. The 140 is a 44 seat version of the ERJ145 made specifcally for American Eagle to get around Americans limits on 50 seaters. This is the exact quote:

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Uncle Dave has left Continental Express to head the Budget Group (parent of Budget-Rent-A-Car) in Chicago. He was a smart man who always returned my calls, so I'm in mourning. He never even considered my feelings about this...sorry. I digress.

Calling the ERJ-140 a "scope-clause buster," Siegel noted that the aircraft was "clearly targeted at pilot scope clauses among the regional carriers, and (the ERJ-140) is a great aircraft to address that issue." He added that he wasn't sure if Express meeded an aircraft that precise. "It's clearly a great aircraft for airlines like American and Northwest with limits of 45 seats," he added. Northwest has an order of 54 Canadair Regional Jets, most of which will be flown by Airlink carrier Express Airlines I.

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[will fix for food]

The much discussed CASM ..................... the legacy carriers are doing the same now with the WN/JB/AT's.

Good post Electradude.

The airline I work at has (or at least used to) have the direct operating cost of a flight on the flight plan. A couple years ago I compared an F100 flight plan DOC with an EMB145 flight plan of roughly the same segment length. The 145 flight cost about 1/3 of the F100 flight. So for the same cost they could fly a little over 1.5 times the number of seats at 3 times the frequency using the 145. Not bad.