Midatlantic Rjs Qre Crap, We're Going Down!

[BoeingBoy]

Ah, but the ASM's are also lower. The rule of thumb that a small plane is more costly to operate absent a technological advancement is alive and well.

Do you know of any "express" operator that has costs competitive with the LCC's? Even Mesa reported 12.1 cents CASM in the 1st quarter (their 2nd fiscal quarter) - and except for a fairly small operation out west they have not ATO, res, etc.

Jim

 

[mweiss]

I'm 100% with Jim on this one, SpinDoc. You may have lower employee costs per employee, but the lower number of ASMs across which to amorize their wages, combined with the higher per-seat-mile operating costs of the 170 vis a vis the 737 makes the airplane a poor replacement for 737s.

 

[BoeingBoy]

FWIW, in the 1st quarter the CRJ-701 operators reported a DOC of between 8 and 8.5 cents per ASM - well above our 737 DOC.

Jim

 

[700UW]

Hey spindoc,

I guess you are the one who does not get it!

 

[Flying Titan]

I'm 100% with Jim on this one, SpinDoc. You may have lower employee costs per employee, but the lower number of ASMs across which to amorize their wages, combined with the higher per-seat-mile operating costs of the 170 vis a vis the 737 makes the airplane a poor replacement for 737s.

Maybe I'm confused, but this misses a key point about many of the routes that UAIR flies. It seems to me that an E170 with 60 pax on board is a big money-maker while a 737 with 60 pax is a loser. Many of the routes that these aircraft will fly are tough for a 737 but need more volume than a Dash-8 or 50-seat RJ. Even if there are 40 pax on a flight, it's probably break-even on the 170 and offers a heck of an advantage over the competition with their CRJs and E145s. While ASMs are important, if you're not going to consistently fill a majority of the seats on an aircraft, it has to be a money loser.

 

[WorldTraveler]

Titan,
You are correct. If a 70 seater is the most economical way to fly a market, then it makes no sense to put a larger aircraft on the flight. Unfortunately, prices are still not stable so the economics may look favorable for flying a 70 seat machine at X percent load factor now but when the fares go down, which they very well may do, a larger aircraft (and associated labor costs) with lower seat costs but higher trip costs make more sense.

Boeing Boy,
the DOC (direct operating costs to make sure we are using the same term) for a 70 seater may be 8.5 seats but that can't be the fully allocated CASM. When you start getting rid of mainline aircraft and replacing them with smaller aircraft all of those overhead costs must be allocated as well. The DOC costs for mainline aircraft can easily be below 4 or 5 cents per ASM.

 

[BoeingBoy]

Flying Titan,

You have accurately described the "niche" for any RJ - an airplane sized to the market. The discussion (or point) that I was engaged in with SpinDoc revolved only around cost only and ignored the equally important revenue side.

WorldTraveler,

You are also correct. The direct operating cost is far less than the fully allocated cost. It has been reported that someone in the know in CCY (how's that for a reliable reference?) says that the "all up" cost of the RJ's is between 15 and 25 cents per ASM, depending on which RJ and the segment length.

None of our mainline aircraft have a DOC below 4 cents (average, not segment specific) - they run between 4.5 and 5 cents except for the 737, which is about 6.5 cents (1st quarter figures). But that's our DOC, I assume some other airlines are getting lower numbers than that, though when talking about DOC, many of the things that drive our overall cost up aren't included.

In the spirit of full disclosure, my numbers involve an assumption - that the 737 covers 350 miles per average flight hour, the 320 series 375, and the others 400. This yields ASM's when combined with seating capacity. The BTS form 41 schedule p52 data (a/c operating costs) has flight hours but not distance, which is in another database. I just haven't gone to the trouble of attempting to combine the databases.

Jim

 

[mweiss]

As Jim said, there are markets for which the 170 is well suited. Specifically, those are markets in which service with a 737 would yield only, say, 75 profitable passengers (it'd be more than 60 because of the lower CASM).

But does it make sense to fly two 170s instead of one 737? Only if the frequency is a substantial determining factor in the bulk of travelers' decisions.

 

[WSurf]

Yes, cities and travels like freq. of travel. More flights out of a city is better.

 

[WSurf]

Ya, too much beer.. Travelers like more choices, and the RJ's and Turbo Props do it. Yea RJs might have more seat cost. But factor in the low wages of everyone that works around it and the fact it turns faster then a mainline plane (equals more flights) you can see in the end it makes more money. EMB must have something (beside the low wages) JB wants 100 and Southwest is looking at them..

Do I like them... no way.. Give my a Dash 8 anyday... It the coolest plane out there. (well it is, cause i am flying one... )

 

[mweiss]

Travelers like more choices, and the RJ's and Turbo Props do it.

Travelers also like bigger jets, and, well, bigger jets do it.

Yea RJs might have more seat cost. But factor in the low wages of everyone that works around it and the fact it turns faster then a mainline plane (equals more flights) you can see in the end it makes more money.

Spoken like someone who hasn't crunched the numbers. It might make more money...but only if the travelers are willing to pay enough more to cover the added cost of the RJ over the 737.

EMB must have something (beside the low wages) JB wants 100 and Southwest is looking at them.

It has the advantage of being able to serve markets that today are too small to push a dozen 737 flights a day through (if you're WN). FWIW, I don't expect there to be many markets for WN that fit this description.

Give my a Dash 8 anyday... It the coolest plane out there. (well it is, cause i am flying one... )

Hopefully not on all that beer!

 

[ClueByFour]

Ya, too much beer.. Travelers like more choices, and the RJ's and Turbo Props do it. Yea RJs might have more seat cost. But factor in the low wages of everyone that works around it and the fact it turns faster then a mainline plane (equals more flights) you can see in the end it makes more money. EMB must have something (beside the low wages) JB wants 100 and Southwest is looking at them..

The frequency thing (really pioneered at the majors by Crandall with AA) only works if people are willing to pay thru the nose for the experience. That age has come and gone. The "turn it faster" thing is generally shot by a hub and spoke model.

Jetblue will be buying a 100 seat aircraft. Not a 20 or 30 or 50 seat aircraft. It makes a difference. There is a huge difference between two EMB-190 frequencies and two EMB-140/145 frequencies.

I suspect that Southwest will only do RJs once it literally runs out of markets that won't support a 737. That's a ways off.

 

[diogenes]

Diogenes,

From my perspective, you right - it's not the plane but what MDA potentially represents.




Careful, SpinDoc. You're unveiling the master plan....

Jim

------------------------------------------------------------------------------------------------

Jim, absolutely correct, on both posts.

It is very clear to me. For the past decade, the sole constant at U has been lowering labor costs. The @!#$%%^ business plan has been all over the map. 9/11 merely accelerated the process.

"...we can't let it look like we're taking advantage of it (9/11)"

Rakesh Gangwhal

 

[RowUnderDCA]

Can U reduce its rj lift by ditching some affiliate carriers? Does that help the economics?

 

[isthisok]

QUOTE (atlantis @ Jul 20 2004, 01:03 PM)
i guess i am dumb but would soembody tell me what "qre" stands for in this topic "midatlatnic rjs qre crap were going down". what does the "qre" mean. is this a term mechnanics use or something. thanks.

QUOTE (ktflyhome @ Jul 20 2004, 11:26 AM)
Atlantis: That was funny I have been thinking the very same thing. Thanks for asking and clearing this mysterious "qre" thing up.

atlantis and ktflyhome,

Is this your best contribution? Quit waisting peoples time and stay on the subject. I thank all who have posted information and most of it very interesting and informative, but we don't need the immature likes of atlantis and ktflyhome. Like you two haven't made typing errors. Look at the keyboard! Grow up, your not funny. Thanks again to all of those who have added constructive conversation.

P.S. - atlantis, what is midatlatnic and mechnanics? You ain't so perfect yourself!