Pit - Just What Are The Facts?

[BoeingBoy]

I noticed a discussion developing on the PIT hub issue, so just thought I'd start a thread on it. But first, a little story....


Billy Bob (hey, I'm from the South so I'm allowed) leases a brand new pick-up truck for $500 per month. What with going to work on the loading dock of the Budweiser plant and taking Betty Sue out on Saturday night, good ole Billy drives 1000 miles a month - so his lease costs him 50 cents per mile. Then one day, Billy Bob hurts his back and has to go on part-time. His bad back makes it difficult to perform his "manly duties" and Betty Sue breaks up with him - no more Saturday nights down at the dance hall. The result is that poor Billy is only driving his truck 500 miles a month - and his lease is now costing him $1.00 per mile.

Once this sinks in, Billy is hopping mad. But Billy Bob (having finished 8th grade) realizes he has some options. He can go down to the dealer, P & M about his bad luck, and try to get his lease reduced. He can suck it up (after all, it is a really nice truck) and maybe look for opportunities to drive more (Betty Sue's kid sister is looking better all the time). Or, Billy might just have to decide that his truck just isn't worth the cost (that "new" smell is gone, after all) and give it up.


That's the saga of PIT in a nutshell. I don't remember reading where the ACAA double or tripled our lease rates in the dark of night. We had a dramatic cut in the number of seats available in PIT, with a corresponding drop in the number of passengers, so our lease cost per passenger did jump way up. Conversely, other carriers at PIT have seen their traffic increase and their "cost per head" go down. Our actions have given them a competitive advantage.

Of course, there are other reasons why PIT is more expensive than CLT. It's a newer facility - if the CLT terminal had been built at the same time as PIT, it would cost more to build than it did. Weather is a factor - more snow days = more deicing cost. PIT is a nicer facility in many ways - moving walkways in the concourses, plenty of ramp space. There are other reasons, but you get the drift.

On the other hand, there are pluses to PIT (aside from those above). In this day of declining revenue, the biggest may be the yield premium that PIT enjoys. Basically, passengers flying out of PIT pay about 20% more per mile than those in PHL. They pay about 7% per mile more than those in CLT.

Jim

 

[700UW]

Jim,

As you know CLT has since renovated several times since PIT was built, two new hangars, new training center, new offsite facility, two concourse extensions one major one minor and a brand new express facility. It is just cheaper to build and operate then PIT plain and simple.

 

[AOG-N-IT]

Any way you care to characterize it? Any analogy you care to apply?

PIT is 3 times more costly to operate on a day to day basis than is CLT. The number of adverse weather operating days between the two hubs also bids in CLT's favor 3 to 4 months out of every 12 too. Costs are Costs..no matter how you slice it !! PIT is in a dollar for dollar comparative quagmire

CLT is also a growing economic region ..and growing in population in a manner that the PIT and surrounding region couldn't begin to compete with. PIT and Allegheny County Junk Bond status says volumes about it state of affairs in general.

CLT is 1 hour 20 minutes south of PIT by most schedules....and about 1 hour 30 to 40 minutes southwest of PHL. Not bad seperation unless something weatherwise sweeps out of the gulf region and envelopes the majority of the U marketing area. U is not the only victim in that isolated situation.

PIT has only 40 minutes air time seperation from PHL....not good for a scaled down airline , with too many hubs and a dire need to shed themselves of excesive debt that fails to make sound business/financial sense.

PIT does without fail have one of the nicest facilities , terminal wise that I have ever encountered ...no dispute there , yet with the new TSA issues coming into play..the PIT terminal is becoming a ghost town in between pushes...hence the loss of a good number of retail establishments within that terminal. Something else that CLT did not bank it's off-setting revenue model upon.

PIT also has the worst Acft Maintenance facilities of any major carrier I've ever seen...maybe too much went into Fluff on the terminal...and not near enough on Function in regards to the supporting facilities? PIT Maintenance itself performs very well considering what they have to work in..and with. PIT is also enjoying better staffing levels than CLT when the type of work being performed is looked at objectively and honestly.

This response is not to inspire a heated and pointless battle about North Vs. South..it's about economics and what hinders us from being as profitable as we could be. PIT is simply too costly for what it actually offers in the broad scheme of things. The leases would not have been rejected if this were not true in all aspects...note that CLT's leases are in tact...and the only bath they may take is in terms of 2002 taxes. Something I've not seen CLT raising Holy Hell about in the press either. Let U sneeze in PIT...and the same cannot be said for a moment.

 

[BoeingBoy]

700UW,

Yes it is - no dispute there. I would suspect that ORD is more expensive than DFW, DIA more expensive than MIA. I suspect that PHL is at least as expensive as PIT.

The bottom line is that I don't know if U needs PIT, PIT needs U, both, or neither. I only know that the "cost per passenger" is a somewhat deceptive use of the numbers.

Jim

 

[BoeingBoy]

To all,

I really wasn't trying to pick a fight on the PIT issue. It is but one small example of how a "numbers guy" (maybe with a math degree??), if given enough data to choose from, can paint pretty much whatever picture he wants.

Outsourcing vs in-house - which do you want to be "least expensive"?

Painted vs unpainted planes - what's your preference?

High cost structure vs LCC - where would you like to place the blame?

Unproductive employees - would that be work rules or the corporate structure, sir?

Low revenue - do you want to justify high fares or low fares?

The list goes on and on.....

Jim

 

[Dea Certe]

Jim,

I thought it was a good analogy.

Thanks for all your thoughtful posts.

Did anyone else see the article on NWA? Apparently their CEO, Richard Anderson has told their AMFA pay cut were needed as they were now the "third highest paid workers in the industy"?

Where does it end?

There's a book, by Harry Braverman called "Labor and Monopoly Capital", written in 1974. Just read the introduction and you'll see where we are heading.

Dea h34r:

 

[AOG-N-IT]

To all,

I really wasn't trying to pick a fight on the PIT issue. It is but one small example of how a "numbers guy" (maybe with a math degree??), if given enough data to choose from, can paint pretty much whatever picture he wants.

Outsourcing vs in-house - which do you want to be "least expensive"?

Painted vs unpainted planes - what's your preference?

High cost structure vs LCC - where would you like to place the blame?

Unproductive employees - would that be work rules or the corporate structure, sir?

Low revenue - do you want to justify high fares or low fares?

The list goes on and on.....

Jim

No fight picked at all.

Outsourcing Vs. In-house - which do you want to be "least expensive" ? Obviously the company wants to paint the picture that " Out-sourcing " is...but industry experts show a meager saving of 6 to 8% under ideal conditions. U's 1st try did not net .5% in savings or any other "positive figures" U lost money in Air Taxi's , Parts , Labor and three added days of un-scheduled down-time to correct the mistakes made by an outsourced vendor. The added crew expenses, fuel burn between CLT-MAE and back to CLT are not factored in either. Then we have the legal side that is eating into the bottom line as we speak.

Painted vs.unpainted planes - what's your preference?

If looks were the only yardstick to measure this by? I'd take a WELL painted aircraft hands down. I like our look..but it stops and ends there.

(1) Paint increases weight which in turn adds to the hourly fuel consumption...fuel consumption is something a floundering "non hedging" airline needs to be mindfull of.

(2) The poor performance and duration that we've gotten out of our "out-sourced" paint jobs have not bidded well for us. The paint looks great at first..then it begin to peel , which creates a negative perception added to the added fuel burn noted above.

(3) Our painted Aircraft , excliuding the factory fresh jobs on the Airbus acft...have forced us into scenarios of added down-time , which is a cost multiplyer to correct thier flaws...and in some cases the Acft had to be flown at our expense in crew time , airframe/powerplant hours and cycles..and fuel back to be repainted under a limited warranty. The warranty covered none of the other costs involved beyond the paint itself.

High Cost structure Vs. LCC - where would you like to place the blame?

I'd like to place it on the backs of those of whom made it happen...and those of whom have failed to correct it , all the while you and I are being asked to subsidize or underwrite it. I will take you to the first two questions for examples of recent failures to change or adapt possitively.

Unproductive employee's...would that be work rules or the corporate structure , sir?

I would have to believe a portion of both. The employee's have been beaten down by the structure and negative culture...the work rules are rules that both sides happened to agree upon...and the nature of a Hub and Spoke operation tends to compound 8 straight hours of productivity...crews sitting for hours between flights doesn't help either.

Low Revenue...do you want to justify high fares or low fares?

High fares could be justified if we were offering a product like no other carrier would choose to match...BUT we aren't. Low fares are a bit of a figment of the imagination if you would read some of the posts by Piney Bob on a few accounts.

Our costs are hurt by leadership stupidity , an incredible shrinking airline , that acts like it needs to grow again all of the sudden (The 60 added Acft carrot for example)

We are also plagued with litigation Vs. having the ability to sit down an talk about what's wrong and correcting it. We bleed from every pore in our beings..and yet the problems are not being addressed or corrected when they are identified for what they truly are. It's easier to blame the employee's , take from the employee's , furlough the employee's as opposed to correcting the core problems.

 

[PITbull]

Boeing Boy,

What will happen to PIT with the ticket prices when U drops fares as part of their new business model?

My hunch is that many folks in PIT will no longer have to drive 21/2 hours to CLE to fly...

If U pulls out before this takes place, some carrier who comes in will surely be able to benefit from whatever ACAA will be able to offer.

I don't believe U has any plans for a HUB in PIT other than point to point with MAA.
The business plan didn't really include PIT as a mainline HUB or even growth, nor CLT other than island flying.

 

[PITbull]

AOG,

The issue for we in Pittsburgh is about jobs. Just as the Mechanic outsource. The one element is also about jobs.

That's why we fight to preserve the jobs in PIttsburgh and keep the Hub. ACAA has to find a solution NOT just for U, but for any carrier to come in. My issue personally, is about the jobs, OUR jobs. Period.

 

[BoeingBoy]

AOG-N-IT,

I'm not disagreeing with any of your conclusions. I'm merely saying that given enough facts, Dave can paint any of those issues any way he chooses by merely picking which of the facts to use.

Want to make outsourcing look like a great deal? Compare the bill from the vendor to all the costs you can possibly attribute in house maintanence and conveniently forget the cost of curing the "minor problems" the plane had when it returned from the vendor. Doesn't make the answer accurate, just "factual".

Jim

 

[AOG-N-IT]

AOG,

The issue for we in Pittsburgh is about jobs. Just as the Mechanic outsource. The one element is also about jobs.

That's why we fight to preserve the jobs in PIttsburgh and keep the Hub. ACAA has to find a solution NOT just for U, but for any carrier to come in. My issue personally, is about the jobs, OUR jobs. Period.

PITbull,

Well Duh !!...I would have never guessed what your concern was I do believe we are all in that boat..are we not? Geography doesn't seem to know any limitations when it comes to why we are losing money..or whom is going to be impacted? The senority system seems to take care of the last aspect nicely.

I have no problem with you wanting to defend your turf sorta speak...and I admire your fight to retain jobs..even if it's only regionally motivated as this last post indicates?

However...you can spare me the talk down the end of your nose lecture as to what is what. I see this crap everynight...and how we lose money far outshadows our feable attempts to make any. These observations hold true in past and present tense terms.

Unless every aspect of loss is identified and sealed off and corrected..it will never ever be masked effectively enough by the attempts to make a profit in todays economic climate. Your giving or mine coupled to the likes of thousands of others will not change that.

If U had the good fortune to somehow obtain WN's bank account today...and went forward in a business as usual manner..we would still end up where we are in short order. I will remind you of what 1.9 Billion in concessions have netted us to date for clarification purposes. ...and the begger is at the door again..only with a weapon this time.

 

[AOG-N-IT]

AOG-N-IT,

I'm not disagreeing with any of your conclusions. I'm merely saying that given enough facts, Dave can paint any of those issues any way he chooses by merely picking which of the facts to use.

Want to make outsourcing look like a great deal? Compare the bill from the vendor to all the costs you can possibly attribute in house maintanence and conveniently forget the cost of curing the "minor problems" the plane had when it returned from the vendor. Doesn't make the answer accurate, just "factual".

Jim

Jim,

We are in a complete understanding of what one another is saying here.

The figures can say anything that a Picaso with a #2 Pencil wants them to look like.

I do believe we both know that our leaders are far more interested in cutting the laboring ranks to the absolute bone , than they are at examining or owning up to the failures that keep us down...and possibly out?

 

[BoeingBoy]

AOG-N-IT,

I had a feeling we were kinda "talking past each other" and didn't really disagree.


PitBull,

As far as your question about PIT and the folks that are apparently driving to CLE or where-ever, I suspect you're right. Even discounting that, other carriers in PIT are already benefiting from our cutbacks there.

While what happens in PIT won't directly affect me, from the humanitarian point of view I hate to see anyone else lose a job, have to commute somewhere else to work, or whatever.

Jim

 

[PITbull]

Thanks BB, we share that point.

 

[delldude]

(1) Paint increases weight which in turn adds to the hourly fuel consumption...fuel consumption is something a floundering "non hedging" airline needs to be mindfull of.
so do we have monies to strip the fleet as opposed to hedging for fuel??duh??