The Plan Or The Phantiscy

[BoeingBoy]

Chip's comments on the plan:

"US Airways' chief executive officer Dave Siegel's goal, as outlined in a private board meeting Dec. 10, is to lower expenses so that average seat costs excluding fuel are 6 cents a mile in the point-to-point, regional jet part of his system and 8 cents in the hub-and-spoke part of operation (its costs excluding fuel was 9.52 cents at the end of the third quarter, vs. Southwest's 6.42 cents). To reach those projections, Siegel has already identified $200 million to $300 million in savings for 2004."

Sounds logical, doesn't it - a tweak here, a work-rule change there, and that 9.52 cent CASM turns into 8 cent CASM. Use the RJ's in MDA (I presume), bypass the hubs, and that same 9.52 cent CASM turns into 6 cent CASM - after all, that's what SWA does.

First, let's look at the 9.52 cent CASM figure. It is not U's CASM, it is U's MAINLINE CASM (domestic & international). Reporting only on mainline makes the CASM appear as low as possible (without cooking the books). Longer haul flying (international) results in lower CASM. RJ's have higher CASM, so excluding them results in lower CASM. U did not show a system-wide figure in it's 3rd quarter report (though the system-wide figure was reported pre-bankruptcy). So what is the system-wide starting point?

The Bureau of Transportation Statistics (BTS) of the DOT compiles the reams of data submitted by the airlines monthly or quarterly. Using that data, they recently released the "Third Quarter 2003 Airline Financial Data" report. (A link to the entire report is posted in the thread "More Interesting Reading") According to their calculations, U's domestic CASM for the third quarter was 15.4 cents - the highest of any major network carrier. If we assume (?) that we can reduce that figure 1.5 cents to exclude fuel, we're left with 14.9 cent CASM. Makes it a little harder to reach that 8 cent CASM figure, doesn't it. We would have to increase ASM's 87.5% without increasing costs (except fuel). But airplanes have an acquisition cost, maintenance cost, etc., so it seems unlikely that even 60 airplanes will make the required difference.

Well, how 'bout getting a point to point operation down to the 6 cent CASM figure. SWA does it so shouldn't we be able to by bypassing the hubs and all the inefficiencies there? Oh, I forgot - we're talking about a point to point REGIONAL JET operation and RJ's are less efficient on a CASM basis than bigger airplanes. Nobody currently operates a fleet composed entirely of 70 (or so) seat RJ's, so there is no yardstick to measure by. All we have are the current RJ operators who are beginning to deploy 70-seaters. BTS shows that their CASM figures range from a high of 15.3 cents to a low of 10.8 cents (all including fuel). Of these, Air Wisconsin may be the most appropriate, since it operates planes ranging from 30 to 100 seats. Their figure is 13.5 cents CASM (again including fuel). If we assume that fuel is worth 1.5 cents of that, we are down to 12 cents CASM. Can bypassing the hubs (point to point) with the resulting increase in utilization result in a 50% reduction in CASM? Not likely.

This is presented as "food for thought". Any comments are welcome.

Jim

 

[a320av8r]

How much of our CASM is due to the fact that the bulk of our flying is in and out of BOS,LGA,DCA,and PHL. How much of the CASM is debt service (WN owns there equipment).
During a "productivity break" in the CLT crewroom I watched a cleaner. During the three hours we were there, he worked a total of 30 minutes, I timed it. He sat in the crewroom watching TV, when an airplane came in (there were three) he'd go and work it for 10 minutes and come back and watch more TV.
That is a huge inefficiency- why doesn't that come under ramp services? Clean the plane, go down and load cargo, work the ramp, push...?
Cost in CASM?

 

[BoeingBoy]

a320av8r,

Good point, there are many inefficiencies like that that contribute to the CASM.

What it boils down to is can we get hub flying down to the 8 cent CASM range (not counting fuel) if we are told that there will be "no W-2 cuts and no more furloughs". I honestly don't know, but a look at our real CASM isn't enouraging.

Likewise for the point-to-point EMB-170 flying. Nobody knows what the CASM figure will be since the airplane isn't in service yet (unless you think Bruce Ashby is all-knowing). The best we can do is look at what is available to compare to and make a guess. I have seen data that shows that the CRJ-700 direct operating cost is well over 6 cents CASM. That includes fuel, but doesn't count all the other costs of real-world operations like loading baggage, selling tickets, leasing gates, advertising, etc.

Jim

 

[ual777fan]

The EMB-170 is a much more efficient airliner than the CRJ7's. They are so cost effective even Southwest is seriously considering buying them.

 

[BoeingBoy]

ual777fan,

I hope you're right about the efficiency of the -170. Only time will tell. As for SWA, they have said that they are always looking at possibilities. I'll believe they're serious when they sign orders.

Jim

 

[tug_slug]

That is a huge inefficiency- why doesn't that come under ramp services? Clean the plane, go down and load cargo, work the ramp, push...?

What happens when that ramper has two a/c on the ground and is busy cleaning the first a/c and has yet to load the bags and push the plane? What becomes of that second a/c sitting waiting to be cleaned and its bags loaded?

Would you then hire more rampers to clean/load planes and risk the possibility of raising the CASM or would you have the flight crew work for free and clean the airplane so all the ramper would have to do is rush from his first a/c and load bags then push?

You could get rampers that are working other gates to pick up the slack and do the second aircraft hoping that their aircraft isn't going to arrive and take a delay because there's no one there to clean the a/c and load the bags.

One last thing, if its taking a cleaner 10 minutes to clean an airplane he's either under time constraints from management or he isnt doing his job.

 

[N628AU]

I think the point was why have a deidcated staff of cleaners, and a separate staff of ramp personnel. I think he is referring to combining the functions, so you do not have the dead time after cleaning and before helping pushbacks or waiting for the next plane to clean. Have the same number of people, but free up some of the workrules and "fences" between what can and cannot be done, and have those people working more planes in the same amount of time, through added scheduling efficiencies, more point to point flying, and rolling at least the PHL hub. How many Southwest employees do you see wathcing TV while flights are on the ground? That is what he is trying to say I think.

That being said, I do not believe you can add 60 aircraft, and not add a single body to the operation, but you can can do it with less people per aircraft fleetwide than the company uses now by workign smarter and not harder.

 

[USA320Pilot]

US Airways could increase ground personnel productivity with employee job classification cross utilization or combination. There is no reason why the Fleet Service and Utility functions could not be combined to help create more ASMs with the same headcount.

Respectfully,

Chip

 

[Light Years]

Chip,

Is there a rough estimate of how many pilot or flight attendant positions would be added? I'd love to come back (F/A), and see others return, but not at the expense (furloughs) of other work groups.

 

[700UW]

It can't be combined as Utility fall under the mechanic and related contract and Fleet Service have their own and it would be a nightmare on seniority integrations and that simply won't happen at this moment. Second there are only Utility on three shifts at BOS, LGA, DCA, PIT, PHL and CLT, Two Shifts at LAX and SFO, the remaining ten stations there is third shift only. So we fly to 89 stations and there are only Utility at 18, the other 71 are cleaned by F/A, ramp or a vendor.

 

[N628AU]

I think change is the idea here. If you eliminated the "utility" classification, rolled those employees to the ramp, and combined the job functions, I don't see where the harm is, except some may have to work harder than they do now. If you are talking about flying an additional 60 aircraft, and flying them more trips and hours per day, you are not going to lose any employees doing that, you would probably actually have to recall people. As I said before, I cannot see the math of adding all that flying without having some more bodies around, albeit not with the same employee to aircraft ratio we have now.

Granted seniority integrations are always ugly (see AA-TWA as the latest example), but I would have to think that for a more secure future, no W-2 cut, no furloughs, everyone could see that all of our paychecks (former paycheck in my case) say "US Airways" and put aside the petty interdepartmental bickering, which is just as bad as the Piedmont-PSA-Allegheny crap that still goes on.

Then again, maybe I am being overly optimistic.

 

[tug_slug]

I think change is the idea here. If you eliminated the "utility" classification, rolled those employees to the ramp, and combined the job functions, I don't see where the harm is

I dont see any harm in it at all. Utility would make approximately $2.00 more an hour.

Beings the company could care less about seniority and Ive been in the IAM for over 16 years and the most senior ramper with close to 40 years with the company but only 5 years as an IAM dues paying member would make me more senior to him allowing me to get his day shift slot with weekends off.

More $$$ per hour, better hours and weekends off... Im all for it, whens the vote?

 

[ExUAW]

US Airways could increase ground personnel productivity with employee job classification cross utilization or combination. There is no reason why the Fleet Service and Utility functions could not be combined to help create more ASMs with the same headcount.

Respectfully,

Chip

Hey Chip,

I think you're right . I also think the pilots and copilots could take turns passing out pretzels and colas instead of taking turns cat napping.

 

[700UW]

You also seem to forget their is utility in base maintenance, stores and the shops, so if they were now under fleet service you would have to hire additional management as fleet service employees do not answer to mtc managament.

 

[delldude]

US Airways could increase ground personnel productivity with employee job classification cross utilization or combination. There is no reason why the Fleet Service and Utility functions could not be combined to help create more ASMs with the same headcount.

Respectfully,

Chip

Hey Chip,

I think you're right . I also think the pilots and copilots could take turns passing out pretzels and colas instead of taking turns cat napping.

i think i just heard some type of cockpit alarm going off.....