How much longer for FLYI?

[j41driver]

There is a magical computer that takes all this info and makes sure that if the flight sells out it made money.

Where's the "BS Flag" when you need it??

 

[Tailwinds]

I'm bored, so it's up onto the soap box again....

My $.02 on airline economics
-or-
Why not to have a heart attack over $29 fares.

Revenue and cost are almost completely seperate from each other. Ticket prices are not set to be higher than cost, they are set to maximize revenue. Read that again, as way too many people miss that point. A $29 ticket makes perfect sense if it maximizes revenue, even if it is far below cost. That max revenue can be far below cost is a different matter related more to market pressure, brand awareness, demand, etc. If max revenue is far below cost, feel free to have a heart attack.

There are many techniques to maximize revenue on a flight. Selling ultra low-fare tickets is one way to fill otherwise empty seats. $29 is, after all, much better than $0. FlyI sells these fares on Tues, Weds, and Sat and limits the number available on each flight. One major issue is that ultra low-fares cannot be so common that the average consumer expects them and will purchase only them. Hence they are offered infrequently (during sale periods), on low-traffic days (T,W,Sa), and in proportion to typical flight loads (more available on low selling flights).

So how does having lower fares increase revenue? The most obvious answer is buy increasing load factor. For an RJ, 50 sales at $69 is vastly superior to 35 sales at $89 ($3450 vs $3115). Since airlines so quickly match fares, increased loads is less a factor of gaining market share than of increasing the number of travelers. At $.20 CASM (unrealisticaly high) an RJ runs $10/mile, so these hypothetical flights would break even at 345 and 311 sm (CASM is measured in statute miles). They are not quite a "money pit," but the dynamics of RJs versus large aircraft is a topic best left for another soap box

The $29 fare has another side benefit - it increases interest in the airline. A few months ago FlyI had a huge sale to announce Las Vegas service, with $29 advertised everywhere. Everyone moaned that FlyI could not possibly survive if it sold it's seats so cheaply. But in the days that followed records were set for most seats sold and highest revenue generated. The average ticket sale price was $100, $30 higher than normal (this information from the SVP of Marketing visiting the crew room). Perversly, the lowest fares ever offered by FlyI generated the highest average yield sales. Marketing is fun, aint it?

As for the long term prospects of FlyI - things are improving month over month, but I don't think it will improve to the point of profitability before cash runs out, and the airline has leveraged everything it has so when cash goes, the airline goes. The airline is operating efficiently, operating costs are about as efficient as they can get, and the non-operating costs that led to the famously high CASMs (most related to the rebranding) have dropped substantially. Yields are slowly climbing, loads are slowly climbing. Break even load factor is now probably below 100%. It's been suggested that the A319s are independently profitable with about 80% load factor, though the CRJs are losing money at 67% full. The fleet reduction had the desired effect, which was to improve the ratio of money making A319s to money losing CRJs, while modestly improving the economics of the remaining CRJs. FlyI is losing money at a substantially lower rate than 4Q04, and is losing less money each month. The potential for profit is absolutely there. The name recognition is getting there. Kerry Skeen is on Nightly Business Report commenting on USAir-AWA, for what that's worth. Any passenger that has experienced United's G gates and FlyIs A gates will pick FlyI every time, and most of the United competition is from the G gate regionals. But will it make money before it runs out of it? Who the hell knows!

But if they go bankrupt, I hope they get the same Virginia judge that USAir has. Then they'll never go out of business!

-Tailwinds

 

[JetFumes]

Finally, some one with some actual info rather than attacks on their fellow pilots. I hate how people get on this board and say ,"Boy, things sure don't look good over there at XYZ airline, how long before they go out of business so my airline can expand and I can make captain?" Never mind that when an airline goes under it creates hardships for hard working pilots and their families, what was that, oh yeah, FAMILIES! Sorry son, I wont be able to pay for college now becauses my career just took a 3 year setback, you understand, right?

 

[METARMan]

I tend to agree with the two replies that actually answered the inital question in this thread.

Unless the entire industry and revenue feed improve significantly in the next few months, I think FLYI would have to start preparing for bankruptcy sometime in the summer.

While a CH 7 or CH 11 may seem like the end of the world now, sometimes greatness came come from adversity. I've already been through the process once and I have a better quality of life now than my pre-BK days. Just be prepared for the worst and get ready to take a plunge with a new aviation job.

Good luck.

 

[FlyFastLiveSlow]

Sounds like Desperation

The last few weeks, I have been hearing FlyI pilots in the flight levels telling ATC they are slowing to save gas. And dramatically slowing, too. As in 260 kts or .65 mach. Nice that the pilots are trying to save some cash, but this sounds a little like desperations setting in. (not to mention it clogs the system for everyone else.)

 

[Blueridge]

The reduction in speed is the result of a new program that started a week or two ago on the CRJ. Called the Basic Cost Index, we reduce our speed in climb,cruise and descent according to the winds aloft and our altitude. For example, at FL280 any tailwind means we will fly at 250 IAS. A headwind at FL 280 will mean a speed anywhere from 270 to .73 depending on the severity.

It's supposed to be used only when we are due to arrive early and of course if OK'd by ATC. I don't know how much fuel it saves on an hourly basis but it supposed to save our company couple of million dollars a year in gas.

I'm sure a couple of million is not going to save FlyI but I suppose every little bit helps. At least now you know why we have become speedbumps in the sky. Reminds me of the Dojet days...

-BR

 

[FlyFastLiveSlow]

Like I said, good for you guys for trying to help the company....just sounds a little desperate is all.

 

[DDpaysoff]

The last few weeks, I have been hearing FlyI pilots in the flight levels telling ATC they are slowing to save gas. And dramatically slowing, too. As in 260 kts or .65 mach. Nice that the pilots are trying to save some cash, but this sounds a little like desperations setting in. (not to mention it clogs the system for everyone else.)

Yeah, that is a great idea when most of your operations are on the east coast. That is fine when you're direct Wichita or something, but on J121 or climbing out of IAD, not the brightest of ideas. When you slow down, the ten competitors behind you have to slow down and it saves them money too, so they can lower their ticket prices even more. Save a little gas, get paid a little more, whatever I'm paid by the minute too. If you all do that stuff on hotel legs or going home legs, now that would show some dedication.

 

[j41driver]

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