Regionals Vs. Majors

402driver

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The events of September 11, 2001 effected America’s
commercial airline industry as a whole. Mainline carriers
and regional carriers alike felt the shockwaves of 9/11,
and the aftershocks are continuing to be felt. Mainline
and regional carriers will travel on different roads to
recovery. It is my opinion that the regionals road will be
much smoother and more direct than that of the mainline
carriers. With passenger loads down, it only makes sense
to use regional airlines to service the shrinking markets.


Profitability is still achievable for the regional airlines
due to numerous factors. Although larger jets, such as
the B767, are extremely efficient when operated at full
capacity, their hourly operating costs are extremely high
compared to that of RJs and turbo-props. In addition, the
larger mainline carriers indirect costs of doing business
are much higher than that of the regionals; largely a
result of higher wages being paid to employees of a
mainline airline. To fully appreciate how, in the current
economy, the RJs and turbo-props can be more profitable for
a regional carrier than a full-size jet can be for a
mainline carrier, take into consideration the following
example.

Immediately following 9/11, Aloha Airlines was operating
737-200s on some of the less traveled routes. Loads were
approximately 30%. Aloha’s fixed cost of doing business
remained constant, however their revenue for these routes was
approximately 65% less than pre-September 11. Obviously,
you can not make money flying a 737-200 with 30 people in
the back. Despite numerous protests by Aloha’s pilots and
their Union, Aloha Airlines stopped flying the routes.
Instead, the routes went to Aloha’s sister Company Island
Air, which flies 37 seat Dash-8-100s. Aloha Airgroup, the
owner of both airlines, realized that the only way to make
money on this route was to reduce the cost of operating the
route proportionate to the decrease in revenue. This was
obtainable utilizing Island Air.

Island air was able to take the same route and make money
where Aloha could not. How? Well, to begin with, the
direct operating costs per hour of the Dash 8 is much lower
than that of the 737-200. This can be accredited to such
things as a lower fuel burn and lower paid pilots. Perhaps
more significant though, is the lower in-direct costs of
doing business. Island Air has less employees, lower
wages, lower amortization, less office space, less
aircraft, less maintenance equipment, less spare parts,
less hanger space, and less advertising costs. This all
adds up to a significantly lower daily operating cost.
Sure, they are not adequately equipped to deal effectively
with high loads and massive capacity. However, it all
boils down to carrier capacity vs. market capacity.
Operating at a 90% load rate is profitable; operating at
30% is not. If you have 60 people/hour who want to fly
between Kona/Hilo and Maui between 0600 to 1800 daily,
that’s 360 people per day. That number equates to an
approximate revenue potential of $36,000 per day. Aloha
Airline’s daily cost for performing this route exceeds
$36,000 per day; Island Air’s cost per day does not exceed
$36,000. Therefore, Island Air can profitably operate a
route that Aloha Airlines could not. Ever heard of the
expression “don’t send an eagle to do a sparrow’s job”?
It’s true.

The airline industry will continue to erode. The loads
will not only be lower; they will be spread out more than
before. People will begin traveling to and from smaller
airports, flying less miles, and looking for the most
convienent travel times. Commercial aviation is changing
dramatically. Regional carriers will be in a position to
take advantage of this situation by utilizing RJS and Turbo-Props. They WILL make a profit and they WILL grow.
Mainline carriers will continue to downsize, eliminate
routes, sub-contract, and struggle to keep their head above
water.

Just some Food for Thought:cool:
 

BigFlyr

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Sounds like you got it all figured out! A future airline industry comprised of mostly RJs and Turboprops... I don't think so. Look at Southwest, AirTran and JetBlue... All three profitable and growing. Maybe the big guys are going to have to restructure by sticking to their most profitable routes and provide excellent service to keep their customers instead of trying to match lower cost carriers (AirTran vs Delta) on short haul flights like ATL-FLL just to keep their share of the market. The bottom line is profitability, and you cant do that by flying big airplanes at less than 65% capacity on scheduled routes. RJs and Turboprobs are one way to deal with small markets or lower load factors due to unforseen setbacks such as an economic recession or 9/11... but they are not the answer to long term profitability. Flying big airplanes at distances they were designed for and filling them to capacity where everyone pays a reasonable fare is. Its a no-brainer!
 

Otto

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I admit the airline industry is going through some dramatic changes but why do you guys keep talking like the current economic situation is something that is going to last for the next 20 years?! Gentlemen, the current situation is TEMPORARY. Only a little over one year ago the talk was how in the world the airlines and the airspace system could handle the enormous surge in traffic expected over the next ten years. That WILL HAPPEN. Our economy will turn around and we will prevail. More people may have to accept working for a Southwest type of operation but would you be happy having a career flying airplanes, making what a captain there makes? I would! Especially having the security that they will be solvent at the end of my career. That's worth something. I think too many guys look only at the $$$ and fail to check out the companys balance sheet.
 

RichardFitzwell

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402driver said:
...the larger mainline carriers indirect costs of doing business
are much higher than that of the regionals; largely a
result of higher wages being paid to employees of a
mainline airline...

...the direct operating costs per hour of the Dash 8 is much lower
than that of the 737-200. This can be accredited to such
things as a lower fuel burn and lower paid pilots. Perhaps
more significant though, is the lower in-direct costs of
doing business. Island Air has less employees, lower
wages, lower amortization, less office space, less
aircraft, less maintenance equipment, less spare parts,
less hanger space, and less advertising costs. This all
adds up to a significantly lower daily operating cost.


By Jennifer Waters, CBS.MarketWatch.com
Last Update: 1:41 PM ET Feb. 25, 2002

"...ExpressJet derives all its revenue under a capacity pact with Continental, which means Continental pays most of the bills while ExpressJet focuses on operations and employees, including labor costs. ExpressJet uses Continental's hubs in Houston, Cleveland and Newark to operate a network that spans the East Coat and reaches as far north as Quebec City, Canada, as far south as Ixtapa, Mexico, and as far west as Colorado."



It is much easier for a regional to show a profit when things like maintenance, some employee wages, office space, advertising and hanger rental are being paid for by the mainline operation.

R.F.
 
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402driver

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Not JUST RJs and Turboprops!

Please do not get me wrong, I believe that there will always be a place for the mainline carriers. However, Mainline carriers will continue to evolve. Once they figure out how to deal with the changing airline market, AND THEY WILL, they will be back in full swing. All I'm saying is that the smaller carriers will play a larger role in the future than they ever have before.

With regards to how much we DRIVERS get paid, I could really care less. As long as I can provide myself and my family with a comfortable lifestlye, I'm stoked! Quality of life is everything. The reason I quit my last job (and it was a six figure job!) was because I hated how my job influenced my life. The "JOB" should be secondary to "LIFE". To me, flying and airplane is not so much a job as it is a hobby. That's what makes it so enjoyable to wake up each morning and go to work.

Thanks for all of the great feedback!:D
 

402driver

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P.S.

Sorry to be such an idiot, but how do you put quotations from other posts in your reply????

Mahalo Nui Loa:cool:
 

Andy Neill

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Sorry to be such an idiot, but how do you put quotations from other posts in your reply????
Above the reply text box, there are a series of buttons. The last on the row is "QUOTE". By cutting the bit you want quoted, hitting the QUOTE button, and pasting the text in the quote box, it will format it to provide the quotes.

Or you could do it by typing in the "QUOTE" at the beginning of the piece you want quoted and "/QUOTE" at the end with brackets []instead of quotation marks.
 

RichardFitzwell

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Re: Not JUST RJs and Turboprops!

402driver said:
With regards to how much we DRIVERS get paid, I could really care less. As long as I can provide myself and my family with a comfortable lifestlye, I'm stoked!
What do YOU consider a comfortable lifestyle? A "van down by the river?" A sweet double wide? Mom and dad's basement? Those are all within your means as long as you don't care what you are paid.

R.F.
 

402driver

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DollarDollarBills Yo!

What do YOU consider a comfortable lifestyle? A "van down by the river?" A sweet double wide? Mom and dad's basement? Those are all within your means as long as you don't care what you are paid.
Wow, check it out, it works!!! Thanks RF!

Anyways, I see what you are getting at. When I say I could care less what I get paid, I don't mean that I am willing to work for peanuts. Certainly, pilots need fair compensation for the work and responsability associated with commercial aviation. However, I'm not going to let the size of my salary dictate where I go in this carrer.

Let me explain myself more. My goal is to be a carrer pilot with Hawaiian Airlines. At Hawaiian, if you were a 767 captain, the most you could expect to get paid per hour (at this time) is $163/hr. If you were a 717 captain, you could expect to get paid $148/hr. Obviously, not the best in the industry. Still, I would rather be a 717 captain for Hawaiian than a 777 captain for United. WHY????????? Well, I want to stay in Hawaii, I love short, busy flights (especially when you are flying over the most beautiful islands in the world), I want to be home with my family every night, I want to be able to play in the Ocean on a regular basis (surf, kitesurf, sail, dive, etc., etc., etc.), and I want to work with the people of Hawaii (some of the best people in the world), while being able to pay the rent, put food on the table, etc. That is a COMFORTABLE lifestyle to me.

Everything is relative, I guess :cool:
 
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capt_zman

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402driver,

I appreciate your goals and desires in the aviation world, but pull your head out of the pipe.

You don't care what you are paid because you have the flying blinders on with aviation. The "I would do anything to fly" attitude sucks. Please wake up and start protecting the industry you so badly want to become a part of.

Hate to be an a$$, but it's this attitude that hurts the industry the most.
 

402driver

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Whatever

Capt_Zman,

So according to your rational, all of the fine men and women at Hawaiian Airlines (ALPA Members), aside from having their “heads in the pipe”, are hurting the aviation industry.

Yeah, you are probably right. The HAL pilots should not have signed their collective bargaining agreement. Those 767 Captains should be making $250,000 a year plus! Hell, while were in La’La Land, lets make it $500,000 a year! Who cares about the fact that the Company is struggling to stay afloat, the pilots can always go to another airline once HAL goes out of business. This is GOOD for the aviation industry, this protects our future, right??

Whatever dude. Hope you make lots and lots of money in your career.

P.S. If you are so concerned about making a fortune, why did you become a pilot?:confused:
 

RichardFitzwell

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402driver,

I see where you are with your goals and I completely agree with you. You aren't saying you want to fly a wide body for free. You are saying you'll demand a pay scale that is equal to your experience level and one that will afford you the lifestyle you want. I totally respect that. Although HAL pilots aren't paid the most in the industry, they are paid a respectable wage; unlike many of the commuters.

I wish you all the luck in the world reaching your goals.

R.F.


"...I don't mean that I am willing to work for peanuts. Certainly, pilots need fair compensation for the work and responsability associated with commercial aviation. However, I'm not going to let the size of my salary dictate where I go in this carrer."
 

bobbysamd

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Pay

I want to add a comment about salary. Union salary leveraging and RJs notwithstanding, a major component of salary, in ANY job, is the responsibility that goes with the job.

Not too long ago we had a surgeon who also flies 135 or something post. He argued about the training he went through to cut open people v. the training pilots go through. Talk about working both sides of the street! Somehow, I gathered that pilot training was made light of in comparison to medical training. Well, anyway, no one would doubt that a surgeon has a great responsibility and it takes a great deal of training for years to earn that responsibility. Well, guess what, folks, pilots have a great deal of responsibility as well. A pilot's responsibilities are manifold and, similar to the surgeon's, turn on the issue of safety. Pilots are responsible to their passengers, to other air traffic, to the public at large, and to their companies, especially when operating a multi-million dollar piece of equipment. Pilots should be paid accordingly. I'm not talking about only the widebody or 74 drivers, but all pilots, and particularly so commuter pilots. A 1900 driver has as much responsibility in every way as do the big guys, and, of course, is paid far less.

Lifestyle is nice, and vital, but being paid properly according to responsibility is vital as well. As always, toss another two cents in the cup for me.
 
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Freight Dog

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402pilot, Island Air did NOT make a profit flying from OGG-ITO and OGG-KOA. We could not fly direct due to Aloha pilot scope clause, so we had to fly to LNY or MKK first to get there. If it takes 2 stops, then people would rather hop in a B737 and fly to HNL, change planes and go to Big Island. April 6 is the last day of the Big Island service. We'll see what happens after the merger... we may be able to go direct from OGG after the merger since Brenneman is taking Hawaiian's contract as a contract for the new airline. If that happens, hopefully you'll have a class soon. As is right now, no hiring is planned this year.
 

Simon Says

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Above the reply text box, there are a series of buttons. The last on the row is "QUOTE". By cutting the bit you want quoted, hitting the QUOTE button, and pasting the text in the quote box, it will format it to provide the quotes.



Just trying out the quotes
 

Visceral

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By cutting the bit you want quoted, hitting the QUOTE button, and pasting the text in the quote box, it will format it to provide the quotes.

Me 2
 
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