Industry Outlook:

[Longhaul]

Given today's economic and political climates, what's your 1,3 and 5 year forecast for the aviation industry? More specifically, what sectors to you think will experience the most growth - the least growth? Why?

[A320_DUDE]

Personally I think by next year United will be gone. Just by the attitudes of the employees and mangement over there....both are trying to make the other look stupid and are ignoring the needs of the customer. USAir has a really tough time ahead but I think they will make it. The other majors will be a lot smaller than they currently are. The big growth will be at the regionals and "LCCs". SW,JB,F9,AS,&FL are making it during this downturn, so they will be better poised to make those dramatic growth spurts that the incumbent carriers can't. Also we'll see the introduction of the "big" regional aircraft,the EMB-170 & CRJ900. Whether they'll be flown by mainline pilots or regional pilots remain to be seen. My prediction is that we see the majors start making money by next year. The loads are up(although that may be artifical,since just about everyone cut 20% out if their schedule),the goal now is to get the yields up. However with the two wildcardS (UA & US) in the deck slashing fares to uneconomic levels just to make payroll, the industry will stay in the doldrums until they become profitable again or go "Tango-Uniform".

[aloft]

Expect to see Delta, American and Continental management follow United and US Airways into bankruptcy court simply to keep their costs competitive.

[vipermcg]

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My prediction is that we see the majors start making money by next year.

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I have to disagree with you there. Considering the war with Iraq, I think it will take 3-5 years before most of the majors start making money.

[pavelump]

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Personally I think by next year United will be gone.

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You'd better hope not. That would put a lot of VERY high time pilots out into the already overflowing pool of highly qualified pilots that exists now. i.e. no job for you! (a la soup nazi )

Dave

[mikek123]

I think that most of the majors will come out of this downturn and in 3-5 years will be experiencing the same growth or better of the late 90s.

[A320_DUDE]

Personally I think United going "Tango-Uniform" would be a good thing for the industry as a whole. Now before you guys start asking what kind of drugs I'm on....hear me out: While load factors have been sky high there is still a large amount of overcapacity in the system. If UA goes Chap 7, that overcapacity goes away almost overnight. Fares and yields would come up...and the majors would start their recovery.While I would not want to see anymore airline employees put on the street,sometimes to needs of the many(AA,DL,CO,NW,WN,US,B6,F9,&FL) out weigh the needs of the one(UA).

[Doug Taylor]

Ack!

UAL going belly up is bad news.

It's a lot more than overcapacity in the industry that would be solved.

Keep in mind that everyone from the $200,000 senior captain purchasing goods and services, down to the $18,000 per annum bag smasher shopping at WalMart is going to be out of a job.

Now those two demographics aren't in the market to purchase goods, services and other durable goods which is going to effect the economy.

Investors see an industry stalwart with perhaps the longest history in commercial passenger aviation go belly up and most of the investor confidence and wall street support goes up in flames overnight.

Airlines cannot borrow money to repay debts incurred during the early 2000's, investors balk at replenishing the industry with capital and the effects are staggering.

Everyone's hurting tothe point that they can't replace the lost route structure that UAL left behind which will probably further effect US/pacific commerce, including throwing a good amount of the 39% tax bracket in LAX/SFO/DEN/MIA/ORD up in smoke overnight...

Let's not kid ourselves, folks. When EAL and PAA went up in smoke, very few benefitted. Delta did, slightly, by picking up PAA's routes, and then subsequentially dropping most of them because the world knew "Pan Am" and thought Delta was merely a faucet manufacturer.

[blee256]

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My prediction is that we see the majors start making money by next year.

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I have to disagree with you there. Considering the war with Iraq, I think it will take 3-5 years before most of the majors start making money.

[/ QUOTE ]

I hope not because if that is the case, there will be no major airlines in 3-5 years. Delta is losing 5 million a day! so to have that kind of loss everyday for 3 years added onto the past 2 years of losses will only force them into chapter 7. So kiss AA, Delta, and everyone other major goodbye.

I hope United gets back in the black and recovers from this.

-Brian

[AirborneMedic_ANGa10]

It's interesting how management puts spin on events to make their outlook look good, when it's really not. Delta mainline is basically falling back in all markets, but DFW is feeling the major shockwaves right now. They're closing the 757/767 pilot base and eliminating all widebody service. There are presumptions that the remaining base (88/90 and 733 crews) will not be around for long. This is all bad news, but look how Delta managment portrays the situation. (this press release was published in the Dallas Morning News).


Spring schedule adds frequencies, connecting banks to Texas hub

ATLANTA, Jan. 9, 2003 -- Delta Air Lines (NYSE: DAL) will <font color="red"> expand service at its Dallas/Fort Worth hub </font> with the introduction of the spring schedule on April 6. The new schedule substantially increases the number of flights Delta offers customers at Dallas/Fort Worth International Airport, and improves travel choices by adding two new connecting banks during peak travel hours.

With the spring schedule, Delta and the Delta Connection will give Dallas/Fort Worth customers 13 percent more flights every day - 272 flights daily with nonstop service to 73 destinations, compared to 240 today. Delta Connection will increase the number of flights from 153 today to 209 by May 2003, while Delta will reduce flights from 87 to 63. The additional Delta Connection flights will feature Bombardier CRJ regional jets, including the new 70-seat aircraft.

"Delta is significantly increasing the number of departures to give customers more convenient connections and expanded travel options while making adjustments to match capacity to the demand in these markets," said Subodh Karnik, senior vice president-Network and Revenue Management.

In addition, Delta will rework its Dallas/Fort Worth flight schedule to offer more connecting opportunities for customers and to make the hub more productive. Flights will be scheduled throughout the day in eight connecting banks, up from today’s six. The two new connecting banks, one at 11:30 a.m. and one at 5:15 p.m., are during peak travel hours.

"Our customers, especially business travelers, tell us that frequency of service is very important to them. This new schedule, with its additional frequencies and connecting banks, is a major enhancement to the service we offer at Dallas/Fort Worth," said Karnik.

Customers traveling between Dallas/Fort Worth and the following 25 cities will enjoy more frequency of flights: Albuquerque, N.M.; Houston (Bush Intercontinental and Hobby), Austin and San Antonio, Texas; Memphis and Nashville, Tenn.; New Orleans, Birmingham, Baton Rouge and Shreveport, La.; Columbia, S.C.; Denver and Colorado Springs, Colo.; Jackson, Miss.; Jacksonville and Pensacola, Fla.; Oklahoma City and Tulsa, Okla.; Phoenix and Tucson, Ariz.; Louisville, Ky.; Salt Lake City; Las Vegas, Los Angeles and Fayetteville/Bentonville/Springdale, Ark. (Northwest Regional Airport).

Also, with the introduction of its spring schedule, Delta will retire the remainder of its Boeing 727 fleet. The retirement, which was previously announced, is part of Delta’s long-term plan to simplify Delta’s mainline fleet.

"Fleet standardization provides significant cost and operational efficiencies, allowing Delta to save on maintenance costs and pilot training expenses. It also improves fleet reliability, which translates into improved customer service," said Karnik.

Delta Air Lines, the world’s second largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offers 5,826 flights each day to 437 destinations in 78 countries on Delta, Delta Express, Delta Shuttle, Delta Connection and Delta’s worldwide partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. For more information, please go to delta.com.

[I_Money]

The are probably refering to all the RJ's going in and out of DFW for Delta. Heck there will probably twice as many flights, with a 1000 less seats, a day or something like that!

[AirborneMedic_ANGa10]

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The are probably refering to all the RJ's going in and out of DFW for Delta. Heck there will probably twice as many flights, with a 1000 less seats, a day or something like that!

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Yep, that's exactly what they're talking about. The number of RJ's is increasing (ASA, Skywest, Comair). There's only going to be 6 757 departures daily in March, and the 767s will be all gone.

[pavelump]

well... more planes = more pilots, but that probably also means that salaries will cap off quite a bit lower for the CRJ guys. I think that's where the industry is heading for the most part. Intl. flights will still be using the larger a/c, but domestic flights will be more direct utilizing smaller a/c like the CRJ. I don't know for sure whether that's a good thing or a bad thing. I think it's potentially a good idea, because...

1. Passengers will have more options/destinations
2. Regionals will 'merge' with majors and there could be a flow though to the majors (although there will be fewer major jobs...)
3. More pilots will be needed for more planes - the potential negative side to this though is that you may end up flying a CRJ for the rest of your career at CRJ payscales.
4. Lower operating costs on the smaller jets could mean more profit and therefore a more stable industry.

Of course, I could be completely off base about this (very likely) seeing how as I'm not yet a professional pilot.

Thoughts?

Dave

[blee256]

What is the range of an CRJ/ERJ?

[pavelump]

from bombardier.com

Maximum range at LRC, FAA 121

CRJ700 (70 pax) 1,685 nm
CRJ700ER (70 pax) 1,985 nm

Series 900 (86 pax) 1,498 nm
Series 900ER (86 pax) 1,732 nm
Series 900LR (86 pax) 1,930 nm

Dave

[flyguy]

There is still a problem with RJs taking over for mainline aircraft. Look at it from a customer service standpoint. How many pax do you know that will be willing to travel more than a hour or two on an RJ? Not many. Any airline keeping mainline aircraft on shorter domestic routes will dominate the industry. The higher operating costs will be made up for in more business. Other airlines will have to switch back to larger aircraft in order to compete. RJs hace a certain niche in the industry and I don't see that changing much.

[pavelump]

I think that a lot of people would like to fly direct from Springfield, IL to New York or Cleveland (just examples..) instead of first having to fly to Chicago or St. Louis... That's where the RJ fits in.

Dave

[flyguy]

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Personally I think by next year United will be gone.

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You'd better hope not. That would put a lot of VERY high time pilots out into the already overflowing pool of highly qualified pilots that exists now. i.e. no job for you! (a la soup nazi )

Dave

[/ QUOTE ]
I've been thinking about this over the past day and I'm not so sure it would be a very big problem. The $200,000 senior captains sure as hell wouldn't start over making probation salary in the last years of their career. They would simply retire early. The relatively high time junior captains probably wouldn't start over either. Depending on how well they have invested they may retire early or find another career. The senior FOs could go either way, but many would find another career. Doug in other posts said that he would probably go back to school and start another career if he were to loose his job. I'm sure many others feel the same. It would be very frustrating to get to the point in your career where you have just earned enough senority to have a little control over shedules, aircraft, and domiciles and all of a sudden you have to start over again at the bottom. So really the only pilots that would be a threat to us would be the junior FOs and maybe a handfull of senior FOs and junior captains. Other airlines would pick up business due to United being gone, and would be able to expand. This expansion would mean hiring. The out of work United pilots who still want to be pilots would grab those slots so we would miss that hiring swing, but would still have a shot at the next one. I don't know. It makes sense. What do you guys think?

[A320_DUDE]

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How many pax do you know that will be willing to travel more than a hour or two on an RJ? Not many. Any airline keeping mainline aircraft on shorter domestic routes will dominate the industry.

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That's the entire reason why the RJ routes are explodeing everywhere.......people really don't care how small the airplane is,just that it's a jet. COEX just started EWR-OKC.....4+ hours in a ERJ. Let's face it RJs are the wave of the future for either short routes or long thin ones. USAir tried that game of running mainline aircraft to every backwater town on the East Coast....look where they are now. Delta and Continental are utilizing their RJs pretty good,while they still bleeding money...but not at the same level of UA,US or AA.

As for the whole RJ pay issue...the pay seems pretty reasonable:

CMR Yearly Pay (CRJ-200)
1st year F/O-22k
2nd year F/O-35k
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1st year Capt-52k
5 year Capt-59k
10 year Capt-68k
18 year Capt-87k

(Disclamer:These figures are before taxes,based upon the minimum guarantee of 75 hours,and don't include Trip/Duty Rigs)

Now I don't know about you guys.....but those figures are okay with me (okay 1st year F/O pay sucks !). Maybe life at a regional is not that bad....not bad at all.

[flyguy]

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I think that a lot of people would like to fly direct from Springfield, IL to New York or Cleveland (just examples..) instead of first having to fly to Chicago or St. Louis... That's where the RJ fits in.

Dave

[/ QUOTE ]
I'm not sure if you are agreeing or disagreeing with me but isn't that what they are there for now? That makes sense. Most people would fly from Springfield to Cleveland on an RJ. But would they fly from Denver to Orlando? Or from LA to Chicago? Anything longer than 2 hours won't go over very well and 2 hours is pushing it. Also, rich snobs who are only willing to fly first class would opt to fly out of Chicago or St, Louis first class than direct from Springfield on an RJ. That brings up another point that first and buisness class pax make up the bulk of an airlines revenue. Replace mainline routes with RJs and you loose that revenue.

[flyguy]

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That's the entire reason why the RJ routes are explodeing everywhere.......people really don't care how small the airplane is,just that it's a jet.

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Yes they do! Once they spend enough time flying on them they will realize that they are extreemely uncomfortable compared to a 737 or something comperable. Airlines may see initial benefits because most people have never been on an RJ. Once they get familiar with them they will learn to hate them. Keep in mind this is from a passanger's standpoint, not from someone who knows anything about airplanes. From a consumer's standpoint, most people are willing to fly on an RJ if it is cheaper. But once you start taliking about flights longer than 2 hours, people start paying more for mainline a/c for the comfort factor.

[aloft]

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Now I don't know about you guys.....but those figures are okay with me (okay 1st year F/O pay sucks !). Maybe life at a regional is not that bad....not bad at all.


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It's getting there--but it needs to be better. It needs to more closely resemble the same scale as the mainline carriers (not the same wages, the same scale).

Save for international travel, it would seem that the hub &amp; spoke model is a bust, and the only possible way to beat Southwest and JetBlue at the point-to-point game is by offering travelers more flexibility. The big advantage RJs offer the major carriers and their customers is increased frequency of service; given a choice between two departure times via 757 and 5 or 6 departures via an RJ, most travelers are going to prefer the greater flexibility 6 different departure times offers them.

I know Doug and his peers are not happy with management's decision to replace mainline runs with RJ service, but the genie's out of the bottle. To prevent erosion of hard-won pay and benefits at the mainline carriers, the smart thing to do now is A) fight to bring the regionals wages and work conditions up to par with mainline, or B) bring all jets to mainline. Jets for Jobs isn't the answer, and neither is scope.

Any way you look at it, RJs are here to stay so we all might as well make the best of it.

[A320_DUDE]

Let me tell you a little story flyguy,.....one day back when I was a neophyte CSA at American Airlines I was booking as passenger to Fayetteville AR(XNA). At the time AA (actually AE) was running a mix of S340s and ERJs. The passenger has a shot at a reduced one way fare of about 650 bucks if he connected to the Saab......or pay full fare of over 1000 bucks for the RJ. He paid for the RJ......he didn't want anything to do with one of those "propeller planes". I'm gonna say this (please nobody take offense to this!) but 99.9% of the time passengers have NO CLUE what kind of airplane they are getting on......and 99.9% of the time they don't care. When I worked at SW I had one lady ask me if the plane was gonna be a turboprop....it was a nonstop flight from Hartford to Vegas! Hate it or Love it the Regional Jet is here to stay!

[A320_DUDE]

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I know Doug and his peers are not happy with management's decision to replace mainline runs with RJ service, but the genie's out of the bottle. To prevent erosion of hard-won pay and benefits at the mainline carriers, the smart thing to do now is A) fight to bring the regionals wages and work conditions up to par with mainline, or B) bring all jets to mainline. Jets for Jobs isn't the answer, and neither is scope.


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I totally agree with answer A......the CMR strike helped "Express" pilots everywhere raise the bar,but now that these guys are getting somewhat decent wages,we have people like Johnny O starting up airlines like Freedumb Air to bring wages back down!

Even though this may piss off Doug....I have a little problem with answer B though......the RJs have been offered to mainline pilots,however they turned their noses up at the payscales and schedules needed to make these airplanes profitable. Now that they are the wave of the future...the mainline guys want the RJ flying. I have a BIG problem with that!

Maybe Doug can answer that question(unless it's gonna get your blood pressure up!): Would mainline pilots be against expanded RJ flying if they were doing the flying under current RJ payscales?

[Doug Taylor]

Southwest and Jet Blue (they needed the money!) are eating our (well, DCI's) lunch when competing against RJ's.

An RJ is a great alternative to driving or from flying on a Brasilia, but if you look at loads on routes that are served by a mainline-sized aircraft on SWA, JBLU or Air Tran, they're kicking our butt big time.

There MAY, and I mean MAY be some regional/major integration, but if I could describe the political machinations that are going on behind the scenes, the best potential at Delta to have a cooperative employment agreement is between DAL and ASA, but considering the political wranglings between DAL and CMR, a DAL-CMR cooperative employment agreement is less likely than the space shuttle going missed approach.