FWAAA

Big airlines tend to reorganize in Ch 11; tiny commuter airlines like DH tend to liquidate.

Merge with/bought by another airline? Hardly. DH owns nothing that's scarce (like valuable route authorities, for instance).

jaguar

If they can hold on a little bit longer I hope JetBlue picks up some of their routes.

mid

Can you point to some examples of tiny airlines liquidating?

I can point to a few examples of large airlines liquidating: Eastern, TWA, Pan Am.

L Dude 7

Probably because nobody remembers the Tiny airlines.

A few that have happened in the past 5 years: Legend, Vanguard, Southeast, Great Plains, Midway (though attempted rebirth as US commuter), Chicago Express (an ATA commuter),

FWAAA

I said "tend to."

Examples? Southeast, Vanguard, Midway (twice), National (the all-757 LAS version of recent vintage), Legend, MGM Grand, and Jetsgo. I'm certain there are others. Like Presidential, Air Florida, AccessAir, Tower Air, Braniff.

Examples of large airlines that have reorganized? Continental (twice), America West, maybe USAir and UAL (probably), Air Canada. Even TWA successfully reorganized twice before finally liquidating in its third bankruptcy.

Maybe DH can successfully reorganize. But I doubt it. Like I said - it doesn't own anything particularly scarce or hard to get. None of its routes are restricted to open competition right now. There's a glut of 50 seat RJs. Its A319s are readily available. It controls gates at IAD. Not much else.

mid

I dunno. My ability to prognosticate the fate of any airline is about as good as anyone else I've heard so far. As far as DH goes, they've gotten this far and they have a lot of fans. The business model can work. JetBlue has made it work for them and Southwest certainly made it work. They sure do have their work cut out for them but I sincerely hope they make it.

The whole airline industry is in serious need of a restructuring. I'm not about to give the majors a pass on this one. Oh, I like to fly United too, but I'm not willing to get nailed on ticket prices the way I've been in the past.

For my money, DH does a damn good job. Will they make it, who knows? But I'm putting my money where my mouth is: I've got at least 4 flights booked on DH in the next 4 weeks. I hope they survive, if only because they have redefined the fare market out of IAD. Enlightened self-interest is the word of the day and I fly DH because they offer me cheap fares and comparable service to any major carrier.

That's a value equation I can get behind.

EricH

Indy is no JetBlue. They're a hub-and-spoke system with far too few customers. No business plan can work without customers.

DHAST

I just wanted to pick at this one point...

I'm going to make some very rough estimates and guesses here, but chime in if you have better data than I do. The CRJ burns about 2000lbs per fuel an hour. The first hour is a bit higher because of the extra fuel burned in climb. IAD-BOS is a 1.5 hour flight. So, I'm just going to guess and say that the CRJ burns 4000lbs one way on a trip to BOS. That's about 600 gallons. At today's rate of about $2/gal for jet A, that's $1200 in fuel costs. Divide that by 50 seats, and you come out with $24/seat for fuel costs each way. So whether or not DH can pay their fuel bill is a matter of their fuel bill being their first or last bill they pay. My numbers are on the high side, so the cost per seat for fuel will most definitely be less.

HeathrowGuy

It's a matter of when, not if, for FlyI - the airline cannot compete effectively against lower-cost *legacies* that have greater revenue potential.

mid

HUH?!? No customers?!?

Have you even been on an Indy flight? Every single flight I've been on has been packed to the gills.

Believe me, FlyI has customers. And it's not the occasional flyers you might think would make up the bulk. It's people like me who have to travel on such a regular basis that even a few bucks saved on airfare makes a BIG difference.

In a lot of ways, FlyI is tailor-made for the frequent flyer. Change fees are low compared to the majors and they are set up to do most of their booking and customer care via the Internet and the phone. The flights they offer are for destinations that are too far to drive but are too expensive to book via the majors.

I make at least one weekly trip to BOS from IAD. When I book online, I get that fare for about $100 RT. If I book via United, it's about $186.

AND I get to use the BH B-gates vs. the UA C-gates OR (heaven forbid) G-gates. I can walk to my plane rather than take those dreaded moon buggies at IAD.

The proof is in the pudding. Every time someone tells me that DH is about to go bust, I think about DL and NW and UA. I get the feeling that a lot of the animosity towards DH comes from people who are in some way affiliated with the legacy carriers and a a bit peeved that this pesky LCC Just Won't Die.

Believe me when I tell you....I flew UA until a friend of mine told me about his DH experience. Think of it this way: It ain't the Ritz but most business travellers will tell you that they are more likely to stay at a Comfort Inn than the Ritz because the Comfort Inn will won't charge you for local phone calls and Internet access while the Ritz will. I'm sure you get my analogy.

mid

BAH!

You look into your crystal ball and I'll look into mine.

The difference between you and I (near as I can tell) is that I've actually sampled what they are selling and I like it.

I keep seeing full flights. Can all those customers be SOOO WROOOONG? Guess what....a lot of them carry laptops too. Sound like leisure travellers to you?

If you are trying to convince me that DH has a higher cost structure than UA, I want a puff of whatever you are smoking. Just make sure you take away my keyboard before you pass it over to me because I want to keep myself from saying anything remotely that dumb.

UALPilotDC

Mid,

Yes the planes may be full or almost full, but the prices they are charging are not covering their costs!!! Did you see the memo about closing LAX?

The problem is not that they can't get passengers to fly FlyI....they just can't get enough pax to pay a fare that makes them money. You pay $100 for IAD-BOS RT....and as some one theorized roughly half of that is eaten by fuel costs....toss in aircraft leases, employee costs, landing fees, facility rentals, etc.....not much room for profit.....

And that $24/pax one way for fuel is if the plane is full. At a 73% system wide load factor.....makes for an even more desperate need to raise fares to cover costs.

So would you still be flying FlyI if they charged more than UAL?

DC

whlinder

Worse, a great deal of those 73% of seats filled are by connecting passengers. So they eat up $24 X 2 for fuel when they fly. I believe in another thread I calculated the average fare that a DH passenger pays to be somewhere in the $70 range. Fuel is hastening their demise but the real culprit is the fares that people are paying.

DHAST

I might have missed that other thread, but how in the world were you able to calculate an average fare paid? I have to say that when I saw those $130 west coast-IAD fares, I had to laugh. Out loud. You *can* make money on short hauls with cheap fares -- WN has been doing it for years. I actually calculated that those $29 OW fares between LAX and LAS either broke even or made them money.

HeathrowGuy

I'm smoking a rock of reality - for the three months ending June 30, 2005, straight from the respective Q2 2005 SEC financial filings:

UA Operating CASM 10.50c
DH Operating CASM 17.20c

The airline with the cost advantage is UNITED, not Independence Air. Fifty-seat RJs are simply too high-CASM to be used effectively as the backbone of a low-cost carrier, especially an airline that is dumping capacity into mature, well-served markets. Even in those instances where UA is competing against DH with RJs of its own, recall that United has a revenue advantage with its ability to funnel Transatlantic/Transpacific/Transcontinental pax into the IAD hub network.