what do you think: Hibbing's plea to keep flying

Discussion in 'Delta Air Lines | SkyMiles' started by lancexfang, Oct 4, 2011.  |  Print Topic

  1. lancexfang
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    lancexfang Silver Member

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    http://www.nytimes.com/2011/10/05/us/from-hibbing-minn-a-plea-for-planes-to-keep-flying.html

    The way I was taught in b-school, there is no merit in the following exchange:
    Q. Delta says the flights are not nearly full, and that it is losing money. Why should they keep flying to Hibbing?
    Ms. Shafer: “A lot of these big companies don’t care about the people. They just don’t care about the needs of people anymore. They only care about their bottom line. If that isn’t greed, what is it? It’s crazy.”

    On the other hand, I do remember vaguely about NWA once said they want to fly to places no one else does. I am sure they didn't do it out of their selfless heart, but do you think there is any incentive for companies to be profitable and socially responsible at the same time? I know the lines defining 'socially responsible' in this case is blurred depending on the perspectives.

    Anyway, from my previous life living in West Lafeyette IN, I know how important it is to be able to fly from the middle of nowhere...
     
  2. LETTERBOY
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    LETTERBOY Gold Member

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    Not to sound like a condescending hardass, but if Delta isn't making money, than they shouldn't be flying to Hibbing. Period. If that hurts Hibbing, tough. Delta is not a charity, they are a business.
     
  3. mattsteg
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    mattsteg Gold Member

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    I would expand that to "if Delta isn't benefiting", as they could derive legitimate business benefits other than directly profiting from the route. Depending on how you do the math, many/most passengers and many/most flights aren't always "profitable". Whether control over passengers who then spend dollars on other flights, control over a large network to draw more loyalty, goodwill to garner public/political appeal, etc. there are lots of ways to derive benefits from a route that are difficult to quantify.

    Really picking nits and not contesting your point. This is largely sour grapes from a dying town.
     
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  4. viguera
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    viguera Gold Member

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    Either way Delta looks like the bad guy... if they went ahead and raised prices to make flying in and out of Hibbing economically feasible, they'd be accused of being greedy just the same.

    Bottom line is that if the yield isn't there, then there's not much they can do. But that bets the question, why doesn't someone take this as an opportunity and do something about it?

    If the interest is there, then someone can set up a shuttle service to Duluth -- ground or air -- and make money hand over fist.
     
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  5. icurhere2
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    icurhere2 Gold Member

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    As the article notes that operations will be starting in the next few years with "hundreds of jobs" to this city of 16,000, DL may well revisit the decision at a later time.

    There's a wide gulf between rational actors and emotive public appeals, where the alternatives appear to be "our town" or "drive to a hub" -- excluding DLH or other options. All other things equal, this sounds like a municipal problem of how do we get fees to maintain our airfield (and pay for existing staff). In the interview, the respondent even mentions "catching the bus" in DLH but describes the 80 minute drive to the airport as unreasonable.

    I live in a city with more than eight times the population of HIB, have just over an hour's drive to BNA, then still have to connect in a DL hub. I would never declare that DL "does not care about people" because they won't put a CR2 onto our postage stamp of an airfield.
     
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  6. DiverDave
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    DiverDave Gold Member

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    Ms. Shafer apparently is smoking some pretty potent stuff: Hibbing has the largest open-pit mine in the world. It’s beautiful. :eek:


    She also needs a lesson in civility and tact. How is a quote like this going to change Delta's mind: “A lot of these big companies don’t care about the people. They just don’t care about the needs of people anymore. They only care about their bottom line. If that isn’t greed, what is it? It’s crazy.”

    David
     
  7. MSPeconomist
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    MSPeconomist Gold Member

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    It's a bit ironic that Hibbing is probably the closest airport to the Chisholm (Iron Range) Call Center that we know and love. It will be a lot tougher for DL employees there to nonrev if they must drive to Duluth or Minneapolis to travel. Since travel benefits are an important advantage of the job for many DL employees, the lack of flights could ultimately make it more difficult to hire good agents at the wages DL pays.
     
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  8. icurhere2
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    icurhere2 Gold Member

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  9. viguera
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    viguera Gold Member

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    Yeah but that's part of the problem too though, isn't it? I don't know exactly how many people currently nonrev, but if it's a good portion of the people already taking up seats on the (mostly empty) RJs, then Delta is making even less money.

    They're running Saab 340s so that's not a whole lot of revenue seats to begin with.
     
  10. mersk862
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    mersk862 Gold Member

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    Not really. Non-revs get seats on a space-available basis. If a flight is filled with revenue passengers, no non-rev gets on. Likewise, I was on a flight earlier this summer on my airline where I barely got on, despite 10 open seats and only me and a lower non-rev listed, due to weight restrictions on the 737-300 getting out of SLC.

    As for benefits, I'm not overly sold. DLH is 75 minutes away, which isn't horrible. Heck, my airline has large operations in a North Carolina city with no service any longer and our employees (think the US version of Chisholm) have to drive 30 miles to GSO for flights. There are also plenty of employees that work for airlines that can't use their NR benefits all too well - think of foreign stations where the carrier might have 1-2 flights a day, all long haul. Employees might be able to ZED on other airlines, but that costs money. Not to mention that I believe the Iron Range has relatively high unemployment right now. Jobs are jobs and pay the bills at the end of the day, which is the most important thing.
     
  11. DiverDave
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    DiverDave Gold Member

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    I think he meant that if the load factors of below 40% counts non-revs, then the passenger loads are even worse than they look.

    David
     
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  12. Sweet Willie
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    Sweet Willie Gold Member

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    I generally liked the responses of Mr. Cannata, Ms. Shaffer seems a bit clueless.
     
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  13. mersk862
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    mersk862 Gold Member

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    Ah. At least at my airline, load factors do not count non-revs (we technically don't even count as passengers - we do not pay any fees domestically, even including the $2.50/segment TSA fee).

    Thus, I have been on flights that went out with every seat taken on an A319, but went out with a 55% load factor since there were about 60 non-revs on board.
     
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  14. MSPeconomist
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    MSPeconomist Gold Member

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    Yes, but nonemployees generally don't see load data, except in the aggregate when it's in the business news, so that some load factor estimates reported here tend to be based on observations rather than data from the carrier.

    When the federal government subsidizes these "rural" flights to/from isolated and underserved areas, how are nonrevs worked into the calculations? How do they count when the community guarantees a certain number of passengers?
     
  15. viguera
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    viguera Gold Member

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    I think what you see is that the stats favor whoever is presenting them... in this case Delta is making the argument that it's not economically feasible to continue flying without the subsidies, so I'd gather they would present loads without non-revs.

    And it's kind of hard to argue with them at that point... if you're having problems filling up 3 50-seat planes a day with paying passengers, then you have to examine whether or not it makes sense to continue flying there.
     
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  16. MSPeconomist
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    As I've said before, flights can be profitable without being full. Sometimes it's smart of the airline to keep seats empty rather than drop fares.
     
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  17. DiverDave
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    DiverDave Gold Member

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    True enough, but it's hard to imagine LFs in the 40s or below being profitable.

    David
     
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  18. MSPeconomist
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    Normally not, but 40% at high fares can be a lot more money than close to 100% but mainly on cheap tickets, not to mention the marginal cost (especially fuel when the price of oil is high) of handling more people and luggage.
     
  19. mersk862
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    mersk862 Gold Member

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    For our EAS markets, if I were to non-rev into them, I would not count as an EAS passenger. For example, if I were to fly out of EAS city ABC every day for a year, I would have flown out of it 365 times. If every single one of those were as a non-rev, it would contribute the same as an empty seat on that plane taking off.

    When the community is doing passenger calculations, it is based strictly on positive space, revenue bookings.
     
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  20. mersk862
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    mersk862 Gold Member

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    Very true. I can't disclose what our optimal load factor is, but we have one on a system-level. Granted, there are flights that need to be above that, there are flights that need to be below that.

    On an EAS route, it can be more difficult...it's often an either/or situation - either you try to fill a plane with low fares or try to capture high yields but turning away many lower-paying customers. A traditional Yield/Load balance doesn't play as nicely in these markets where demand is extremely minimal.

    At the end of the day, you still have to pay two pilots and a flight attendant, plus fuel just to get the plane off the ground. Doesn't include stuff like ground staffing, landing fees, etc. On an hour-long Saab flight., it probably costs the airline $1500-2000 - if only 10 pax want to fly, they need to pay a pretty good amount to cover the costs. Even with EAS funds subsidizing half of the costs of a flight, it still would mean in that scenario a passenger would have to pay a $150-200 premium to use their airport - might be worth it to a single traveler, but to a family of four in Minnesota going to Disney, I'm sure they'll wake up early, drive 4-5 hours to Minneapolis if needed, and fly from there, while paying about $80 for a couple of tanks of gas to save $500-700.
     
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  21. DeacFlyer1
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    DeacFlyer1 Silver Member

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    Winston-Salem is more like 20 miles from GSO, isn't it? But I get your point ;)
     
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  22. MSPeconomist
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    For many people, there's a big difference between driving 20-30 miles to an airport versus the roughly 75 miles to DLH.
     
  23. travelgourmet
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    travelgourmet Silver Member

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    My take - if folks in Hibbing are unhappy with their air service, they can always move. If the city or county is concerned about lost jobs, then they can provide a subsidy to make the route profitable. Reduced transport options is one of the costs of living in a small, isolated community.
     
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  24. mattsteg
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    mattsteg Gold Member

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    There is, I suppose, but I can't imagine for the average person in a rural area there is. At some point, you're used to driving a long way to get to anywhere. Also, 75 miles to Duluth with no traffic to speak of is less time and hassle than people coming into MSP from across the metro area in high traffic times. Other than people who don't have the means to travel between towns, I can't imagine flying out of hibbing can support much of a premium over flying out of DLH or MSP.
    Hibbing isn't really all that small and isolated. Their population is over 16k and DLH is only 75 miles away, after all. If they can't support the flights, it would seem relatively straightforward for someone to make money on a shuttle over to DLH.
     
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  25. travelgourmet
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    travelgourmet Silver Member

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    Agreed. I have no more sympathy for folks in Hibbing than I do for folks living in Gwinnett County that have to drive roughly 50 miles through traffic to ATL.

    I suspect it would still require a subsidy to run a shuttle. Back of the envelope calculations suggest that, based upon population, Hibbing generates maybe 30-50 air passengers (coming or going) in a day. With maybe 7 arrivals and 7 departures each day from DLH (and assuming nobody from Hibbing drives to MSP or any other airport), you are looking at maybe 2-4 pax per flight coming or going to Hibbing. Given the very high likelihood that most residents of Hibbing have a car and given the low pricing for parking at DLH, quite a few of those passengers would choose to drive or receive a ride from friends or family. I'd be shocked if one could count on more than 1-2 passengers on each flight. I guess you could reduce the frequency of the shuttle, but this would almost certainly reduce per-flight demand for transport services, as I doubt anyone would want to sit at DLH for several hours waiting for a flight or shuttle. Frankly, I think Hibbing would be better served to subsidize taxi service from DLH, rather than bothering with a shuttle service.
     
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