View Single Post
Old 28th Feb 2014, 22:47
  #14 (permalink)  
KRUSTY 34
 
Join Date: Jan 2006
Location: Sydney Australia
Posts: 2,082
From what I can see the VARA model, thankfully, was changed from it's original intent. You need to look no further than the US to see what was on the minds of the creators of this scheme.
  • Continental airlines need to divest itself of loss making thin routes, either by re-equipping or liquidating the routes altogether.
  • Continental approach several small Regional carriers with a deal. They gift these thin routes to the Regionals, who then embark on an aggressive re-equipment, and expansion plan.
  • As a result 50% of all US Domestic flying is now performed by the Regionals.
  • Continental however retain the profits from these routes, and pay the Regionals a fee for every sector flown. It is sold to the Regional concerned as constant and continuous cash flow. (can anyone say Bank-Run!)
  • The reality is that the Regional airline loses control of passenger revenue.
  • Training, maintenance, the sheer expense of the new aircraft all lead to the Regional falling into financial difficulty.
  • Appeals to the parent results in nothing more than advice. "You will just have to reduce costs". Meanwhile Continental continue to take the cream for what amounts to no real financial risk
  • The regionals cut. Wages, conditions, staff numbers, training...... What did they end up with?
  • COLGAN!
Fortunately this "American" plan didn't get to that stage. SkyWest went broke within 6 months. A $100 million loan from VA only provided a stay of execution for a further 6 months!

VA now had a decision to make. Cut SkyWest loose (that's what the Americans would have done), or spend more money and take them over. In reality there were no other real contenders for this now Hi-Profile little venture considering such a small market, and we now have what we have today.

I sincerely hope that VA and VARA make a go of it. The last thing any of us want are pilots out of work. Considering the ongoing loses of both VARA and TT, these entities are an anchor around the Mainline neck! Hundreds of Millions, if not more than a Billion dollars will need to be spent to bring them up to the capacity were they become profitable.

Are the genius's who thought up these schemes still employed?
KRUSTY 34 is offline