Ken, I'm no doctor, but I take its as the additional contracted flying will require a number of jets that is greater than two but smaller than four.

This will entail getting this number jets operationally active from a currently-inactive fleet of Fokkers purchased from an airline representing some unknowable country ostensibly between Germany and Hungary.

GW,

I know what they are trying to say but how is it possible to 'acquire an additional three operational aircraft that have already been acquired'. I hope their operational standards are better than their journalistic skills.

So the AFAP is going to do some analysis to see whether totally sub-contracting out your 100 seater market (VARA in WA, Alliance East Coast) and almost completely sub contracting out your regional market (WA, QLD) constitutes a breach of the EBA job security provisions....

It would be funny if this **** wasn't real.

I'm guessing that the first aquire should read 'require'.

At the end of it all the AFAP won't be able to do much. A court order saying keep the loss making route running will not go far.

Subcontracting makes a loss making route profitable? Were they even loss making? Do the unions express "crossness" while the company continues to do whatever they wish regardless of what's written in agreements? Is more "crossness" expressed over issues that may/ may not affect certain resource groups than some of the smaller ones?

This story has so much more to give......

The route revenue detail and pax numbers are known, the company has determined that while the revenue may cover the OPEX the revenue does not cover the CAPEX on the existing equipment.

Depending upon how this is viewed by the bean counters and who is liable for the investment of CAPEX, the shareholders or the company. This is what has killed the ATR in this country..... QLD is just the start.

When QF renewed the 717 with Cobham and then VA ditched the 190, they simply confirmed what everyone reading this needs to understand.....
The CAPEX required, the market volume, yields, utilisation, slot availability, directionality and simply how much the punters behind you are willing to pay and come out with one equation....

The Australian Regional market will only sustain the use of preowned (jets) ie significantly lower CAPEX equipment.

This is why your regular punter is getting on a jet that has not been in production for 20 years. Alliance, Network, Vara are all only using this equipment because its the only stuff our market pricing will sustain.

VA is now on the slippery merry go round of what is a defunct regional network where they cant make money with the regular toys. Outsourcing to QQ is a smoke screen for both companies because the OPEX for these sectors with the F70/100 simply does not equate to the known route revenue detail.

The company is trying to stay alive, the crews think they are getting screwed by the company but it comes down to how much people are willing to pay for a service in the first place.

Remember what airfares were like 15 years ago..... add in a bunch of Gen Y expectation and smattering of the smartest men in the room.

The race to the bottom is certainly looking interesting, who will be the next to sip the poison chalice>>

:E

Sorry Fallingleaf, could you please explain to me how you sub contract flying out to a wholly owned subsidiary?

Twotbags

The only problem with your theory is that the aeroplanes were, for the most part, owned and the costs were already sunk. The crews were in place, the sim was in place, the engineers had sorted the airframe out and it was running reliably, the punters loved the aeroplane as did the majority of crews.

The only one that didn't like the ejet was one man in particular, for reasons best known to himself.

The capital cost of those aeroplanes, while more than a F100, was significantly less than a 737 and similarly it was cheaper to run, crews were cheaper, air nav charges were cheaper, it burnt less fuel than either a F100 or a 737, and giving them away just to not see them making the tarmac look untidy is a false economy in my opinion.

I dont understand the logic of contracting work out. The contracted party has to make a profit and at the end of the day the only major input cost differences are the manpower (which in my opinion is a marginal and temporary cost reduction) and airframe capital cost.

Fuel is much the same, air nav charges are much the same, maintenance is more often than not more expensive due to the older airframes, the other operator normally has to duplicate ops, crewing, nav/flight planning, load control, management and engineering functions and the other operator usually tries to do the job on a cost plus basis so there is no real incentive for them to do things as efficiently as possible.

To me, the smarter, though seemingly outdated, move is to do the work yourself, get the economies of scale associated with using your own infrastructure which is already in place and if needed making small, incremental, increases in manpower in the various areas. Morale of your troops is improved because they see the work staying in-house, the risk is better managed as you have control of the end to end process rather than plonking your brand on a machine operated by someone else who doesn't care as much about your brand as you do.

But what do i know :)

While technically you are correct, my argument is addressed at the companies assertion when they closed the Perth Ejet base that 'all Ejet flying will be done by the 737'. This was clearly not the case. The same lie was trotted out again to justify the Ejet decommissioning.

So why VARA may be wholly owned, all those 'Ejet' equivalent commands which are now on a F100 are not really available to VAA flight crew as every FO at VARA at the time of integration has first dibs. So in practical terms, the job security is not really there.

It's a typo. The first 'acquire' should be 'require'. The actual announcement posted on the ASX website has it written correctly.

I can't imagine Virgin being around that long!