Same Time Next Year
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It’s been nearly a year since I wrote about the problems that come from
having 11 bosses who are not on the same page about anything, as well as
suggestion...
4 months ago
January 01, 2009
Direct Air
Rumors I have been hearing are that loads are not where they need to be and Virgin may want their planes back? Lets hope both are wrong.
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21 comments:
There you go again Bill. You love it!!!
Bill , I have been wondering of late if airlines were hedging their bets last summer when oil prices were much higher and if some of these airlines bought futures contracts for delivery of jet fuel at futures dates (like right now)......at prices that are much higher then what you can buy jet fuel for now on open market.
Almsot like homeonwers who are now locked into heating oil at 3.50 a gallon when it can now be bought for how much less?? I am not familiar with heating oil prices b/c i heat with otehr means.
my point is those airlines who are buying now at alower price obvioulsly have some pricing advantages and could more "afford" to fly with a lower load factor...vs....those who are stuck paying fuel prices of a 4-5 months ago b/c they lost their hedging bets.
If Direct air locked at last summers prices we got even more problenms , I would think??
Jim:
I truly hate the attitude in this city that if you say something that is not "rah rah" then you are negative. Obviously you are not a businessman.
I was hoping that the loads would be 100% and that we could attract more airlines. The rumor mill, however, is telling me the opposite and that Virgin may want their planes back.
Versus saying I love it, why don't you disprove the statement,call the airport and find out the load factors? Again I hope I am wrong.
Bill
You just love to spread rumors. You thrive on it. I don't need to call anyone. It will succeed or not based upon a lot of factors. I would guess the airline industry is down all over because of the tight economy. Before you spread rumors that may or may not hold water why don't you call? You are the one bringing it up and, as is your history, admit it is only rumor.
Jim:
My rumor mill is very reliable--trust me.. The loads are not what they need to make money long term and Virgin wants their planes back..
Time will tell.
Bill
Jim:
I got an idea for you. Why don't you start your own blog to say all the positive things to counter my negativity.
Trust I will be more then happy to tell people about it and will read it myself.
Bill
Bill,
Does Virgin get paid by the trip or by the passenger? It seems to me that they would simply charge X to fly from Worcester to Florida, and leave it up to Direct Air to fill the plane and sell the tickets.
I could be wrong though, it's happened before.
Over the holidays I flew ORH-SFB December 20 and load was just over 50% and there was open seating. But that was during the snow, so maybe many people rescheduled or cancelled. Coming back (Dec 27) I was told at checkin there was "eighty something" seats sold out of the 149 - and the inflight system was inoperable. But when we landed there seemed to be alot more people waiting for the Punta Gorda flight than was on the SFB flight. Flight crew was San Francisco based.
JD1:
Thanks. That is pretty much what I have been hearing on a consistent basis.
Direct Air needs at least an 80-85% load factor to make any money and stay flying out of ORH.
Bill
Steve:
You use to be able to get the passenger counts per airport. Can you try to get them for December at ORH and we can calculate our own load factor.
Thanks
Bill
Email from a friend who flew up from Florida on December 11 and left ORH on December 14:
"The plane was nice!!
Little tv's you can watch. . . .all you had to do was buy the headsets
for $2.00
Well worth it. . . .
And the Landings were Perfect. . . Couldn't even feel them!!! Amazing!
Probably cause they are newer planes. . . ."
Harry T
Worcester, MA
Harry:
Not doubt that the Virgin experiences has been 1st class.
My question is "how are the loads?" Direct Air is not a well capitalized established airline and needs to turn profits on their routes.
They can no subsidize routes that are not making money!
Bill
I got put on notice over at our pal WormTown's blog about how tiring the non-rah..rah'ers are (more directed at me:>) I had made comment about the alternative community in WooTown in a roundabout way via his comic strip in WOMAG being dropped thread ....not banging Worm who I respect and I know he knows this...
I have given up on rah rahing..I want results:>)
But since I am around amigoes..the alternaive crowd in WooTown is cliquey not alternative:>)I got put on notice that my comments are silly....heard this word once before about blogging in WooTown
Ahhhhhhhhhhh Negativity, makes you remember this famous Rick Pitino quote now doesn't it?
"Larry Bird is not walking through that door, fans. Kevin McHale is not walking through that door, and Robert Parish is not walking through that door. And if you expect them to walk through that door, they're going to be gray and old. What we are is young, exciting, hard-working, and we're going to improve. People don't realize that, and as soon as they realize those three guys are not coming through that door, the better this town will be for all of us because there are young guys in that (locker) room playing their asses off. I wish we had $90 million under the salary cap. I wish we could buy the world. We can't; the only thing we can do is work hard, and all the negativity that's in this town sucks. I've been around when Jim Rice was booed. I've been around when (Carl) Yastrzemski was booed. And it stinks. It makes the greatest town, greatest city in the world, lousy. The only thing that will turn this around is being upbeat and positive like we are in that locker room... and if you think I'm going to succumb to negativity, you're wrong. You've got the wrong guy leading this team."
:-)
Harry T
Worcester, MA
Jim;
I have known Wild Will for about a year now..got associated with him thru the Chandler Street Business Association..a local biz group that I founded with another lad about 5 years back and then left for awhile due to personal reasons..Wild Will go involved while I was absent..and thus when I go back involved in a small way I got to work with him..I have found him to be far removed from what you have stated...he is one of the more involved within the group..pulls his weight more than most..devotes many hours and money to projects we ae involved with and in general offers very steady leadership..
Being level headed about important issues is not being negative..we have far to many folks in this city in charge of projects important to this city who are not qualified..the mis-management of the airport being one..
If the loads are low..the citizenry should know..perhaps it will push them to use the airport instead of staying away...we lost a profitable airline just two years ago..was this not enough for you to realize that profitable business has a problem with Worcester?
Jimbo;
should have added..I am meeting with Wild Will tonight and exective directors of a local non-profit organization to discuss a 2nd annual music festival on Chandler in the the urban core...sad sacks do not do this stuff:>)
"It seems to me that they would simply charge X to fly from Worcester to Florida, and leave it up to Direct Air to fill the plane and sell the tickets."
That is exactly right. Furthermore, the charter carriers will work with you if the future bookings are high. All of the passenger fares are held in escrow and the bank is required to set up different accounts for each flight. So, Direct Air can take the statements to the carrier and say "It will all work out in a week or two."
Of course, if the bookings are not there, then there is nothing to be said.
Anonymous:
You are correct. Lets hope these funds are held in esgrow as you outline.
No matter what way you slice it, we needgood loads to enable Direct Air to survive. My guesstimate is 80 to 85 percent, based on the current fares, to break even.
To be profitable they need 85 plus. I do not see that happening and in fact my gut tells me they are in the 70 percent range average each way.
They can not stay at ORH at these load levels and they do not have the capital to hang in there.
Bill
Bill,
I can't get the load data.
The Bureau of Transportation Statistics website says the latest data available is June of 2008.
I guess they're slacking.
steve:
Thanks for checking
Bill
Steve,
Indirect Air Carriers do not have to report their loads to the Feds. So, you will find nothing publicly available about Direct Air's loads. If they (or a counter at every airport) don't tell you, you won't know. I am sure that the airport has counts, but they are going to hang on to them.
Bill,
By federal law, all public charters must keep their fares in escrow until the flight departs. If vacations and all those goodies are included, all of that has to be in escrow until they are used. In addition, all public charters must file a $200,000 bond in order to operate.
Your money is actually safer with Direct Air than a network carrier. Even if you pay Direct Air in cash, you can still get your money back out of their bond as long as it is valid.
The key to their profitability is to find out the charter costs of the aircraft. A very coarse estimate would be $8,000-$10,000 per block hour including fuel. That number is for similar sized jets, but a little older. However, the constant utilization may have gotten them a contract price that was very, very good.
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