Another one bites the dust

[muralist0221]

Seems that Comair a Delta partner serving Kentucky and vicinity is out of business. They blame the failure on high fuel costs and the higher maintenance costs for its smaller jets. This seems odd to me. The conventional wisdom in the 80's suggested that airlines would move to the smaller commuter jets on lower volume small city routes.

In the passenger rail vis-a-vis airline argument, seems that Amtrak and rail has the edge and is not as affected by escalating fuel costs as is the airline industry. Norfolk Southern is experimenting with natural gas for engines while Amtrak uses bio-diesel on its Heartland Flyer. Sixty percent of airline passenger revenue is spent on jet fuel. American was supposed to go "belly-up" this year, but the drop in crude prices has prolonged its agony.

 

[auburnrails]

There are a multitude of reasons why this is happening:
*Comair has seen their fleet shrink to a small size due to cost (wage) issues making them uncompetitive
*Because of their reduced fleet, they have reduced staffing - those who are left are very senior and therefore more expensive.
*Comair was fully vested in the 50 seat CRJ-100/200. These aircraft made great sense when fuel was $18-$30/barrell, but when it get's in the $90-$140/barrell range they become a noose around the carriers' necks.
*Comair is wholly owned by Delta so Delta has full control over what happens to the carrier. Because Delta (among others) is desperately trying to get out of their 50-seater contracts, killing Comair versus relying on protracted negotiations with other reginoal "partners" was an easy first step.

In regards to American, they are in Chapter 11 and just posted a pretty sizable profit, albeit during their protected bankruptcy. They won't be going anywhere as their restructuring seems to be progressing well. Expect to see them emerge from Chapter 11 in the not so distant future, either independently or in conjuction with a merger with another carrier (likely US Airways).

Bottom line: Fuel prices combined with the inefficient fleets of the regional operators make short haul flying a difficult proposition. Even Southwest, which thrived on short haul flying throughout it's existence, has really been tightening up this type of stuff, dropping numerous short haul routes and adding many more volume destinations.

-Dave