Regional Airlines are afraid of High Speed Rail

From the Railway age Editor: "Gussied-up Prairie Schooners"

Those of you who have been involved in the high speed rail business for a while may recall, with acid reflux, Herb Kelleher, the man who, with some creative legal shenanigans, single-handedly succeeded in killing the Texas TGV in the early 1990s. Let’s go back to Don Itzkoff’s “High Speed Currents” column in the July 1991 issue of Railway Age (p. 14) for some perspective:

“[Its] emergence into the national spotlight parallels a new, broader acceptance of high speed ground transportation as a significant future travel option for Americans. But recent events in Austin . . . teach a lesson in reality as well—that changing the entrenched domestic, political, economic, and institutional order to accommodate new high speed ground transportation systems will not be easy.

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They may be afraid of HSR, but they positively soil themselves with thoughts of a return of oil at > 100$/bbl. My understanding is that the business models simply can't tolerate oil that expensive for an extended period of time.

JackRussell wrote:They may be afraid of HSR, but they positively soil themselves with thoughts of a return of oil at > 100$/bbl. My understanding is that the business models simply can't tolerate oil that expensive for an extended period of time.

That is such a true statement. well said. JC

It is both simplistic and inaccurate to state that Southwest Airlines killed the "Texas TGV." In the end, that proposal died because it failed to find private investment, and rightly so as it was a surefire money loser.

The harsh reality is that "high speed rail," at least by the classic definition, requires an immense investment and offers little prospect of self-sufficiency. It's up to the public sector to fund and subsidize it.

Moreover, the regional airlines are moving towards larger regional jets with ranges that are similar to those of conventional jets. The days of the 50 seat regional jet might come to an end, but the operating economics are far different for a 90 seat jet that has the operational range of a conventional jet liner. There is a place for low cost, regional airlines under contract to major carriers. Unlike passenger rail, they have very low labor costs. I wouldn't be surprised if many region airline pilots make less than an assistant conductor.

I also don't see where HSR results in competitive fares in terms of costs per mile. Look at Acela fares, and consider for a moment that these trains use existing infrastructure. Then factor in the immense infrastructure costs of building dedicated HSR passenger lines and it should be clear that HSR either require high levels of subsidies, not just in terms of capital costs, but in continuing operating cost, or extremely high fares, or a combination of the two.

It may be simplistic, but Southwest Airlines lobbied heavily against HSR. Since they are a Texas-based company employing thousands of people in Texas, I would assume their voice would be heard in the Texas legislature.

CHTT wrote:It may be simplistic, but Southwest Airlines lobbied heavily against HSR. Since they are a Texas-based company employing thousands of people in Texas, I would assume their voice would be heard in the Texas legislature.

A company stating a view that a proposal is a bad idea doesn't equate to them being afraid of the idea. Secondly, as has been stated, why wouldn't they try to protect their stockholders and employees?

If an airline is advocating against a new transportation system that means they are afraid of it. do you think they are advocating against for the people of the state? Do think its for the greater good of society? JC

Somehow, Mr. Form D et al, I don't think Southwest Airlines was ever "afraid" of a Texas HSR; they run their business their way and enjoy strong public acceptance of "their way".

Southwest recently showed they can, absent the price being really right, walk away from a deal; case in point; bankrupt Frontier Airlines. SWA was not going to follow the herd of sheep just to say they made a deal and pay "whatever we have to even if we have the resources to outbid our opponent (in this case regional carrier Republic Airways that does business under a variety of brand names governed by whatever major carrier they are "partnered' with in a given market)".

While it would have been real sport to have been that housefly on the wall at SW's Love Field offices, I'm willing to bet that they recognized there has NEVER been a truly successful airline merger (such as was Conrail within the industry we follow here) resulting in two "weaks" becoming strong. Hell's bells, it is my understanding some three years after the fact US Air is still essentially operation two distinct carriers, USAir and America West, under one umbrella. Reportedly USAir had to play hell in order to get the employees of the two carriers to agree upon as innocuous an issue as uniform employee travel privileges.

So I would guess that Southwest looked at all the host of problems a merger would bring, such as a non standard fleet upsetting SW's long standing policy of having only B-737 variants on the registry, the possibility of "headaches" from Frontier's international routes, their hubs instead of our "point to point" route structure, and the stickiest wicket of all, labor....labor .....labor.

Anybody here in the industry who holds that no one can top railroads for contentious labor relations, somehow our airline employees around here just might disagree. A good read on that point is SkyGods; the Fall of Pan Am ISBN 1-888962-11-9

Oh well, let the other guys have it, lest we note the last time a regional carrier decided they wanted to play in the big boys' sandbox, the outcome was less than fulfilling, save maybe those passengers lucky enough to get a $9.99 fare KORD-KIAD on Independence Air. Yup, they "declared Independence", from their major carrier "partnerships', and did a tailspin right into Bankruptcy Court.

Pardon my off topic narrative, but which is relevant to what appears to be the management philosophy of Southwest Airlines.

When I worked at a major airport shortly after high school I noticed that the legacy carriers had much older staff and flight attendents. United Air Lines Flight attendents were or alomost senoir citzens themselves and the Red Caps where older black gentleman who problay came from the railroads. The start ups like Southwest were a much younger crowd. Continental was somehwere in between. Having flown about less times then the fingers on my hand what is a legacy airline anyway? Plus why should we save them? I dont think the airlines pay into a separate retirement system like the ralroads though for the fact that they are risking there lives every day out there they should deserve there own system separate from social security.

OT, but allow me to address Mr. Form D's points.

FormD wrote:what is a legacy airline anyway?.

"Legacy" is a term given to an airline that was part of the regulated industry, i.e. in business prior to 1979. Nowadays, this means American, United, Delta (Northwest), USAir, and Alaska. Southwest was in business during the regulated era, but they were exempt from regulation as their operations were solely within Texas.

FormD wrote: Plus why should we save them?

I don't think there is any government policy advocating "save the legacies" considering the number of them that have just plain gone out of business.

FormD wrote:I don't think the airlines pay into a separate retirement system like the ralroads though for the fact that they are risking there lives every day out there they should deserve there own system separate from social security.

Although airline labor relations are covered by the Railway Labor Act, and several traditional rail unions such as U2 hold contracts on airline property, the employees are covered by Social Security and not by the far "richer" Railroad Retirement.

We now return to our regularly scheduled programmine over at http://www.airliners.net

Gilbert B Norman wrote:... there has NEVER been a truly successful airline merger (such as was Conrail within the industry we follow here) ...

Conrail was a merger? It looks like a 1970 government bailout of Penn Central and several smaller railroads. Then 28 years later two rival railroads bought and split up Conrail (with some areas operating as joint assets). Successful merger? Successful bailout, perhaps.

People may not want to hear this but bailouts often times work. JC

Gilbert B Norman wrote:OT, but allow me to address Mr. Form D's points.

FormD wrote:what is a legacy airline anyway?.

"Legacy" is a term given to an airline that was part of the regulated industry, i.e. in business prior to 1979. Nowadays, this means American, United, Delta (Northwest), USAir, and Alaska. Southwest was in business during the regulated era, but they were exempt from regulation as their operations were solely within Texas
....

Plus Continental and Hawaiian, according to Wikipedia.

http://en.wikipedia.org/wiki/Legacy_carrier

There are five legacy carriers that are no longer around, soon to be six once Northwest is fully absorbed into Delta.

Mr. Mudlake, acknowledge the oversight.

Mr Lurker, I guess the success of Conrail can be debated in view of the "mixed" reviews of the "break-up", however that it became viable and did not become the "Con-Game" as it certainly appeared to be on its way to becoming circa 1977 and was able to pay back any and all public funds advanced sounds like a success to me. I'm certain that it could have remained a viable independent business enterprise had it not been seen seen as an attractive merger partner. That is simply how capitalism works.

Conrail's outcome hardly resembled that of Amtrak, which anyone in the industry on A-Day could have predicted.

Finally, if you are "chuckling" that Frosty got his comeuppance when Cerberus got "bathed" with Chrysler, we are on the same page!

matawanaberdeen wrote:People may not want to hear this but bailouts often times work. JC

Would one be referring to the (AFAIK) most successful government bailout - Conrail?