Delta Tells Some Feeder Airlines: Rebid for Routes

Delta Air Lines put a portion of its regional carrier flying out for bid Tuesday in an effort to wrestle concessions either from its current feeder airlines or their replacements, and indirectly from their employees.

Delta said the so-called request for proposal, or RFP, covers flying by up to 143 regional jets. Most are part of the fleets of Delta's wholly owned subsidiary, Comair, and independent contractors Chautauqua, Shuttle America and Freedom Airlines.

The contracts would cover about a fifth of Delta's flying done by smaller regional jets, which generally involves feeder routes to its hubs and nonstop routes between smaller destinations. The contracts cover 93 jets with 50 or 70 seats that are currently flying for Delta, and future flying by up to 50 bigger regional jets with 76 seats.

Delta spent $1.3 billion during the first half of this year on contract carrier arrangements, which didn't include Comair's operations.

However, an industry analyst said Delta probably won't see big savings from the move, which seems to be aimed mostly at getting lower costs at Comair.

"They're trying to put some pressure on Comair," said CreditSights analyst Roger King. He said the other regional carriers included in the rebidding effort already have competitive costs and are likely to gain new business from Delta.

Meanwhile, the contracts of two of Delta's biggest regional contractors, Skywest and Atlantic Southeast Airlines, aren't being rebid because they were locked in as part of Delta's sale of ASA to SkyWest last year. The associated contracts were approved by the bankruptcy court.

Under that contract, which extends to 2020, SkyWest and ASA have the right to operate at least 40 percent of Delta's regional carrier flying and 80 percent of such flying out of Delta's Atlanta hub as long as their costs are competitive with other regional airlines.

A Delta executive declined to say how much the airline hopes to save by rebidding most of the flying done by its Delta Connection partners, which is expected to be completed by year-end.

"It's a natural part of Delta's restructuring. Now it's [Delta Connection's] turn," said Joe Kolshak, executive vice president of operations.

He said it's "very premature" to say by how much Delta hopes to cut the cost of its regional jet-flying. "We'll wait and see what's bid," he said, adding that he expects up to a dozen airlines to submit proposals within the 30-day deadline.

However, the head of the Air Line Pilots Association vowed that unions at the various carriers will fight Delta's move, even if it means losing work.

"They hope they can tie labor into underbidding each other," said ALPA President Duane Woerth. "We are going to negotiate together as a group. We are not going to bid against each other."

He said the ALPA units at regional carriers formed a task force late last year to oppose similar efforts by United and US Airways to seek concessions from regional carriers and their unionized work forces. The task force is headed by the chairman of ALPA's unit at Comair.

"The work that's really at risk here is Comair work," said Woerth.

Comair, arguing that its costs are too high compared to the industry, sought almost $30 million in labor cost concessions from its unionized pilots, mechanics and flight attendants. Tentative agreements with the pilots and mechanics could fall apart after Comair got the court's approval to terminate the flight attendants' contract, prompting renewed strike threats and renewed talks.

Woerth also said he plans to block the Comair pilots' concession agreement. "I've told them I won't sign that deal," he said.

Meanwhile, Kolshak said Comair continues to shrink.

Twenty-seven of the regional jets subject to being rebid are Comair jets, he said. The Cincinnati-based carrier's fleet has dropped from 174 jets to 168 since it filed for bankruptcy along with Delta, and is scheduled to lose 30 more jets this fall, separate from whatever happens in the rebidding process, he said.

"If they continue to lose flying, it would not bode well for the long term," he said.

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