What do you believe is causing all the major carriers pain?


#1

Post your thoughts on what influences the downsizing of many U.S. airlines.

Personally I think low cost airlines,(ex. Air Tran), fact that there are too many airlines, and 9/11 are all factors that are responsible for the airlines suffering.


#2

Unions.

Well, that’s half tongue in cheek. It’s not oil (which doesn’t help), 9/11 (which caused a temporary hit, but problems were brewing long before), empty seats (which is becoming less and less of an issue), but rather compensation for the thousands of employees. It doesn’t take a rocket scientist to figure out that spending more to fly a route than you get in receipts from the flight will drive you into the ground, yet CEOs that make millions of dollars seemed to not get that message.

But take something like a baggage handler union, a flight attendant union, to drive up salaries, benefits, etc. it certainly causes problems. I’m not saying that they’re unimportant or easy jobs, but the pay should be more in line with the responsibilities that come with it. And, for the longest time it wasn’t, and now things have hit the fan.

Right now I think we have a good mix of legacy and low cost airlines. It’s very possible for all of them to be profitable but it takes proper resource management, and up until very recently that wasn’t happening.


#3

I’d say there are three primary reasons (not written in any particular order)…

Labor union inflexibility on work rules.

Cost of jet fuel, which keeps on being a problem month after month after month.

Over-expansion of purchasing of new jets. Airlines have ordered billions of dollars of new planes. The financing costs they have to carry are eating them up.


#4

I’d have to agree w/ tobyz1 on this one… I think the 9/11 “fear factor” has a minimal effect on passenger volume now.
Fuel prices are difinitely starting to take their toll, even w/ so many carriers hedged at certain prices. Do you think they won’t make up for it w/ future purchases? (When DON’T the oil companies come out ahead??).
The unions are trying to wield a big stick. In typical union fashion, they think that a weakened airline gives them more leverage, when history shows us that a weak company often becomes desperate, and the cuts will be deeper and less forgiving for employees. It often comes down to a choice: the airline’s proposed cuts or the company’s demise. You might (or might not) be surprised to see how many die-hards w/in the unions would rather see a company fold and collect unemployment than accept any cuts proposed from management.
With the exception of leisure routes, I don’t think the LCCs have done nearly as much “damage” to the legacy carriers as is sometimes reported. Don’t most legacies make their “bread & butter” on international flights and business/first class seating?? Other than AirTran, I don’t think any LCCs even offer business class, although I could be wrong.
The number of airlines is good for the customers, and even though it keeps prices down, it actually helps the airlines run more efficiently by forcing the issue. The size of the profits may be down, but there’s no real reason that they can’t all come out ahead. Hell, once every employee and bill are paid, equipment is purchased, taxes are taken care of, and the books are balanced, any company could earn 1 a year and survive (although expansion may require a good juggling routine). Okay, my .02 turned into $20. Maybe I should manage an airline! :wink:
I hereby yield the floor.


#5

I agree with all the aforementioned reasons, especially unions. Those that have been a part of this board know I am, for the most part, anti-union. Oil prices, yes. LCC’s have done some damage to lower 48 routes, but the legacies are doing things to combat this. I never thought I would see that it was cheaper for me to fly from TUL to STL on AA rather than SWA. Same goes for TUL-SNA. The major carriers are taking steps, even though it may not seem like it, to attempt to compete with the LCC group.

Not only that, but the majors are giving in more and more to concessions by airports that are trying to expand. For example, the now former Dir. of Airports of BFL has been trying to get SWA to come in, especially with a beautiful new terminal (thank you Cong. Bill Thomas!!). United and Delta have lowered their requirements of the airport to begin flights direct to SLC and DEN. SWA refuses to budge. Too bad that the D of A is just a stubborn. AA is about the only major that is still having a hard time giving in on some of their demands. Too bad. I miss the direct DFW-BFL flight (which, I might add, over 6 years, averaged 91% capacity!).

Anyway, my $.02 became my $40, only because it is worth more than planeaholic…


#6

:laughing: 40?!?! Pika, your .02 is PRICELESS. :laughing:


#7

See…even he agrees!!!


#8

Besides the unions, it is also management. Southwest is heavily unionized yet they are doing good because they have great management.

Good management does things like fuel hedge and keep the hedge. Bad management gets a fuel hedge and then sells it, like Delta did.

It’s a myth that business travellers avoid LCC (low cost carriers). Southwest has quite a few business travellers. Many of the people at Kaiser in Oakland take Southwest, not only to the LA area but to the midwest and the east coast.


#9

Don’t pat yourself on the back too hard…Priceless is priceless. $20 is a case of REAL beer. :wink:


#10

Don’t make me go KCVG on you!! :smiling_imp:


#11

Is that an attempted slam on the fact that OK is the ONLY state that still requires its beer sold in stores other than liquor stores to be 3.2% alcohol???

I don’t make the rules around here! Hell, OK just became the LAST state to make tatooing legal!! Between that and the fact that Oklahomans haven’t been able to grasp the concept of a center turn lane makes me worry. Can’t imagine what would happen if they introduced carpool (diamond) lanes here!!!