Another Merger, Another Bankruptcy whens it gonna end!

[Lear70]

Unless the market won't bear it. Doesn't matter what you think you're worth. If there isn't someone out there to pay it, you won't make it. Scarcity vs. intrinsic value, i.e. the value of something decreases if everyone has it, not matter how much that "something" costs to produce.

This is what those OWS students are finding out. Bless their hearts. Five years ago, their degree was probably worth something. Now it's not, because no one is hiring. Five years from now, it might again, be worth something. Kodak, real estate agents and computer chips are related, yet seemingly incongruous examples.

Which brings us right back to deregulation.

The issue is that an airplane seat is not a perfectly elastic commodity, and deregulation allowed the airlines to flood the market with seats, thus depressing their value. Unfortunately, the airlines (with notable exceptions) don't seem to care if many routes are operated at a loss, therefore everyone involved loses... except the consumer... and management.

The whole idea that airlines would compete on customer service was, is, and will be in the future, completely ludicrous. Unfortunately, the people who get pinched aren't the consumer, it's the employee. If the company can't increase prices or decrease direct costs such as aircraft leases, gate space, etc, they'll squeeze the middle (read employee), and with unions being hobbled by the RLA (and a much weaker membership than decades past), there's nothing to stop them.

Notice how everything ELSE involved in running an airline increases equal to or more than inflation? Fuel, aircraft and equipment leases, interest rates, gate leases, catering, maintenance parts, taxes, etc, etc. Everything except labor rates.

Again, deregulation is a failure economically (as proven by just about every airline in existence for any length of time having been through bankruptcy court AT LEAST once - SWA the notable exception) and professionally (for the employees)... the only people who benefit are the public with their cheap seats and the senior management drawing large salaries and bonuses.

 

[suupah]

Successful for the economy? Debatable, once the costs of multiple trips into bankruptcy court has been included.

Successful for the average consumer through severely depressed ticket prices? Certainly. The average ticket price is down nearly 60% compared to pre-deregulation prices, adjusted for inflation.

The average traveler may rejoice. I shall not, until incomes are restored back to 1960's -era income levels, adjusted for inflation.

YMMV

Bankruptcies have been quite beneficial for Lawyers and Executives. This puts lots of money into peoples hands. they are people too. says Mitt Romney.

 

[Lear70]

*chuckle*

 

[learherkjay]

Which brings us right back to deregulation.

The issue is that an airplane seat is not a perfectly elastic commodity, and deregulation allowed the airlines to flood the market with seats, thus depressing their value. Unfortunately, the airlines (with notable exceptions) don't seem to care if many routes are operated at a loss, therefore everyone involved loses... except the consumer... and management.

The whole idea that airlines would compete on customer service was, is, and will be in the future, completely ludicrous. Unfortunately, the people who get pinched aren't the consumer, it's the employee. If the company can't increase prices or decrease direct costs such as aircraft leases, gate space, etc, they'll squeeze the middle (read employee), and with unions being hobbled by the RLA (and a much weaker membership than decades past), there's nothing to stop them.

Notice how everything ELSE involved in running an airline increases equal to or more than inflation? Fuel, aircraft and equipment leases, interest rates, gate leases, catering, maintenance parts, taxes, etc, etc. Everything except labor rates.

Again, deregulation is a failure economically (as proven by just about every airline in existence for any length of time having been through bankruptcy court AT LEAST once - SWA the notable exception) and professionally (for the employees)... the only people who benefit are the public with their cheap seats and the senior management drawing large salaries and bonuses.

I am not trying to stir the pot here, but I fail to see your logic. Without de-regulation, most of us on here would not have airline jobs.

Regardless, while you mention bankruptcy and lawyers making money from it, you are failing to see that bankruptcy, not deregulation, is the problem. We have a flood of seats in the market because we have carriers kept artificially alive through the bankruptcy system. Then, those carriers are allowed to shed their debt obligations, maintain piles of cash while not paying those bills so they can "compete" with other carriers who do not get to shed their debts. So now we have bankrupt airlines running fire sales on seats - that's unfair competition and is against the purpose of deregulation.
Deregulation would not be a problem if the government actually allowed the market to run its course. United, Delta, US Airways - they should have been gone 8 years ago. But, companies that do it right are punished by having to compete with carriers who are "too big to fail." Deregulation is not the problem; but we don't have true de-regulation - bankruptcy laws will not allow the market to run its course....

 

[The Prussian]

I am not trying to stir the pot here, but I fail to see your logic. Without de-regulation, most of us on here would not have airline jobs.

Regardless, while you mention bankruptcy and lawyers making money from it, you are failing to see that bankruptcy, not deregulation, is the problem. We have a flood of seats in the market because we have carriers kept artificially alive through the bankruptcy system. Then, those carriers are allowed to shed their debt obligations, maintain piles of cash while not paying those bills so they can "compete" with other carriers who do not get to shed their debts. So now we have bankrupt airlines running fire sales on seats - that's unfair competition and is against the purpose of deregulation.
Deregulation would not be a problem if the government actually allowed the market to run its course. United, Delta, US Airways - they should have been gone 8 years ago. But, companies that do it right are punished by having to compete with carriers who are "too big to fail." Deregulation is not the problem; but we don't have true de-regulation - bankruptcy laws will not allow the market to run its course....

Forget it, learhercjay,...our government's involvement in business decisions will work. We just need to give it time.

 

[outerlimits]

Forget it, learhercjay,...our government's involvement in business decisions will work. We just need to give it time.

That should be put on the 100 dollar bill.

 

[e=mc2]

Well with all the doom and gloom the best way to get a 2% pay raise is to dump ALPA. After all they only help management work out the details of the give backs.

 

[HalinTexas]

I am not trying to stir the pot here, but I fail to see your logic. Without de-regulation, most of us on here would not have airline jobs.

Regardless, while you mention bankruptcy and lawyers making money from it, you are failing to see that bankruptcy, not deregulation, is the problem. We have a flood of seats in the market because we have carriers kept artificially alive through the bankruptcy system. Then, those carriers are allowed to shed their debt obligations, maintain piles of cash while not paying those bills so they can "compete" with other carriers who do not get to shed their debts. So now we have bankrupt airlines running fire sales on seats - that's unfair competition and is against the purpose of deregulation.
Deregulation would not be a problem if the government actually allowed the market to run its course. United, Delta, US Airways - they should have been gone 8 years ago. But, companies that do it right are punished by having to compete with carriers who are "too big to fail." Deregulation is not the problem; but we don't have true de-regulation - bankruptcy laws will not allow the market to run its course....

Beat me to it. I might add, that if we return to a regulated industry, the ramifications to our economy as a whole would make this "recession" persists or worsen for a decades, until it's modified again.

Certain congressional districts who are represented by very powerful members are deemed "to important" to not have a major airline hub. This, as well as other things, will keep the RLA from changing. A managed liquidation of AMR will help the industry as a whole, but it will decimate those employees financially. I kind of see Pan Am, the airline, and maybe TWA of the Icahn days being repeated here.

 

[CRAWDADDY]

Ill add that the reason for such high payrates in the 60s was due to the pilot pay formula established in arbitration back in the 40s. As aircraft productivity went up, so did the pilots pay rate. When larger faster jets were introduced, naturally the pay sky rocketed.

Pretty well explained in Flying the Line Vol 1

 

[Lear70]

And then, if bankruptcy were allowed to work properly and weed out the companies that couldn't run an airline properly, we'd STILL be out of work.

It all works around the same premise: to many seats in the air at too cheap a price, brought on by the fact that there's no accountability for bad business decisions and labor is the only party that has to pay the consequence.