If you could be the CEO, what would you do?

[rvsm410]

below find a reprint from the other "general" forum in regard to the problems the airlines are faced with.....
I thought this might stir some positive comments, maybe some flamming, but lets try to make this civil....: JMHO here.

Col Bill USAF (ret)


You know many other industries have alliances with each other and still compete at the same time. Oil companies, Rx, many more...none of them are loosing money...

People will always fly, some will balk at increase fares...so.....we all balk at higher gas prices, taxes, a loaf of bread and a gallon of milk....so do we stop buying them because they went up on price NO......

The same applies for ALL the airlines....RAISE THE DARN FARES TO A PROFIETABLE LEVEL, The airlines need to form there own alliance to protect the fares....so what if the LCC don’t join...many people are sick and tried of the routine they must endure at a SWA or Airtran gate to get somewhere......If the airlines in this alliance were to go on a 1 month shut down, the LCCs could not carry all of them, the lines and over bookings would be terrible and they would plead for someone to do something to get more people back in the air...

AIR TRAVELERS NEED A WAKE-UP CALL..... EVERYONE RAISE THE PRICES

How is that this industry has not followed suit with everything else we buy everyday??? its got to stop, NOW stop taking form the employees, make the people pay the tab as they do everywhere else...

Auto gas prices went through the roof this summer, we complained and then went out and filled up the SUV so we could continue our life style.....





Comment by : 414flyer



Your advice would also be illegal too. If the airlines got together to coordinate raising of prices, government would also come down on them pretty hard and rightfully so. Price fixing and monopolies are not compatible with free market and competion.

I am sure if GM/Ford/Chrysler all announced one day there were acting in unison and upping the price of autos together, by a fixed amount, there would be a big outcry, even on here.

While thinking if the airlines just raised prices together would solve problems, and while it may in the short term, it still would not be a long term solution and would only put off the problems they are facing.

While I certainly do not want to see the legacy carriers go away, I also would not support a price cartel to prop them up either.

That would be a very bad road to go down too. can you imagine what would happen after that? Every company out there having problems would demand the same thing.



Reply by: RVSM410



414, please look at what you have said and then visit the local new car dealerships...."you make my point exactly"....in 1985 a new F-150 cost around $16,000 to buy new....loaded I might add, I bought one....I'm getting read to buy an new one and the same truck from the same plant is now $27,500.....



Look at all the new car types and its the same thing...they all have KEPT UP WITH INFLATION while competing on the open market......FURTHER WE ALL HAVE CONTINUIED TO BUY THEM BY THE BOAT LOADS!! Again you make my Original point very simple to see....all those assembly line workers are making darn good money......so should everyone in this industry!



I understand you cant set up an Monopoly, that by definition is illegal...but were not talking about one airline, I'm talking about EVERYONE, LEGACY, LCC, REGIONAL, no matter....



If you want to fly from A to B then it should cost a person about the same on anyone for the same level of service i.e. coach, biz or first class.....other services could be added as well for those that want more, or services removed for those that want less, but the base ticket from A to B costs this much..Period...just like that base model F-150....go to any ford dealer and you will pay about the same amount for that Base Model....



What’s the downside: will lets see, if legacy carriers continue to hemorrhage money to the point were they go out of business, don’t you think Uncle Sammy is going to step in and do something???

Of course Sammy already has, the ATSB was the first part of this action....So if the airlines WERE to form an Alliance, what would Uncle Sammy have to say in light of many bankruptcy proceedings to come? You have to operate at a loss, your shareholders are not entitled to make money, and the American people have a right to pay Wal-Mart fares???? NO, that argument would not hold water...but that is what is going on at the mainlines today....



Why are they letting this happen to them??? Competition from the LCC's....lets look at that one....the LCC's carried 28% of the total available seats last month...if the other legacy carriers or 72% were to stop flying next month...how would that 72% off travelers get to where they are going? the LCC's could not possibly handle it all, the public would be in total turmoil, the economy would go in the crapper. Uncle Sammy would have to step in... Like British Airways, or Amtrak, etc…



Would the LCC's like it, for the short term maybe, but if you stop and think about it...it would be a disaster...the LCC bean counters have projected the companies cost for many years in advance..they know that they WILL NOT BE AS COMPETITIVE in the FUTURE as they are now, their over-head will rise rapidly as the work force continues to gain seniority, the leased equipment will expire, or cost more...the deals for Airport terminal space will expire and get more expensive...etc...They will in effect become the Legacy carriers of the future WITH THE SAME PROBLEMS today’s carriers face.....the LCC's have to come up with a different plan for those days ahead, a plan that is much different than has ever been done before or they are in trouble as well...



IMHO, I believe all the CEO’s and BOD’s must form an alliance the industry has never seen before, one that keeps everyone in the black, and keeps prices in line with NORMAL inflation….every employee has the right to make a decent living, and have promises kept by their companies…it has to start with charging enough for the services you provide……



Boy if I were a CEO for a while….Hmmmmmm…what would you do???

 

[rvsm410]

If you were a CEO what would you do???

Come on General Lee, Tony C...someone here must have some idea's..something different....if, I'm all wet please explain why you think so???? I'm not a Harvard PHD, but a dratically different approach needs to be considered....

 

[Draginass]

1. Ensure that I pay myself a very high package of compensation. Structure it so that only a fraction of it is known.
2. Setup a BK protected pension fund.
3. Go to one of those special schools for CEO that show you how to lie very sincerely and convincingly.
4. Feign the appearance of caring about employees, but at the same time squeeze every little bit of concession I can while the industry is still in the dumper. Make sure that those concessions are in effect through the recovery and into the start of the next downturn.
5. Lower 100 seat payrates equal to or lower than JetBlue . . . . my new hero.

Oh, wait . . . . they're already doing that!!

 

[rvsm410]

Good, nice idea...already used...next....

Great, just another ordinary normal CEO.....how about some sencerity..huh...doesn't anyone have anything to say here but negitive nonproductive arguement??? is there not a a single positive idea out there...?
You're telling me there is not a single thought on real fixes to this problem?

Come on now, you people have been in the business long enough to look at the big picture.... if all there is out here in aviation land are the expressions etched in stone by draginass....then there really is no hope for this industry...your all dead...find another job, start looking right now, it's only a matter of time....

shame on those that can only feel contempt.....grow a pair and come up with some ideas.....I doubt a single person will have the perfect solution here, but it's possible for its to evolve from the group....don't be all Pathetic, and give up....

Get envolved, present some ideas, some constructive thoughts...Or Lord help us all.

 

[TonyC]

I'll bite:


Comparing a new car as a product in the free market with a seat mile as a product has little validity. There are numerous market pressures that just simply do not equate.

The Pick'em-Up truck can sit on the lot until a price is agreed upon. The seat mile leaves the gate thousands of times a day, sold or not.

Airlines will ALWAYS only be able to charge prices that the market will bear. An airline cannot afford to maintain it's price of $1.00 per-whatever when there are three other airlines willing to sell the same whatever for 99 cents. It's not like they can leave it sitting on the lot until a generous soul willing to pay a whole buck waltzes along.

Colluding on pricing schemes is illegal. We'd sooner see all the pilots in the US joining together to demand a unified wage scheme. Don't hold your breath.

Airline alliance? All wet.

Shut down for a month to prove a point? You must pray they don't choose you for the random drug screening anytime soon.




If I were the CEO, I'd immediately raise all fares by 20%, and then offer up to a 25% discount to all passengers who could pass a simple test. Once in the boarding area, each passenger would be asked to compose a 100-word essay on the topic of their choice. Essays would be graded for penmanship, spelling, and grammar, according to the MLA Handbook or some other well-recognized standard (APA, etc.) Essays scoring 98% or above receive the full discount, scores down to 90% receive a prorated discount, below 90% pay full-fare.

 

[rvsm410]

Tony..good obvious points...but if USAir and UAL go under in the next 12 months...Who then will be able to handel all those customers? and when would they be able to find a open seat in the future?? 2006 maybe....and how long would these lines be?

In the cargo business, what would happen if DHL or some other airline decided to cut shipping costs like the LCC's are doing? Would the same problems exist?

SO if my idea would not work do you think the GOV will have to step in? Would government regulation be a bad thing again? At least to address the current bleeding?

Good stuff, hope more interject......

 

[Publishers]

points

Let me see if I can answer a couple of points.

Anti Trust law-- price fixing and collusion -take your pick

DHL and some of the others cut the price for the product just like the example mentioned all the time.

Rergulation not going to happen. It is the antithisis of a free market economy.

In every previous case like we have now, new airlines have been formed to take advantage of both the availability of cheap aircraft and available employees,, not only pilots.

When things are like they are now, cost cutting is not alone sufficient, you must find a way to sell your way out. If I were a CEO trying ot appease everyone today, I would retire.

 

[rvsm410]

Let me see if I can answer a couple of points.

Anti Trust law-- price fixing and collusion -take your pick

DHL and some of the others cut the price for the product just like the example mentioned all the time.

Rergulation not going to happen. It is the antithisis of a free market economy.

In every previous case like we have now, new airlines have been formed to take advantage of both the availability of cheap aircraft and available employees,, not only pilots.

When things are like they are now, cost cutting is not alone sufficient, you must find a way to sell your way out. If I were a CEO trying ot appease everyone today, I would retire.

Just so I understand...When the legacy carriers finish dying off here in a next 12 to 48 months....the stockholders loose all there money, tens of thousands are now out of work, out of insurance, bankrupt, the flying public will 1) not be able to find an empty seat to buy for the next 6 months and 2) when they do find a seat the price will be much higher than they are now....supply and demand..right? I still fail to see how this is better for anyone? I'm not talking about raising prices unfairly or to gouge people as if in a national crisis..The basic costs to operate aircraft are pretty will understood, leases, labor etc...why could'nt these known costs be computed and a formula used like (just as an example) block hour cost be used as the basis then add the profit? simplistic I know, I'm just trying to start somewhere...even if the government was to audit and approve the rate hike, like the utlity companies go through to raise their rates...would'nt this be better than it is now?


...if this were to happen, the GOV would be forced to step in to protect air commerce and the economy...is the result not the same for the public, but the economy is now much worse?

Cheaper aircraft, cheaper labor...where is this business headed? will the future employees be paid by WalMart, will there be anyone willing to work for an airline if they have nothing to offer?

 

[jetexas]

As a CEO, my first priority would be the morale and welfare of those below me. Afterall, what good is a company without its people?

 

[Publishers]

Business

It is hard in the short space that we have here to really give complete answers or to address all the aspects of this industry. On the other hand, deregulation was in part accomplished to get the business competitive as has been the case.

I remember going to Chicago from Columbus Ohio and the coach fare discounted was like $426 RT in the seventies. This for a 727 hour flight.

Today, passengers fly at very competitive rates, do not have trouble finding seats, and are generally pleased with the system --terrorism not included.

The demise of the legacy carriers, particularly two would be painful but in the end, supply would fill in. I do not think this will happen, however, the demise of one (US) is a distinct possibility.

The fact is that there are consequences when you do not control your costs. The same people that were cheering at the last contract achieved never thought that they were killing themselves with costs. One UAL pilot even asked me if the company could afford such a lucrative deal. Well maybe when all was going really well. The trouble is that things do not always go really well. Over the years, UAL hocked their future and one day, someone came to collect.

You now propose that the fares be raised so you can up the bar. This morning I talked to an Eastern pilot who went out and did not scab. Not only did he not scab, he never ever came close again to the income level he had at Eastern.

The thing is that this is a business and needs to be looked at like one.

 

[rvsm410]

Pub, would you not agree

That the current fares are too low, especially in light of your comment from the 70's? I just see something wrong with todays prices...no business stays in business unless they make money..sure they cut costs, but they also raise prices...auto gas, bread, milk, everything has gone up...so why cant this industry do the same? And I don mean a $476 ticket for an hour 72 ride...just something better than coast to coast for $99 bucks...

I however do understand what you have said, but remember were supposed to be thinking "outside" of the box on this thread....

 

[Draginass]

The problem is two-fold . . . . government and an antiquated business model.

Government:
1. All security costs should be borne by the government.
2. Profiling should be openly legal and routinely done.
3. The airline industry is NOT "DEREGULATED". It is probably the most regulated industry in the country.
4. Do away with the Railroad Labor Act, PEBs, etc. These provide unnecssary interference in the pursuit of free trade.
5. Have the FAA provide much greater oversight of maintenance facilities. REQUIRE aircraft maintenance work to be done by licensed mechanics instead of unlicensed immigrants at $7 an hour. Either that or just go to a scheme where only 1 pilot in the aircraft has to have a license, since he's working under the "supervision" of a licensed pilot.
6. Annually, make airlines competitively bid for every TO and landing slot at every airport. Highest bid wins. Same for gates and airport floor space.
7. Stop subsidizing air service to small towns that cannot economically support air traffic on its own.

Corporate:
1. Sell off regional feeders.
2. Stop fee-for-departure schemes that guarantee commuter airlines profits at the expense of mainline.
3. Get rid of airplanes under 100 seats.
4. Stop service to small markets that cannot support several 100 seat flights a day.
5. Terminate all pension schemes, worker and management.
6. Simplify pricing. Price by leg, not trip.
7. Pay pilots flat rate pay regardless of aircraft. Minimize training costs by locking in aircraft for 5 years. Regular bids for bases.
8. Institute preferential monthly bidding.
9. Discourage flight attendants from trying to make being a stewardess a career. Singapore Air does have have crusty old grandma's as flight attendants and their service is superb.
10. Stop being cheap with snacks and beverages on airplanes. Lower first class fares to reasonable levels. If you want a shock, go on a major airline web site and see what a major US city to London ticket costs in first class. I'll bet it's about 7 times what you thought.


That's what I can think of off the top of my head. Fire away.

 

[TonyC]

4. Do away with the Railroad (sic) Labor Act, PEBs, etc.

3. Get rid of airplanes under 100 seats.

4. Stop service to small markets that cannot support several 100 seat flights a day.

5. Terminate all pension schemes, worker and management.

7. Pay pilots flat rate pay regardless of aircraft. Minimize training costs by locking in aircraft for 5 years. Regular bids for bases.

8. Institute preferential monthly bidding.

While you're at it, start including Pilot's Licenses in every third bag of Cracker Jacks. Anyone who can afford three bags deserves to fly jets.


(You don't know how much it hurt to type "bag" of Cracker Jacks instead of "box." )

 

[Draginass]

They're in bags now?

Given the number of pilots that are perfectly willing to work for $30k a year flying jets, I think pilot's licenses are already in those bags of cracker jacks.

 

[vetteracer]

Hire some 22-year-old guys from MIT kick them in a room and have an operating model developed.

Hire pilots that are non-outside union. Form an internal form of representation from all level, from new hires to F/A’s and mechanics to old crusty captains. The panel would change yearly and service would be mandatory. Everyone gets a chance. You would fly the line and get paid to attend meetings and bring up issues to management. The next meeting ALL of those issues would be dealt with.

Keep this board up to date on business plans and concerns and get input on expansion and expenditures.

Hire the best people I could at the best price we could afford. The company has to make money to grow, and when the company grows, so does pay and seniority as new hires come on board.

In some form I would make my company employee owned. Plain and simple, we make money, you make more money. The company lays out an HONEST operating cost for the year. All profits made after that point are spilt 50-50 with the company and the employees. Then pro-rated based on time in service.

Bring back the glamour in air travel. Comfortable seating free soda, snacks, etc. Make such a good experience that customers look forward to the travel as much as the destination. Find young enthusiastic flight attendants. Make a family out of your airline.

 

[Publishers]

ideas

Great ideas but what does it do for the consumer. Airline seats are a commodity and once the plane leaves the gate, they are obsolete.

All of these ideas are great for you but which one is great for the paying public. That is the nature of a business. It is producing a product that the consumer wants and is willing to pay for which you can produce at a profit. That simple!

We have an idea what they are willing to pay, the question is what does it take to produce the product.

 

[Draginass]

That's precisely the problem. There is a gross oversupply of seats, I'd say about 20-25% oversupply. Airline seats are completely perishable, but at the same time very expensive. The airline industry simply cannot adjust to wild swings in demand as has happened over the last couple of years. The government hasn't a clue on how to regulate the industry . . . and make no mistake about it, it IS regulated. The government also has no idea of what kind of national transportation system it wants to have, except that the tickets should be below bus travel. We now have a situation where capital is so cheap and easy and Airbus will sell airplanes for next to nothing, that new startups can come in every few years with bottom-barrel compensation employees. If we want a national system that only cherry picked cities, then JB is the way to go. But that's not really want the public wants. They want service to small cities and easy connections to anywhere . . . only they don't want to pay for an experienced and mature work force to go with it. Why not just turn it over to the Chinese. They can buy their tickets at Walmart right next to the 150,000 other Chinese imports that they sell.

 

[rvsm410]

Wal-Mart ticket Kiosk...On My Gosh!!

Draginass, you mentioned the Walmart angle....you know it would now really surprise me to see something like this in the future....how horrible......Lts go to Wally world get some shopping done and buy our tickets to Vegas...we have wally bucks, we can fly for FREE!!

At some point, a company has got to ask is it worth staying in business???....the stock holders have got to be running away from this industry....I dont own a share of any airline stock....better to play Black-jack at least you can have some fun....

 

[Jungle_Jet]

The problem is two-fold . . . . government and an antiquated business model.

Government:
1. All security costs should be borne by the government.
2. Profiling should be openly legal and routinely done.
3. The airline industry is NOT "DEREGULATED". It is probably the most regulated industry in the country.
4. Do away with the Railroad Labor Act, PEBs, etc. These provide unnecssary interference in the pursuit of free trade.
5. Have the FAA provide much greater oversight of maintenance facilities. REQUIRE aircraft maintenance work to be done by licensed mechanics instead of unlicensed immigrants at $7 an hour. Either that or just go to a scheme where only 1 pilot in the aircraft has to have a license, since he's working under the "supervision" of a licensed pilot.
6. Annually, make airlines competitively bid for every TO and landing slot at every airport. Highest bid wins. Same for gates and airport floor space.
7. Stop subsidizing air service to small towns that cannot economically support air traffic on its own.

Corporate:
1. Sell off regional feeders.
2. Stop fee-for-departure schemes that guarantee commuter airlines profits at the expense of mainline.
3. Get rid of airplanes under 100 seats.
4. Stop service to small markets that cannot support several 100 seat flights a day.
5. Terminate all pension schemes, worker and management.
6. Simplify pricing. Price by leg, not trip.
7. Pay pilots flat rate pay regardless of aircraft. Minimize training costs by locking in aircraft for 5 years. Regular bids for bases.
8. Institute preferential monthly bidding.
9. Discourage flight attendants from trying to make being a stewardess a career. Singapore Air does have have crusty old grandma's as flight attendants and their service is superb.
10. Stop being cheap with snacks and beverages on airplanes. Lower first class fares to reasonable levels. If you want a shock, go on a major airline web site and see what a major US city to London ticket costs in first class. I'll bet it's about 7 times what you thought.


That's what I can think of off the top of my head. Fire away.

Man, I can't believe you didn't get completely pounded on this one. Mention free market capitalism and individuality to a group of pilots!? Wow, oyu skated that one.

Anyway:

1) Sounds good, but who is the government? The money isn't free, so why should non-flyers bear the cost of security for fliers? User fees are fine, but get TSA out of it.

2) I agree, but keep in mind that these arrangements raised the regionals out of the puddle jumper status they previously occupied. Without such arrangements financing for those fancy new Brazilian baby jets is too hard to get.

3) Why?

4) Again, why? I get the feeling (not slamming you) that you have a regional bias.

5) Pretty much agree, I think I am responsible for my retirement, not my employer (who, come to think about it is me) or the government.

6) Agree as well, isn't this what Neeleman and his boys are doing with JB?

 

[ThomasR]

CEO and Cost of Doing Business

Is it true that some Delta pilots make $600,000 a year?