Is "Excess Capacity" really the problem

[shon7]

Have been reading and hearing about UAL and maybe ( a big maybe) a Chapter 7 Filing. A lot of the consultants/analysts argue that the problem is Excess Capacity and one airline liquidating could possibly help the industry as a whole.

As pilots do you all share the same views? In case of UAL, as pointed before, there were just too many management screwups - the whole AVOLAR thing, the we won't hire new pilots, two Asian routes that were started and closed etc.
But all the other airlines seem to be facing the same problems.

So to get to my original question - from a pilots perspective what really is the root of the problem?

 

[race#53]

In all other unionized industries, the members set their labor rates and the consumers decide if they want to use their labor. that means there maybe lots of union members sitting in their halls waiting for a company to hire them but their pay is good when they do find work.
a similar thing is happening to the airline industry today as there are not enough people willing to pay high fares to justify many carriers costs. However, the airlines cannot just let the planes sit until there are enough high paying passengers to go on a trip so they have to adjust to demand. In addition the pilots are stuck with a seniority system that works great when things are good but in a downturn they start at the bottom of the pay scale at the new airline.
Now think about how things would change if every aircraft operator had to go to one union and pay the same rate for any pilot on a 737, etc.
This is where i think ALPA and others have missed the boat and i can not understand why pilot unions and their members have allowed it.
i would love to see someone try to hire a union electrician that just got laid off and tell him he has start at apprentice pay since he is the new guy!!!

 

[tranceport]

excess capacity seems to be the excuse du jour.....for now

remember how it was all labor's fault for a few months?

now the reporters have to start changing their tune in order to avoid sounding like a broken record.

IMO, it's:
-business traveler is not paying the premiums nor may ever
-war on tourism/fear
-the economy is in a slump. 45% loss in S+P in last two years

Right now at two majors, about 30% of the major airline pilots (u and ual) have taken 30%+ pay cuts and either have lost part of their pensions to the pbgc or are close to it. amr is about 90 days from bk filing and mgmt has already asked for about the same in cuts.

Fast forward to the summer. Let's say GW's war is over and Sadam is on permanent vacation. Barring another catastrophic/terroris event, what will have happened is more than half the major airline worker bees have taken 25, 30% pay cuts, loss of benefits, become more productive and low cost divisions will have sprung up within the established carriers. 10-20%+ capacity will have been parked....ALL the while Southwest, Jet Blue, Airtran, and some others including RJ's will be / have ADDED capacity. Right now the LCC's represent about 25% of flying.....that number will grow not shrink.

What we are seeing is the entrenched, established carriers not being able to sustain prolonged losses during a time of incredible revenue loss, traffic drop off, regulatory and security restrictions as well as fees added. Additionally, Crude oil is almost 50% more expensive today than it was last year. I think it's at about $38 bucks a barrel!!! Watch out for those companies that don't hedge.

ANY labor intensive business which sees a 20, 30% rise in costs overnite WITHOUT being able to raise revenue will suffer. As amatter of fact, Southwest has indicated that depending on how the 'war' goes, this year may be close to break even. ATA had a loss last year...so iow, even the LCC are feeling the revenue slide.

Let's say the price of a sheet of plywood went up 50%....what do u think that would do to the housing boom in this country?

keep your head up and a dollar in yur pocket. Like a colleague keeps telling me: when it turns, it's gonna turn. The swings up and down in the already volatile airline industry has just been made worse by world tensions and the economy.......it may take a couple of years of right sizing but I think our government can't stand by the way side while the tourism and transportation industry go down the sh*tter. ....on the other hand, it probably will at the rate this is going.

In the meantime, stay current and love your family and friends.