Solutions? Im not a magician
Firehoser-
I read your posts. Excellent job in pointing out the problem....
What solutions do you offer?
As I see it two things are going to have to happen to change the paradigm anytime soon and pilot unions will have little or no part of it. First, view this presentation by MIT on airline profit cycles to verify my points.
http://web.mit.edu/airlines/www/board-meetings/meeting-nov-2004/ProfitCycles-Jiang.pdf
First notice the average profit margins over the last twenty years - they average about 5%. This is equivalent to having only $250 dollars left over each month from a $5000 take home pay. When you are in this extreme financial condition ANY loss of business can transform your figures from black to red. Thus the difficulty of the major airlines to raise prices: If one doesn't go along and the others see even 2% of their ridership moving to other airlines, the loss is critical - it probably is equivalent to all of the profit they are making.
Labor, blithely negotiating ever higher compensation packages - even at modest increases will eat up this narrow profit margin - eventually experiencing the cycles I illustrated all over again. Thus something has to happen to improve pricing leverage on one end and thus profitability, or to change the dynamics of supply and demand in terms of pilots at the other end.
Capacity has to be reduced in the system in order to let the market forces of supply and demand allow ticket price increases. That will only occur in the near future when a major airline is liquidated - some analysts are forecasting this very thing as the next down cycle will be very huge as you can see from the MIT presentation. Ironically, it will likely to be labor costs that will put that airline under as I don't see (from the posts on these boards) either ALPA National nor the rank and file pilots understanding market forces well enough to understand whether their labor policies will be sustainable. History suggests that it will repeat itself and the pilots at one carrier will unfortunately gamble and lose. It seems we don't learn from history.
The other end of the equation is the pilot supply side. Already we are seeing some reduction in supply in real terms - one would think that this would drive salaries up and it will likely do so eventually. However, major airlines don't care about the ability of their regional partners to attract quality pilots and therefore will not be willing to pay the fees necessary for the regionals to attract those pilots with increased pay.
Thus it is entirely possible that those regionals who agree to compensation increases in order to attract pilots will ultimately lose in the competition for major airline flying as they face either bankruptcy or the dropping of flying due to the requirement to demand higher fees (see Express Jet)- Catch 22.
So the only idea I have at this moment is to assist the company to be more efficient, more cost conscious, and deliver more customer service. This will gain market share at lower cost figures, thus increasing profitability thus making more money available for compensation increases. Profit sharing is a great incentive to do this and allows the company to "increase or shrink" total compensation as market forces dictate.
The real question is: Will labor (ne: individual rank and file pilots) make the effort to understand the market forces in play and understand how their negotiation desires "fit" within those market forces in terms of sustainabilty? Judging from (not the ignorance displayed in these forums but...) the
unwilligness of many pilots to educate themselves on these issues and thus reduce their ignorance, I am not optimistic. It is almost if many pilots are frightened that if they educate themselves in these areas, their cherished beliefs, germinated, husbanded, and sustained by their single source of information , will be undermined.
Until individual rank and file pilots do so, they will continue to allow themselves to be manipulated by both union and management alike. They will continue to operate and make decisions in ignorance, either losing what they could have won in negotiations or ultimately pricing themselves out of the market.