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Re-regulation

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You gotta keep the government out of this. When was the last time you heard of the government getting involved and improving things?
TSA is a prime example. Let the market do its job and let the chips fall where they may.
 
Lear70 said:
Oh yeah, it's working great.

" tens of thousands of employees are without jobs, retirement benefits, or medical coverage well before Social Security and Medicare cut in, and what was that about capitalism at its finest? Only the fittest survive?"




I'll bet Alfred Kahn is still getting HIS retirement ckecks from Cornell University!
 
I will still get 70 percent of my United pension. Hopefully, when I retire, this will be enough to fill my gas tank.
 
Interesting you should say that. University professors are in something called TIAA-CREF. It's not a defined benefit program---it's a defined contribution program. What professors get after they retire depends on what they put in and how well TIAA-CREF invested the money, and everything is backed by real assets. In other words, it's basically a 401(k). TIAA-CREF ("Teachers") is one of the biggest pension funds out there.

So Alfred Kahn isn't getting any pension checks from Cornell.

Further, ALPA could have set stuff up like this if they'd wanted to. But N-O-O-O-O... they wanted the "certainty" of a defined benefit program.

By the way, it *is* possible to have an iron-clad defined benefit program, but it's very very expensive. Basically, pension contributions have to be used to buy annuities from very highly-rated insurance companies.



castle bravo said:
Lear70 said:
Oh yeah, it's working great.

" tens of thousands of employees are without jobs, retirement benefits, or medical coverage well before Social Security and Medicare cut in, and what was that about capitalism at its finest? Only the fittest survive?"




I'll bet Alfred Kahn is still getting HIS retirement ckecks from Cornell University!
 
Here is a great website: www.braniffpages.com

Braniff CEO Harding Lawrence thought de-regulation would fail. He believed that Braniff needed to agressively grow when de-regulation started because it would quickly fail and that any new route launched during that time would be allowed to remain part of the airlines' system. Braniff launched [gambled] over 100 new routes around the world when de-regulation started. Braniff failed, but Harding Lawrence may still be right, just off by 20+ years.

Here is where I'm coming from:

Continuing with Braniff: Braniff didn't want to go to DFW. They considered Love their home no less than SWA does now. Moving to DFW disturded their operations and was expensive. In doing so they relented market share to SWA, but not without a fight. Braniff matched each route SWA flew out of Love in a very expensive fight. SWA did not run Braniff out of Love, far from it. Braniff was forced to cease Love Field operations by a court order! So in a new "de-regulated" environment, Braniff was very much "regulated" out of Love Field. SWA was very much "regulated" into a durable advantage in a strategic market. De-regulation did not account for the SWA special interest. Free market? My a$$!

I wonder if Alfred Kahn's research accounted for this possibility:

The SWA "phenomenon" makes money, but does not throw off a lot of money. They only fly one model of airplane, and if they are the future then I guess we won't need to engineer/design any new airplanes. They aren't going to support any new airports or terminals that cost them any money, so forget about that. And they aren't going to do any complicated flying that perserves our air transportation system. For instance: If SWA is able to erode Alaska's route system/profit base to the point that they can no longer do the important flying in the Alaskan wilderness that service will be lost forever. SWA is not going to do it. Project that example onto the whole country and you can see the long term effect of de-regulation.

Is this business de-regulated? Not truly. DOJ has to intervene in anything majors do.

Is what we call de-regulation going to advance our standard of living, build up the middle class in earnest? Perhaps, it seems so at this moment. Long term? Maybe not. Look over the website at the top of the page, and then try to find anything similiar about SWA. Try to use that sort of reasoning and see where you think the US air transportation system is headed. In 20 years we might end up with the most primitive and limited transportation system in the world.
 
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I think what you are missing is that if the bankruptcy laws were not as they were and were not airlines such cash cows, the impact of dereguation would have taken about 10 to 15 years.

The inefficiency that airlines operated under for so long was going to take a long time to change and in some cases, there was no hope. Braniff took one approach, American another. \

If a few airlines had been allowed to fail outright, the others would have remained stronger but that did not happen. Eastern, Pan American, Braniff, National, etc etc are names of the past.

It is just something that will take longer but the short version is that if you decided you wanted to start an airline on the day of deregulation, you were in better shape than the companies already with airlines.
 
JD2003 said:
I will still get 70 percent of my United pension. Hopefully, when I retire, this will be enough to fill my gas tank.
Ummm... that's the entire point. If the PBGC goes belly-up, the Federal Government will HAVE to step in.

IF the government doesn't step in and bail out the PBGC you WON'T get 70% of your United pension, you won't even get 20% of your United pension, you'll get a big giant goose-egg.

Incidentally, how do you figure you're getting 70% of what your pension would have been? The cap on PBGC pensions is usually around $40,000 a year - my dad should have made around $120,000 a year in retirement from US Airways and he's getting the max from the PBGC which is $40,000 a year or approximately 33%.
 
Lear70 said:
Ummm... that's the entire point. If the PBGC goes belly-up, the Federal Government will HAVE to step in.

IF the government doesn't step in and bail out the PBGC you WON'T get 70% of your United pension, you won't even get 20% of your United pension, you'll get a big giant goose-egg.

Incidentally, how do you figure you're getting 70% of what your pension would have been? The cap on PBGC pensions is usually around $40,000 a year - my dad should have made around $120,000 a year in retirement from US Airways and he's getting the max from the PBGC which is $40,000 a year or approximately 33%.

PBGC max 46,000. Average time served will get around 28,000.
 
Publishers said:
It is just something that will take longer but the short version is that if you decided you wanted to start an airline on the day of deregulation, you were in better shape than the companies already with airlines.

Would it also be correect to say that if you had an airline you could take to BK before the Oct.17th deadline, you have a permanent advantage over one who could not? There will be a pronounced before and after on this date.
 
I think that is correct although might take some more anaylsis. The earlier point is that you could look at the rules that would be in place and gear yourself to that environment. You could be a niche player and go with a new fleet that fit that structure.

Your labor, even if it was union, was not controlled by a senior bunch that covetted their way. Bankruptcy is not as attractive no matter under what rules but there are things that need to be dealt with.
 

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