Regulation or Deregulation? Interesting article.

[vc10]

From a consumer point of view if you can fly across country for less than the price of a Greyhound ticket there is no problem at all. None. Zippo. In fact, it's wonderful.

Airlines do not exist for the purpose of providing anyone with stable employment opportunities.

You may argue that ultimately the situation will become so bad that no one will be willing to work for the airlines, and this will cause the airline industry big problems. If and when we ever get to that situation, we'll talk. Until then...
From a consumer standpoint there's no argument at all for reregulation. The situation for the average passenger has never been better than it is today. You've never been able to fly for so little.

Re-regulating is necessary because of the big picture. Sure you can run $49 tickets at a loss and kill off the majors. Now what? The LCC's have to purchase new ac that can fill in the long haul and international flying that is now vacant. Meanwhile your LCC costs have now gone up to the levels of the major you just killed. this is due to seniority and the new AC and all the associated costs of new airports, especially international, ect. So next thing you know you have Joes airlines start up and start killing off the former LCC by undercutting their fares by offering $49 tickets. Everybody loses, no airline employee will be able to sustain a career of more than 10 years, no benefits, retirement, you get the point. People need to understand how much it actually costs to move an airplane, we all understand this. If you can fly across the country for less than a grey hound bus there is a problem.

So for those that keep thinking "my airline is the greatest ever because we make money" just wait untill the growth and seniority take their toll.

 

[FR8mastr]

It's not just providing stable employment for airline employees, that is just our problem, (that is the hundreds of thousands of people who have the misfortune of working in the airline industry now). The point I was trying to make is that this whole situation is not sustainable. The airlines cant continue to lose millions of dollars so that joe consumer can be happy with his give away tickets. Yes I know two airlines managed to make some money, refer to my previous post. I dont believe that will continue, so if the airlines dont manage to find away to charge a reasonable fare ($49 isnt it) they will continue in this cycle of huge losses.

 

[Publishers]

This conversation is drifting from the reality stated earlier. Deregulation was implemented for the consumer good, not the airline. Business and business management is about adapting your company to the market and the rules that you are faced with.

Yes, it is not easy and events out of the blue like the 9/11 attacks can be a totally consuming event that changes everything overnight.

Figuring all this out is why management gets the bucks they do.

Reregulation is not going to happen because it was not a consumer friendly environment. A CMH to ORD ticket was $450 for an hour flight in the 70's. I went to San Diego for less from Miami in 2004, a 4-5 hour flight.

The sad fact is that all the service is the same, well maybe not, the cheaper LCC's give better service in a more pleasant manner.

Regulation or deregulation are not the point. They did not kill the industry, it was suicide.

 

[Sol Rosenberg]

Re-regulating is necessary because of the big picture. People need to understand how much it actually costs to move an airplane, we all understand this. If you can fly across the country for less than a grey hound bus there is a problem.

Good post, this is my point exactly.

But people don't want doodads and giveaways. They want cheap tickets. So replacing cheap tickets with doodads does not benefit (most) customers at all.

Ok, maybe you're right regarding doodads, I'm just remembering the nostalga of the good old days in airline travel, when people for the most part dressed up to fly and thought it was not just a way to get from point a to point b, but was an experience within itself. I guess it will never be that way again.
The fact that the only thing that passengers want are cheap tickets is a major problem. Passengers will continue to expect cheap tickets, as long as the LCC's keep offering them. Where do you draw the line? How long can any airline last when they offer a $49 dollar seat on an aircraft, when there is no way a profit can be made with a fare that low. I find it funny to read posts by airline pilots who think the whole $49 greyhound ticket price is the best thing in the world, and then they're the first ones to bitchh about their salary being so low. How the heck do you figure your airline can pay you a decent salary if they don't charge enough for a ticket to turn a profit? This industry is so cheapened now, that you see more computerized ticket counter stations than actual human ticket agents. I wouldn't be suprised if they start to charge passengers money to check regular luggage. What's next?...completely eliminating all food and beverage service onboard and replacing the duties of a flight attendant with a television monitor to give passenger instructions in case of an emergency? Maybe if we do all that, they can start selling tickets for $25! No wait, then offer a sweet PFT program for newhire fo's. That way, the airline will only have to pay the captain.

 

[V2+10]

I'm just remembering the nostalga of the good old days in airline travel, when people for the most part dressed up to fly and thought it was not just a way to get from point a to point b, but was an experience within itself. I guess it will never be that way again.

I hate to tell you but it's not just the airlines. Take a look at a photo from a baseball game, or any sporting event, taken in the 1950's or 60's and you will see fans dressed in coats and ties (hats too). Everyday citizens walking down the street were often dressed up. For better or worse those days are gone forever. The biggest difference however is that the price to see a sporting event has gone up while the price of air travel has gone down. Of course I don't make $6 million a year either.

V2

 

[Lear70]

This conversation is drifting from the reality stated earlier. Deregulation was implemented for the consumer good, not the airline. Business and business management is about adapting your company to the market and the rules that you are faced with.

You're absolutely right, and when a business doesn't adapt as you stated, they fail; except the government won't let them, which is the root of the problem.

Figuring all this out is why management gets the bucks they do.

Ummm, last I checked airline management (with a few exceptions) WASN'T figuring out how to make the airline run profitably. Sustained losses measured in the BILLIONS over the last 4 decades is not my idea of "figuring this out". If you mean that they have "figured out how to get the U.S. government to keep giving free handouts at the expense of the taxpayer", then I'd agree with you.

Reregulation is not going to happen because it was not a consumer friendly environment.

And using taxpayer dollars to continually prop-up MULTIPLE failing airlines IS "consumer-friendly"? You know better, and so do the bureaucrats in D.C., but their constituents keep lining their pockets and the insanity continues. I wonder if a study has been done since 9/11 that shows how much money the average taxpayer has been sending to the airlines in forms of government bailouts.

The sad fact is that all the service is the same, well maybe not, the cheaper LCC's give better service in a more pleasant manner.

That's the first thing I've wholeheartedly agreed with you on that I can recall.

Regulation or deregulation are not the point. They did not kill the industry, it was suicide.

Yes, they ARE the point of this thread; while I agree with you that regulation will not work (Pandora's box can't be closed), you MUST agree that this cycle can't possibly continue without some kind of adjustment, and it appears that neither US nor UAL are going T.U. anytime soon which means no "internal adjustment", so where is it going to come from?

Personally, I believe strongly that the U.S. Government should enact legislation that requires an airline to price their product AT LEAST at their break-even point. While not directly controlling prices, it would at least minimize the government cheese that's been flowing into this industry to maintain the status quo.

 

[Publishers]

Ahh, let's just do price fixing.

I believe on another thread I just read that SWA, Air Tran, and JetBlue produced profits for the quarter and year. Seems like it can be done and their managment did figure it out.

While I agree that BK just keeps these guys running, the fact is that this is a result of cash flows at big companies, not governement handouts.

We do have to recognize that 9/11 impacted this industry and the government is in the business of stepping in when something extraordinary occurs, after all it was our government that was attacked, not the airlines.

I do expect one of the carriers to die.

 

[Lear70]

While I agree that BK just keeps these guys running, the fact is that this is a result of cash flows at big companies, not governement handouts.

Last I checked, US didn't have large cash flows and the only reason they are still kicking is because the ATSB allowed them yet another extension on their Federally-guaranteed loan (which is backed by taxes paid by John Q. Public), even though US has YET to meet any of the income restrictions as prescribed in the loan document.

I have nothing against US or UAL and wish that this could all come to a positive conclusion without anyone enduring further loss but you're right, one of the big guys has to go down or all the airlines have to dramatically cut back capacity (ain't happening). I don't see that happening as long as the feds are happy to help those who wouldn't survive without it.

We do have to recognize that 9/11 impacted this industry and the government is in the business of stepping in when something extraordinary occurs, after all it was our government that was attacked, not the airlines.

Absolutely, the ATSB was formed and gave out BILLIONS as a direct result. That SHOULD have been the end of it; default and it's no longer their fault or problem. Unfortunately it wasn't and it will keep on being a problem until a large number of representatives in Congress or the Senate are monetarily affected, either constituently or through lobbying.