Six reasons airlines are set to crash

[Traderd]

Ideas regarding the future of the industry.

Here's guessing reason #6 will not be so popular around these parts. Not even sure he understands there are serious barriers to striking in the industry.

"Airlines have always been horrible businesses. However, here are six main reasons their businesses are about to get a lot worse:"

http://wallstcheatsheet.com/breaking-news/6-reasons-airlines-are-set-to-crash/?p=10330/

 

[FLYLOW22]

Raise ticket prices.

The market will correct.

The end.

 

[whymeworry?]

American journalism is so infantile these days. Reminds me of those reports you see on CNN or Fox, "How to manage your debt" 1) #1 Pay off high interest cards first. 2) Consider consolidating debt into a home equity loan. 3) Don't use credit cards 4) Save money...

As if anyone with a brain doesn' already know these most obvious conclusions.

Nothing new in this article and plenty it leaves out.

But regarding the video conferencing. Do you really think that will replace face-to-face transaction? Not likely, ever! Video will serve as an enhancement to what would have been a phone conversation, which all deals are preceeded by anyway. When it comes to actually having to pull out the most effective trump card in you're arsenal to get the deal done (and get paid), your going to haul take whatever trip is necessary to close.

I spent years in sales. Nothing is as effective as a face to face meeting.

 

[Hamburger]

There is only ONE thing that will be the death knell of airlines.

That thing is if they figure out some sort of Star Trek 'Beam Me Up' Teleporter.

The day they come up with that, sell all your stock and run, because it's over. We'll have a few years for them to work out the housefly kinks and for the technology to become cheap/commercially viable, but that's it. We'll become horse & buggy drivers.

Until then..........People and stuff HAS to move. Someone will always have to do it.

 

[Muskycat]

There is only ONE thing that will be the death knell of airlines.

That thing is if they figure out some sort of Star Trek 'Beam Me Up' Teleporter.

The day they come up with that, sell all your stock and run, because it's over. We'll have a few years for them to work out the housefly kinks and for the technology to become cheap/commercially viable, but that's it. We'll become horse & buggy drivers.

Until then..........People and stuff HAS to move. Someone will always have to do it.

Naw. I'm sure such a device would cause cancer.

 

[pilotyip]

unintended consequences

Raise ticket prices.

The market will correct.

The end.

It is basic economics, if you raise the price of commodity, less people will purchase that commodity. It is neither management nor unions that can operate without considering the impact on the consumer who has instant access to the cheapest fare on every route. With less people purchasing there is not as much demand for that commodity, therefore there will be fewer, but better paid pilots. That is what we had under Regulation. Yes the market will correct, be very good for senior guys, not so good for everyone else. I like the gas price sign. BTW SWA raised their advance purchase ticket price and their price increase lasted about 10 days.

 

[skyaddict]

Every event that hits business travel hard- eg 911, the Volcano shutdown, or whatever, does have a certain ratchet effect on business travel never quite bouncing back to where it was before. But there are limits to how much you can teleconference in a relentlessly competitive business world- the executive who shows his face to break bread will always establish a huge leg up on the one who chooses to meet on a plasma screen- all the moreso when dealing with, say, Asia - but there will be fewer and fewer underling flunkies coming along on trips I bet. (Besides, as you say, once we have the teleporters it will be years before they work out the mutations into half-fly as per Jeff Goldblum, lol- gosh gotta rent that flick again or even the old B&W original, it's been awhile).

 

[justin15e]

If teleconferencing is the magic bullet that kills the airlines, why hasn't the mere phone and now the newfangled data phones stopped people from going by and seeing clients, employees, work even. Why doesn't everyone just stay at home and work from their computer at home? Some companies already allow this, but it hasn't happened widespread, and I don't think it will.

Sure, it will reduce business travel like it already has. It will reduce the travel that was for something minor in the first place.

He also states unions are a problem for the airlines, how about the super large corporate contracts and bonuses of airline management? They really are two sides of the same argument. I'm not in love with unions because of all the politics and drama, but they are a necessity due to what we've seen happen to airlines historically. Jetblue may not have a union, but they will eventually.

 

[inline]

If teleconferencing is the magic bullet that kills the airlines, why hasn't the mere phone and now the newfangled data phones stopped people from going by and seeing clients, employees, work even. Why doesn't everyone just stay at home and work from their computer at home? Some companies already allow this, but it hasn't happened widespread, and I don't think it will.

Sure, it will reduce business travel like it already has. It will reduce the travel that was for something minor in the first place.

He also states unions are a problem for the airlines, how about the super large corporate contracts and bonuses of airline management? They really are two sides of the same argument. I'm not in love with unions because of all the politics and drama, but they are a necessity due to what we've seen happen to airlines historically. Jetblue may not have a union, but they will eventually.

Why don't we unionize your employer, the military?

 

[nimtz]

"As the reasons below come into play, unions will not understand why workers will need to compromise. This will create unnecessary administrative costs to negotiate and prevent strikes. If workers don’t accept the waning health of their employers, ill-timed strikes could catalyze a negative feedback loop."

Typical bland Wall Street writer. Editor tossed him a story that he spent all of five minutes researching. Hey at least he corrected himself after someone pointed out that jetliners are made of aluminum instead of steel. Never mind the fact labor spent this entire decade 'compromising' our compensation.

 

[Redmeat]

Raise ticket prices.

The market will correct.

The end.

How is it that you haven't been scooped up and hired as the CEO of a major airline like Delta?

Have you wrote to these people and informed them of your break-thru business model?

 

[Flightdawg]

If teleconferencing is the magic bullet that kills the airlines, why hasn't the mere phone and now the newfangled data phones stopped people from going by and seeing clients, employees, work even.

Those did have impact and teleconferencing will have more impact but it won´t kill business travel. Only hurt it. Companies love to cut costs and teleconferencing is cheaper and almost like being there.

It´s the debt part that bothers me. Ticket prices won´t go up until the demand goes up. Sad to say, there is still too much capacity in the system for ticket prices to go up. If the capacity does go down and ticket prices rise, then the airlines will lose more passengers as vacationing families elect to drive or ride a bus. This means less flying and less pilot jobs. The good news would be that the airlines would be sustainably profitable again.

 

[Smarta$$]

"As the reasons below come into play, unions will not understand why workers will need to compromise. This will create unnecessary administrative costs to negotiate and prevent strikes. If workers don’t accept the waning health of their employers, ill-timed strikes could catalyze a negative feedback loop."

Typical bland Wall Street writer. Editor tossed him a story that he spent all of five minutes researching. Hey at least he corrected himself after someone pointed out that jetliners are made of aluminum instead of steel. Never mind the fact labor spent this entire decade 'compromising' our compensation.

We will NEVER be able to compromise our compensation enough to make wall street, executives or Republicans happy. It is a losing battle from go. I choose not to participate.

 

[Draginass]

One very prominent reason for the airlines problems is that insolvent bankrupt carriers like US Airways were allowed unfair competitive advantages given through bankruptcy, in some cases more than once. If those airlines were not given unfair advantages, pricing power would have been retained in the industry.

 

[Smarta$$]

One very prominent reason for the airlines problems is that insolvent bankrupt carriers like US Airways were allowed unfair competitive advantages given through bankruptcy, in some cases more than once. If those airlines were not given unfair advantages, pricing power would have been retained in the industry.

That's a great argument. Until it is YOUR employer.

 

[pilotyip]

refreshing post

Ticket prices won´t go up until the demand goes up. Sad to say, there is still too much capacity in the system for ticket prices to go up. If the capacity does go down and ticket prices rise, then the airlines will lose more passengers as vacationing families elect to drive or ride a bus. This means less flying and less pilot jobs. The good news would be that the airlines would be sustainably profitable again.

A nice does of reality. It is the consumer of airline travel that will determine the profitability of an airline. This consumer if they are paying for their tickets will change airlines for a $1.00. Last week SWA dropped their prices again after raising them early in April. I am guessing that their advance bookings dropped off drastically. As stated above, it is neither management nor unions that can operate without considering the impact on the consumer who has instant access to the cheapest fare on every route.

 

[Flopgut]

Pilots and other employees would not have to worry about the specific economics of why/who is buying the tickets if we didn't have a broken relationship with the RLA. When deregulation came the RLA should have gone.

 

[Draginass]

That's a great argument. Until it is YOUR employer.

Nevertheless, it is TRUE. And at one time I worked for a carrier that DID go completely OUT OF BUSINESS. I was just smart enough to ditch the lousy company before the executives augered the company into a smoking hole. The writing was on the wall for YEARS at US Airways, but it's still staggers on as a zombie outfit helping dragging down the rest of the industry. UAL and DAL haven't helped either with their milktoast scope and compliant MECs.

 

[justin15e]

Why don't we unionize your employer, the military?

I don't know what you're trying to say here. Are you trying to be funny?

 

[FLYLOW22]

No, there is a solution.

Get legislation to charge a PILOT FEE just like a fee for 9/11, bags, sandwiches and crappers are charged right now.

Let them charge what they will and stop making the issue complicated.

CAPA?

 

[Ty Webb]

Quote o' da week!

That's a great argument. Until it is YOUR employer.

Heh-Heh! Flightinfo quote of the week. Nice job! imp:

 

[dashtrash]

Bump to get rid of ALK/USair thread.

 

[Kalifornia]

A nice does of reality. It is the consumer of airline travel that will determine the profitability of an airline. This consumer if they are paying for their tickets will change airlines for a $1.00. Last week SWA dropped their prices again after raising them early in April. I am guessing that their advance bookings dropped off drastically. As stated above, it is neither management nor unions that can operate without considering the impact on the consumer who has instant access to the cheapest fare on every route.

Silly that you argue basic economics for ticket prices, yet choose to help destroy this profession with economics. If less pilots are interested or qualified to fly professionally, then pilot pay and benefits go up is this simplistic theory. But some such as yourself are intent on letting every Johnny and Suzy believe that this is a nice little hobby job ignoring the economic realities of flight training costs, low end pay, and ignoring that this is far more than a job, or a career, it's a lifestyle and a huge responsibility that deserves good compensation.

 

[Metrojet]

One very prominent reason for the airlines problems is that insolvent bankrupt carriers like US Airways were allowed unfair competitive advantages given through bankruptcy, in some cases more than once. If those airlines were not given unfair advantages, pricing power would have been retained in the industry.

Lets see -

Use of US Bankruptcy Code -

United
Continental
Delta
Northwest
GM
Chrysler
Delphi Automotive

Did they all have unfair pricing advantage also - or do you just like singling out US AIRWAYS?

Metrojet

 

[hockeypilot44]

One very prominent reason for the airlines problems is that insolvent bankrupt carriers like US Airways were allowed unfair competitive advantages given through bankruptcy, in some cases more than once. If those airlines were not given unfair advantages, pricing power would have been retained in the industry.

Carriers like US Airways never would have went bankrupt if start-ups like Valujet, Jetblue, Skybus, Virgin America, etc. were not given ridiculous unfair advantages on landing fees, slots, labor, plane loans, etc. The playing field has never been level. The government has been in the process of bringing ticket prices down at all cost since deregulation. Unfortunately, the prices the government wants tickets to cost is lower than the cost to actually provide those tickets. To get to this goal, the government is encouraging and helping any and every potential start-up airline.

 

[pilotyip]

Brign reg back?

Carriers like US Airways never would have went bankrupt if start-ups like Valujet, Jetblue, Skybus, Virgin America, etc. were not given ridiculous unfair advantages on landing fees, slots, labor, plane loans, etc. The playing field has never been level. The government has been in the process of bringing ticket prices down at all cost since deregulation.

Yea, we should have never had those airlines; we should have stayed regulated. Life was good for a few pilots under regulation. However there are probably 4-5 times as many pilot’s jobs now as there was in 1977 and most of the pilots on this sight have benefited from de-reg. Back in reg time it was about 90% military that went to the majors. Dereg opened up a lot of airline job to non-military pilots. The bottom end ticket purchaser does not have to fly. To return to regulation would raise ticket prices, reduce the number of passengers, and therefore reduce the number of pilots needed. As in almost every example, a rise in ticket prices will be good for a few senior guys and bad for everyone else.

 

[pilotyip]

Brign reg back?

Carriers like US Airways never would have went bankrupt if start-ups like Valujet, Jetblue, Skybus, Virgin America, etc. were not given ridiculous unfair advantages on landing fees, slots, labor, plane loans, etc. The playing field has never been level. The government has been in the process of bringing ticket prices down at all cost since deregulation.

Yea, we should have never had those airlines; we should have stayed regulated. Life was good for a few pilots under regulation. However there are probably 4-5 times as many pilot’s jobs now as there was in 1977 and most of the pilots on this sight have benefited from de-reg. Back in reg time it was about 90% military that went to the majors. Dereg opened up a lot of airline job to non-military pilots. The bottom end ticket purchaser does not have to fly. To return to regulation would raise ticket prices, reduce the number of passengers, and therefore reduce the number of pilots needed. As in almost every example, a rise in ticket prices will be good for a few senior guys and bad for everyone else.

Silly that.......... that deserves good compensation.

I confess I am the puppet master who has destroyed the profession.

 

[CoolSidePillow]

Wasnt regulation kind of like big government? Those start up airlines with lower costs bring lower fares which helps local economies bring more people. They allow business travelers more economical travel ability as well as family vacations more afforable. I think it is a pro/con situation. Sams, BJs and all of the other discount stores are the same way. This whole country is based on consumerism. Quantity and not quality. It is not just the airline business but an entire cultural thought process. We are a disposable society. People do not even own cars anymore. They just keep leasing. So where is the line drawn? When and where are low prices ok? The only people that complain about low fares are the pilots who want more money. Unfortunately, we are the very small minority. Low far wars are not going to go away.

 

[waveflyer]

"In the history of airlines, very few CEOs have effectively run an airline. In fact, only one CEO in recent history, Herb Kelleher of Southwest Airlines (LUV), has been successful. Every other airline CEO in recent history has mismanaged during their short tenures, only to take large bonuses and golden parachutes on their way out. With idiots and thieves running the show, airlines are doomed to crash."

only quote in the article worth reading.
-------------------
as far as bankruptcy abuses and regulation- guess what, this is still the industry that if not outright regulated, is the most highly taxed and meddled with industry in the world. When it comes to financial health- 1 point is important- the powers that be know that cheap airline tickets stimulate the overall economy. We will always have a toughtime getting paid and should really concentrate on unifying and stop being our own worst enemies.

 

[pilotyip]

Who will pay for it.

the powers that be know that cheap airline tickets stimulate the overall economy. We will always have a toughtime getting paid and should really concentrate on unifying and stop being our own worst enemies.

Ok lets suppose you are successful in unifying, and you double pilot pay. Who will pay for it? The marginal consumer will reject air travel, these are the ones that buy the $99 seat MDW-SAN, the ones who fill the empty seats on Tues, Wed that allow profitibility. In the end it is the consumer who will determines how much can be charged for an airline seat. Higher prices will be good for senior guys, not so good for everyone else.