Time for re-regulation

[Junkflyer]

The one with the crack pipe.

 

[JD2003]

.....

 

[ackattacker]

Forget goverment regulation....

what we need is the mafia.

Hear me out, here.

"Looka here boyz, the boss says youza tickets to maiyami isa gonna be four hundred clams or I breaka your kneecaps"

 

[ToiletDuck]

Which economist?

"Northeastern University economist Steven Morrison and Clifford Winston"

First ones www.google.com brought up. Along with the ones that teach at two of the universities I've attended.

 

[Publishers]

The fact is that a public transportation system is first and foremost for the traveling public. The public must be assured of reasonably priced transportation in a competitive environment. That is not what regulation offered.

Reregulation would cause just as much consternation as did deregulation. The biggest problem airlines face is that they are extremely capital intensive which is by its nature a long term situation and yet the have to deal with the vulgarities of a short term public and problems.

The biggest of them have become unwieldy and are encumbered with debt, regulation, and unions all of which remove any flexibility in dealing with the short term situations.

Had regulation continued, the price of travel in America would be obscene on some routes, essential air service would kill many smaller airlines, and there would be less pilots and fewer opportunity however they would be more stable and better paid than regionals.

An economist would look at the recent events as a major rennovation of the industry, nothing more.

 

[Vector4fun]

Well,

My idea of re-regulation would be this:

Somebody with knowledge and credibility sets a realistic hourly capacity number for every major airport, based on runway config, gates, ramp space, etc.; and then forces the airlines to adhere to it. The challange then becomes how to fairly allocate the hourly slots, recognizing each airline's investment in that facility. The result would be that at airports which are already severely over-crowded, like LGA and EWR for example, would have fewer flights and less destructive competition for a limited resource. Fares would go up at these airports of course. Then I'd tell each and every city that complained, if they want more flights and competition, they can pony up some matching $$s and Political will to upgrade their darn airports, OR tell their citizens they can commute to a releiver airport. Start-ups and Regionals can fly all they want to the NON-congested airports. I'm not talking about limiting growth and routes. Just limiting the destructive competition of $99 fares at horribly congested airports where the average delay is a joke and a big factor in passenger dis-satisfaction. A side benefit is it makes the larger aircraft like the 757-767 more viable/valuable domesticly. I think it would also, over time, improve service to the 2nd and 3rd tier communities and airports.

Pouting and waiting for the FAA to come up with an "automation" solution to a lack of physical space and concrete is a cop-out and a complete waste of time.....

 

[MDAutry]

What we need are the Pan Am Clippers and that way we won't have to build new runways.

No, we all know how little the average person understands aviation so why would we want some intern in Washington deciding where and when and what we fly? If you want to be out of a job and out of choices then beg for reregulation.

 

[ToiletDuck]

Well what they are doing now is not working. We know this. So why not move in a different direction?

 

[414Flyer]

Yea let us go back to the regulated industry like 1975, 75% less pilots flying, most guys hired by the majors are ex-military like about 85%. The regional industry, SWA outside of Texas, Air Tran, Spirit, do not exist. This means 3 out of 4 pilots presently would probably not have jobs. Is this what we really want?

Bingo, give the man a red star. He was flying at that time. Most here who advocate regulation, were not around flying then, but just read about it, without understanding it.

People who think that if we just start regulating the airlines like we once did, it would solve all of our problems remind me of Muslims who think that if move to a prosperous western country and then try to get Muslim law installed, that they can have BOTH prosperity and their religious law.

However just like those Muslims who do not realize it is exactly their religion and culture that keeps them in poverty, pilots do not realize regulation is very much a two headed monster.

You simply wont have a BOTH stability, and a large aviation system and many airline jobs if we went back that way. Yes fares were more expensive, but consequently airline travel was not a means of mass transit like it is now. Airline travel was more of a means of travel for the person traveling for business, or the upper middle class and upper class. There were far far far fewer airline jobs.

It is competition that gives us many of these jobs, and removing the competition aspect of it, will also remove many of these jobs, as will raising fares significantly will start will invariably remove part of the traveling public.

The main winners in regulation would be those who already are at an airline and significantly up in seniority, and then part 135 charter passenger companies, who would find they are suddenly more competitive.

Those who want an airline job, or are low on seniority, might find their airline job goals vanishing.

I think many of those who advocate increase government intervention, would be the loudest critics if other industries asked for it to

 

[coolyokeluke]

Question: What does the aviation fuel tax fund? Isn't it ATC and airport infrastructure? If it is dropped what will take the place to fund the missing dollars?

And TiredofTeaching, you pointed out SW is successful in the present environment but neglected to note that they would not be if they weren't hedged. Somebody else spoke of innovation by the likes of JetBlue. Let's see, JetBlue gets airplanes with cheap or deferred lease payments, has no senior workers and associated pensions, probably very little maintenance needed with new airframes, and picks off traffic only on the denser markets. Thus they take away business from the established carriers that serve more markets. The established carriers declare BK in order to drop pensions etc to compete. And once JB is an old enough carrier somebody else will come in and do the same because a newer business can do it cheaper. Is this the type of innovation you want? I'm not all for regulation and I don't only favor legacy carriers but this cycle of BK's every few years is clearly not in anybody's favor (investors or employees) in the long term.

 

[A Squared]

And TiredofTeaching, you pointed out SW is successful in the present environment but neglected to note that they would not be if they weren't hedged.

yes, but the point is that they DID hedge, and they are making money, and other airlines, run with less foresight are not making money.

Thats great that those companies are very fortunate in their current business practices. However, even comparing Southwest to any of the legacy carriers is like comparing apples to oranges. Southwest has always concentrated on keeping fares low and providing service within the US. The legacy carriers have expanded their reach to surround the globe and provided several levels of service such as coach, first, and business classes. That type of operation is vastly different than Southwest. So it is truely unfair to compare the two based on the fact they have night and day business models.

No it is not an apples to oranges comprison, it is as direct and as vadid comparison as could possibly be made. Southwest and the legacy carriers are both in the buisness of selling air transoprtation. Southwest uses a business model which works, and the legacy carriers use a business model which *doesn't* work. That it the whole point. The legacy model doesn't work, Southwest's does. You can talk all you want about global reach and various levels of service, but at the end of the day, thier business model isn't working, and Southwest's model *IS* working. For whatever reason the legacy carriers are clinging to a business model which is pretty clearly not workable, yet we keep propping them up and letting them stagger on.

It has allowed some companies to cherry pick while disallowing true competition.

No actually "cherry picking" as you put it is a fundamental element of competition, enter the markets which are profitable, don't enter those which are not. It's not some insidious evil, like scabbing or prostituting your sister, it's sound business practice, which the legacy carriers are not practicing. If "cherry picking" certain markets puts the legacy carriers in jeporady because it takes away revuene they need to sustain unprofitable routes, the question must be asked, "why are they flying those unprofitable routes?"

It's like a legacy sunscreen retailer complaing becuse some new upstart sunscreen retailer is "cherry picking" the lucrative florida and arizona sunsscreen markets, leaving them with the losses from thier unprofitable Ketchikan, Alaska sunscreen store (it rains 476 days in an average year in Ketchikan )

Hello, why on earth are you selling sunscreen in ketchikan whey you can't make money doing it???????? The problem is not the new upstart sunscreen retailers "cherry picking" in Miami and Phoenix, the problem is the business model which has you keeping a sunscereen store open in ketchikan which never sees the sun.

Maybe the key is to close your Ketchikan store and concentrate on being competitive in the sun belt, where the market is.

 

[Traderd]

And time keeps draggin' on.....

It's like a legacy sunscreen retailer complaing becuse some new upstart sunscreen retailer is "cherry picking" the lucrative florida and arizona sunsscreen markets, leaving them with the losses from thier unprofitable Ketchikan, Alaska sunscreen store (it rains 476 days in an average year in Ketchikan )

I have had a few of those years myself!

 

[ToiletDuck]

Yea let us go back to the regulated industry like 1975, 75% less pilots flying, most guys hired by the majors are ex-military like about 85%. The regional industry, SWA outside of Texas, Air Tran, Spirit, do not exist. This means 3 out of 4 pilots presently would probably not have jobs. Is this what we really want?

You're right assuming your numbers are accurate. But they are not. Between 1978 and 2004 there were 45% less employees than now. There has since been a 25% increase in population alone and you can't possibly assume that the amount of air operations going on wouldn't have grown had the gov still regulated. Between 1970 and 1978 there was an annual increase in employees of around 1.4% per year. Between 1978 and 2004 there was an increase in employees of about 1.7% per year. Not that much diff.

There was no big boom in the amount of flying going on before and after deregulation. It's pretty much linear growth which is expected as technology improves. Meaning that it would be reasonable to assume that more people would have kept flying and shipping things anyway and the airlines would still have kept growing. The difference being that smaller companies would not try to shoot in and under bid forcing some airling to operate under bankruptcy just to hang in there.

 

[414Flyer]

You're right assuming your numbers are accurate. But they are not and you can't possibly assume that the amount of air operations going on wouldn't have grown had the gov still regulated. There was no big boom in the amount of flying going on before and after deregulation.

Sure you can, because fares would be substantially higher, probably double to triple. While that might make some here jump for joy, it would invariably result in less passengers, and hence less flights.

 

[ToiletDuck]

Sure you can, because fares would be substantially higher, probably double to triple. While that might make some here jump for joy, it would invariably result in less passengers, and hence less flights.

During regulation the price airlines were able to charge was 12% over cost. So unless they just showed having a TON of cost because of being unorganized or something it shouldn't do that.

If you want to do a search here: http://www.bts.gov/xml/airline_financial/src/index.xml

I know it only goes back to 1990 but it's pretty sad when you plug in your own searches and look at the numbers. Agreed prices would be higher but it would be worth it. I just look at it that if something was $1000 and then one day you saw it for $650 you'd be happy. Take that same $1000 item, see it at $250, then it jumps up to $650 people would be really upset about it. I wouldn't consider it price gouging just business. And it's kind of like higher gas prices. People will still pay it because they have to drive to work. Well I think people would still fly and still mail their packages because they have to. It's become too important to society. Waiting 2 weeks for mail is just unacceptable now days. I think they'd do it.

The fact is that a public transportation system is first and foremost for the traveling public. The public must be assured of reasonably priced transportation in a competitive environment. That is not what regulation offered.

Of course it didn't. Airlines aren't public transportation. They are not paid for by the gov't and no taxes are taken to run them.. (Well outside of the gov stepping in and tossing some money so they don't up the unemployment rate really fast). That's like saying Grayhound and Taxi's are public transportation. They are companies and their goal is to make money.

Not trying to point anyone out or argue till blue in the face. I just think what's going on now isn't working. What's the worse that could happen with re-regulation? Everyone's already scratching by as is.

Just my .02 worth.

Resources for my information (and just some interesting reads):
http://www.bts.gov/programs/airline_information/number_of_employees/certificated_carriers/index.html
http://www.airlines.org/econ/d.aspx?nid=1032
http://library.findlaw.com/1988/Sep/1/129304.html (very interesting)