What's Really Wrong With The Airline Industry - And Can It Be Fixed?

[Mach 80]

The problem is the bankruptcy laws of the U.S.

If the airlines that had to go Chapter 11 had simply gone out of business and not allowed to shrug off their debt and tear up their contracts and then go out and and try again we would have had a MUCH stronger and profitable industry now.

Our bankruptcy laws have created a weak industry. If a business can't hack it, they should die out and let corporate Darwinism work.

 

[pipejockey]

The problem is the bankruptcy laws of the U.S.

If the airlines that had to go Chapter 11 had simply gone out of business and not allowed to shrug off their debt and tear up their contracts and then go out and and try again we would have had a MUCH stronger and profitable industry now.

Our bankruptcy laws have created a weak industry. If a business can't hack it, they should die out and let corporate Darwinism work.

Agreed. I understand the bankruptcy laws have changed, as evidenced by DAL and NWA filing the day before the change. Hopefully these new laws will cause the weak to wither at the vine this next wave of bankruptcy's. But then how much do ya want to make a bet the bottom feeders like swa and jb will come in and fill the lost capacity thereby preventing the survivors from charging a fare that can sustain a profit.

 

[HalinTexas]

What's really happening, and what will cull the airlines, is the creditors are refusing to finance poor operations. That's what happened to all of the carriers that's shut down this year.

I think Citibank fronted UAL some $20 billion over a period of time.

 

[AC560]

Because they need to match southworsts and the other LCC's fares in order to keep from losing all their business, so they say. And these fares can't support decent wages.

But WN supports higher wages with lower ticket prices today. I can understand to an extent that pay dropped because of the LCC's. Now they are established in the marketplace though there should be parity between pay. Instead the LCC's are generally paying better then the majors.

A good argument can be made that pay level dropped because of competition with the LCC's but they have been in the marketplace for a long time now. I don't think the reason why major XYZ pays $50 an hour less the WN though is the fault of WN today.

 

[Quimby]

forget it.

 

[Chest Rockwell]

Because they need to match southworsts and the other LCC's fares in order to keep from losing all their business, so they say. And these fares can't support decent wages.

You need to get over your hate of SWA and look at the facts. Pre-9/11 SWA had only about 5% of the domestic market share. I do not think that we had that much overall impact on most of the other carriers. I think it would be difficult for ExxonMobil to blame a small energy company for going out of business.

You have to get past the hourly pay rate. In 15+ years at SWA, mostof my friends have enjoyed higher rates of pay at the legacy carriers, yet they have made less due to the inefficient schedules. If you make 180/hr and only get paid for 3.5 while I make 150/hr for 6, I think that I win in the $ category. This can be done without a draconian schedule.

It is easy to brag about making 150K+ a year and only flying 400 hours a year, but you leave yourself wide open for someone to come along and do it better (more efficiently). The pay rate does affect the bottom line, but not nearly as much as how many you have to pay. The benefits and training costs can overtake an airlines ability to pay a better wage.

 

[pipejockey]

You need to get over your hate of SWA and look at the facts. Pre-9/11 SWA had only about 5% of the domestic market share.

And now they control the domestic market with over 50%. They are the ones most everyone must compete with but absolutely cannot in a hub and spoke network.

I do not think that we had that much overall impact on most of the other carriers. I think it would be difficult for ExxonMobil to blame a small energy company for going out of business.

southworst is not a small energy company. They are the largest domestic carrier in the country. Thanks to a 66% capacity increase in this decade while the network carriers have shrunk. The network carriers have tried to control capacity and raise fares to no avail. People flying out of the DC area will just go to BWI. People in Chicago area will just go to MDW. People in the SF area will just go to OAK. Dallas area, how about Love Field. You get the idea? Not to mention the places where they directly compete with the network carriers such as LAX, MCO, BNA, to name just a few. So you talk about not having much impact, well maybe that was true from that unfortunate day in 1971 until the 90s, but for the past 10+ years the impact has been immeasurable.

You have to get past the hourly pay rate. In 15+ years at SWA, mostof my friends have enjoyed higher rates of pay at the legacy carriers, yet they have made less due to the inefficient schedules. If you make 180/hr and only get paid for 3.5 while I make 150/hr for 6, I think that I win in the $ category. This can be done without a draconian schedule.

I'm not quite sure of the point you are trying to make here. But if I made 180 an hour I would be satisfied with a 60 to 70 hour line. But you say you guys can earn more at a lesser pay rate because you work more hours? Well of course! As much as I despise the southworst business model, I can agree with you that you all worked far greater hours than the network pilots did pre 9-11. We all don't always want to do 4-5 legs a day at 7-8 hours a day all the time. And as far as today, we are all working a southworst type schedule with 80-90 hour lines each month thanks to the necessity of having to compete with you. This excludes the transcon and international guys of course. The same guys that sell all the junior and domestic guys out all the time come contract negotiations because they don't want to risk their still cushy schedules!

 

[scoreboardII]

pipjock, site your source for SWA having over 50% market share, I can only find SWA at 26% as recent as 2006. Interestingly, USair has 38%...

 

[Chest Rockwell]

Pipe,

Like I said, you obvious hate won't let you see the facts. I have no idea where you get 50% from.

If you want to work more days for the same take home because you don't like the SWA schedule, more power to ya. I hope your airline can afford it, I really do.

BTW, for 2007, I averaged 3.1 legs per day.

 

[Andy]

I think Citibank fronted UAL some $20 billion over a period of time.

OK, if you're going to pull a number from your nether regions, the least you can do is make it halfway reasonable. UAUA's total debt is listed at $8.91B. Cite a source for this inflated number. Preferably UAUA's 10Q.