Lear70
JAFFO
- Joined
- Oct 17, 2003
- Posts
- 7,487
Not.
Pensions were funded just FINE through investments until the big, late 90's stock boom, and the senior management teams at many of the legacies thought it would be great to raid those funds, just take them down to the government-required levels, and use the cash they pulled out as bonuses. After all, it was THEIR management that had resulted in the big increases in stocks and bonds at companies the world over, right?
Of course, it was the dot com bubble, it burst, and the pensions ended up being 50% or so underfunded in many cases. Interestingly enough, most of those had come back to only being 20-30% underfunded before the bankruptcy filings were complete.
Re-funding the pensions to required levels would not have bankrupted the companies, either. Nor would an average pilot salary of $150k for an F/O, $225k for a Captain, which is what the average salary for a DAL/UAL pilot was when that contract was signed (not many were going to make that $300,000 figure, something like 10% of the seniority list in any given year projected for the next 12 years after DOS).
The average ticket price would have had to increase between $15 and $20 to cover BOTH the increased pilot salaries AND the pensions. This equates to a roughly 5-7% increase in the cost of a ticket.
Now, if you add in increased pilot costs and pensions, same for flight attendants, gate agents, ground handlers, mechanics, plus doubling of gas prices for the planes, crap contracts for new planes and ground equipment paying high prices and high interest, increased gate leases expense, caterers raising prices, it all resulted in a NET increase of cost above 50%, while airlines priced their products lower and lower in this insane "war of attrition" in which NO ONE was going to be the winner, due to the government-allowed "repeated bankruptcy" cycle.
THAT'S what caused the bankruptcy filings. Corporate greed and an inability to raise prices when your competitors don't either, because you'll lose your customers to them, even though that other airline is pricing at a loss, just to drive you out of the market.
The price of automobile gas roughly doubled during that same time. The price of utilities for your home went up by 30%. The price of groceries increased about 15%. The price of cars went up by about 20%.
Everything costs more over time... except, evidently, plane tickets, which the flying public expects to somehow remain static with increasing costs to produce it.
Until the airlines are MADE to price their product to cover cost, airlines are not a sustainable business model. Period. Anyone that thinks otherwise is delusional or doesn't understand the simple, basic economics of free-market business.
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