Why Fares Remain Low...ABC News article

[canyonblue]

ALL PILOTS ARE UNDERPAID!!!!

Until there is a pilot group that will not accept a certain wage, management will make them work for it, and lower, until someone says no and walks away. So far, no one has.

 

[chase]

Thanks for replying PCL_128...here's what I find interesting though & again if this comes across poorly my apologies....

You say you treat them well to their face...I'll agree because you say it is so. Yet you appear to have a certain contempt for their unfair demands. They complain.

My fellow SWA pilots fly their passengers & while some may complain, the last year SWA once again had the fewest number of complaints from passengers. I would generally say the passengers I run in don't complain & in fact I would say it more likely is they are happy to be flying with SWA & appear very satisified. They're positive about their experience.

Result...your passengers are not happy, You say their treated well. SWA's passengers are happy....aI say they are treated well....assuming you're dealing from the same general public SWA draws from, what makes the people you fly react differently?

Fares?
Equipment?
Customer service?
Expectations being/not being met?
Interaction w/employees?
Just wondering what your take on it is? thanks in advance....

BTW, speaking of incredible feats of engineering....sitting in a hotel room, typing on a keyboard & debating with someone isn't a bad marvel either...but the first thing I ask at the hotel is..."is the internet free"..........they smile & say yes usually.....that is after I find out if they have "1,2,3"....just because something is a wonderful marvel doesn't mean it can't be sold at a lower price.....I'd recommend you read a book by Thomas Friedman, "The World is Flat"...it has applicability to the airline world also....I listened to day about the "flattening effect of the world since the turn of the 20th century....from a small city in Ely,CO, it use to take 12 days to carry something on wagon to Salt Lake City...when the railroad came to town, the same trip took 12 hours....that same trip could be flown in less than 45 minutes now by air...to send something by computer takes mere seconds....the world is getting flatter & faster, as an industry we must understand this concept & learn how to apply to the various companies we work with...if we don't & then adapt, then I would be worrying about our future...sorry to drift into a worthless ramble PCL_128...cheers

 

[Chest Rockwell]

It is not necessarily how much you pay your pilots, it is how many pilots that you have to pay. The benefits package is a huge portion of the "cost" of an employee.

SWA is where it is today because, from day one, most everone here worked a little harder and a little longer than our counterparts at other carriers. I believe that in 2000, our average pilot flew close to 800 hours compared to around 400 at UAL. Everyone here felt that it was us against the world and each employee took ownership in the sucess or failure of the company. No pension but a great 401k and profitsharing that further guarantees a motivated work force. Will it continue? Hopefully it will but, perhaps not. I personally see a decline in the newer generation of employees. Most are great, but I see more and more that walk in the door with sense of entitlement. Herb has said it many times that the greatest threat to SWA is that we forget how we got here.

 

[PCL_128]

Chase, I think the difference is evident. In order to compete with such horridly low fares coming from the likes of JetBlue and SWA, real airlines like NWA have had to do such things as remove pillows from planes, stop serving any food (including basics like pretzels), and outsource ground services. As a result, people get cranky because they aren't getting fed and can't sleep without a pillow, and they are stuck sitting on an airplane for 15 minutes after arriving at the gate because the ground crew is so understaffed that they can't get the job done fast enough. This is a direct result of the low fare that they "demand," yet they complain about the result. Because of the hedges, SWA is able to provide these low fares without these negative side effects. That advantage will soon come to an end. As a result, SWA will either have to cut back services, raise fares, or not turn a profit for once. If you cut back services as we have, then your customers will soon become just as unsatisfied as ours.

 

[canyonblue]

SWA has the highest paid pilots because everyone else has been forced to come down to their level with draconian concessions. Not the other way around.

Want to post your pay scale? Until you are part of the solution, you need to shut up about pay.

It is not about people deserving low fares, it's about what it will take for someone to get on an airplane. Believe it or not, many senior citizens and large families cannot afford to travel by air. When the price is low enough, they travel. Because of Southwest management, we have an edge over the competition and can charge far less than they can and still make money. Unfortunately those same carriers try to match our fares which is economic suicide. They end up losing money and go after their employee's to make up for the shortfall in cash. The employees oblige, and then complain about the low fares their customers get. If you really does bother you I would suggest you apply to an airline that charges big bucks for airline tickets. Good luck finding one.

 

[canyonblue]

real airlines like NWA have had to do such things as remove pillows from planes, stop serving any food (including basics like pretzels), and outsource ground services. As a result, people get cranky because they aren't getting fed and can't sleep without a pillow, and they are stuck sitting on an airplane for 15 minutes after arriving at the gate because the ground crew is so understaffed that they can't get the job done fast enough.

And stuck on your RJ for over an hour. I flew the plane and loved some aspects of it, but that plane is horrible for passengers over an hour, and would lead many passengers to feel cranky. That is why our short-haul still does well, we compete against an RJ and a 737 will always win. I just hope that the "Legacy" airlines who get the new generation RJ's will keep the flying in house.

I say bring back regulation.

Would be nice, but with the drop in passengers you would see less demand in air-travel, therefore requiring less pilots to fly. After the dust settles you would be back as a CFI but your friends at the Mainline would enjoy a hefty paycheck. Just remember, when the music stops do you have a seat?

 

[chase]

PCL...thanks again for a respective reply...here's something to think about....

For the sake of argument, lets say there are two reasons why SWA makes money & a "real" (your description of NWA ) airline makes money.

1. SWA has fuel hedges (huge benefit, granted), "real" airlines don't

(For lack of a better word, I'll use the word friction in the following context : Friction = inefficiencies and comparable efficiencies found within an airline (single airplane type, point to point, no interlining, hub & spoke, technology advances such as higher % of folks buying tickets on the internet...in other words all the "non-fuel, no labor" costs that make up the category of CASM...how the factory/airline operations works ona given day)).

2. SWA has removed more "friction" from taking people from point to point than any other carrier (currently).

Now, using what I think you're saying, you would like for SWA to :

1. increase fares to allow other "real" airline companies who dont' have hedges to raise their fares to offset the higher fuel costs in order to make money

2. Add more "friction" to SWA operations to allow other carriers to compete with SWA & everyone is happy...all pilots get paid fair wages & everyone lives happily ever after.

Our "core" costs are lower, almost by 1/2 compared to most legacy carriers....that's called efficiency. Fuel hedges are an advantage but as the very first thread shows, SWA is raising fares, others are raising them also & it would appear they maybe doing it a rate that exceeds SWA's...other companies are doing it to feed their appetite for revenue which is caused by huge debt, remaining "friction" within their system, but mostly much higher fuel costs....SWA is doing it for the same reason, cover our higher fuel costs.....how much should SWA raise the fares so others can prosper..SWA isn't the blame for the rising fuel prices, I know you would agree but you appear to blame SWA for not "raising fares" to a point that others can also...what other business in the world would operate with that type of approach? Any ideas?
Thanks again in advance for a thoughtful reply....cheers,

 

[SWA/FO]

CHASE,

Where you been? I could have used your help weeks ago, when they were all calling me names and making me cry :crying: . You tell 'em, Union Brother!!

 

[canyonblue]

When the American public will pay $4 for a coffee, $1000 to go to a professional sports game, etc, they do not "deserve" to pay $90 for a flight. They should at least be paying enough to cover the cost of the flight for God's sake.

I don't see how your post shows SWA in a positive light. I think it pretty much says that SWA is responsible for low fares.

Cheers

Problem is, the majority of the American public do not even do any of the things you posted. Even as far as shipping a package, I won't even pay over $5, because I get an airline discount at FedEx. Heck, as soon as someone does it for $4, I'm there. Do you also complain about the price of gasoline? A gallon of gas cost $.77 cents in 1979, adjusted for inflation that would be $2.18. Still want to complain?

 

[PCL_128]

I'm certainly not suggesting that SWA voluntarily raise their fares just to help out the rest of the industry. That's ridiculous, and no one should ever expect that. This is a business, and SWA will do whatever it takes for SWA to make money, everyone else be danged.

What I am suggesting is that this is not ultimately good for the consumer, and certainly not good for the economy in the long run. The consumer and the economy depend upon a viable air transportation system. SWA is not able to provide a full transportation system. They serve a few dozen cities, many of them smaller or secondary airports, and leave a large share of the country with no air service. Not to mention the fact that they have no international service. Therefore, if the "real" airlines were to cease to exist because of these ridiculous fare wars, then the economy would suffer due to a lack of air service to many important markets. A businessman in Evansville, IN will never be able to get an SWA flight to go to Burlington, VT. SWA simply won't do it, because they can't make money doing it. "Real" airlines provide service to these smaller markets because they have always acted as loss-leaders when they feed travelers to their money-making international and trans-con flights. It's not working that way anymore, because even the trans-con flights don't make money. Only a select few international flights make any money. This is why many cities like Youngstown, OH no longer have any airline service. That trend will continue if the "real" airlines can't make any money. This isn't good for anyone, except for SWA of course.

Regulation would put an end to this. The "leisure traveler" that isn't willing to spend more than $29 to go to FL may disappear, but at least the entire country would receive adequate air service, and the businessman that is necessary for economic stability will be able to go where he needs to, albeit at a slightly higher fare than he's become used to.

Note: When I say "real airline," it's not intended as a stab at SWA. I don't consider my airline a "real" airline either since we only act as a contractor for NWA. I simply mean that SWA doesn't have a complete route structure serving the smaller markets and international destinations. To me, that's what a "real airline" is. Airlines like SWA and JetBlue are "niche carriers" really.

 

[chase]

PCL,

No slap taken at the "real" airline comment....just making fun of myself & SWA...

As for your comments...many of us, not just in the airline industry work under the assumption that what "is" today, will remain forever in place. That nothing new in the way of new technology, new methods or new business models (in the case of our discussion) will ever be invented again....we all suffer under the paradigm that what we see around us is what will be in the future & that nothing new will come about that will "do" what these things are currently doing....let me illusrate my point.

15 years ago who would think of a concept such as "google"...it was only a dream, rough concept....now an entire industry & industries are changed because of it.....the new "micro jets" are coming out...is that the answer? I don't know....new technology on engines that may one day exclude or reduce the amount of oil required to go into a propulsion "fuel" thereby negating the entire "oil" issue. Other new & imaginative solutions to problems that our industry & others are facing....I have great faith in the American (& coming to a third world near you also) initiatives & brain power to find new technologies/business models that work.

As for more regulation....sorry, can't disagree with you more strongly than on that point....regulation adds "friction" to the process....adding "barriers" to the free market system on the whole is a bad idea IMHO....it only promotes & allows inefficienies to be awarded & allow loop holes for less scrupulous folks to find holes in & take advantage for their own personal gain....when things are out in the open for all to see, bid on fairly & compete with, the consumer & the producer are better served. Just my my $.02 worth....thanks again for some interesting points but we appear to be coming to different conclusions...thanks for not getting frustrated with an old guy who has failed logic cheers

 

[FlyBoeingJets]

Remember the deregulation of telecom? Long distance rates are a fraction of what they used to be. Careers and Companies were destroyed. Americans, apparently, are o.k. with that. Same with steel and now the auto industry.

I think Americans are happy with airline deregulation and the low fares it has brought them. I think they are also happy the unions are getting put back in the box. The effect on the industry employees is "unfortunate" but may be a necessary evil for the goodness of cheaper travel. (That's me thinking like an airline traveler)

Don't get me wrong, I respect the passenger. They pay the bills. I even like to chit chat with them. But they are the master. In fact, their power and steadfast determination to obtain the lowest fare are frightening.


If you are going to write an article and sell it to the public you might as well say they "deserve" low fares. It would not do a writer any good to irritate the hand that feeds them.

 

[PCL_128]

As for more regulation....sorry, can't disagree with you more strongly than on that point....regulation adds "friction" to the process....adding "barriers" to the free market system on the whole is a bad idea IMHO....it only promotes & allows inefficienies to be awarded & allow loop holes for less scrupulous folks to find holes in & take advantage for their own personal gain....when things are out in the open for all to see, bid on fairly & compete with, the consumer & the producer are better served.

Normally, I would completely agree. I'm as conservative as they come on most things, and I love the free markets. There are a few things that I think need to be excluded from such market forces though, due to their importance in the nation's economy. Would you want to bid out a police force to the lowest bidder in a free market system? Firefighers maybe? I doubt it. I view the airlines as the same sort of thing. They provide a service that is absolutely essential to the American economy and way of life. The whole economic system is now built around the ability to freely "move about the country" (some props to SWA there ). I think this makes it important to remove the airlines from the normal market pressures, since they have proven themselves to be unable to cope with them.

thanks for not getting frustrated with an old guy who has failed logic cheers

Truly a pleasure, sir. I always like talking with the "old guys." If I was talking this over with a young guy like SWA/FO, this would have degenerated into a shouting match by now. Glad we could have a pleasant debate.:beer:

 

[mule]

I can't believe what I am seeing....

An intelligent discussion on flightinfo without all of the "mine is bigger than yours" personal attacks. I love it!

 

[IB6 UB9]

I can't believe what I am seeing....

An intelligent discussion on flightinfo without all of the "mine is bigger than yours" personal attacks. I love it!

...and even with a guy who PFT'd.

 

[FlyBoeingJets]

I'm as conservative as they come on most things, and I love the free markets. There are a few things that I think need to be excluded from such market forces though, due to their importance in the nation's economy. Would you want to bid out a police force to the lowest bidder in a free market system? Firefighers maybe? I doubt it. I view the airlines as the same sort of thing. They provide a service that is absolutely essential to the American economy and way of life.

Everybody thinks their career should be excluded from any free market forces as they take advantage of lower prices on consumer goods. Airline travel important? Yes. Exception to the rule of free market? Not a chance. Maybe the biz jets who carry the really important people are an exception.

We have VOLUNTEER firefighters in my neighborhood.

With all due respect, we have all been sold a bill of goods on the "American Way of Life" It is no accident that a majority of people consider themselves middle class and above average drivers. We have all bought the Marketing.

Welcome to the free market.

 

[SWA/FO]

They serve a few dozen cities, many of them smaller or secondary airports, and leave a large share of the country with no air service

If I was talking this over with a young guy like SWA/FO, this would have degenerated into a shouting match by now

Hey pal,

The SWA/FO has been here the whole time reading all of this. I disagree with your above statements. I don't think your belief/views make sense... But hey they are your own, I respect that. I'm probably not as nice as Chase, but I never yell...I might type fast but yell, no.

We serve more then 36 cities. The larger carriers that serve "smaller" markets do so with higher fares and some cities actually pay a carrier to operate out of their city. They price gouge the smaller cities because they can.

 

[SWA/FO]

and even with a guy who PFT'd.

And has one of the best jobs in aviation.

 

[canyonblue]

Everybody thinks their career should be excluded from any free market forces as they take advantage of lower prices on consumer goods.

I agree, ask any Bank Teller what they think of ATM machines. When was the last time anyone went into a bank to withdraw money. I also remember the days before Self Serve gas stations. The American people want it that way and the airline industry will have to adapt, even though most Gate Agents hate the Kiosks, and internet boarding passes.

 

[canyonblue]

I'm probably not as nice as Chase

Having met both of you I would say you two are more alike than you think.