Will Major Airline salaries rebound???

[Mugs]

Gordon has some ideas on how to compete with the LCC's:

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Reuters
Continental Air CEO Says Not Ready for 7E7 or A380
Friday April 30, 3:50 pm ET


SEATTLE (Reuters) - Boeing Co.'s new mid-sized 7E7 jetliner would be a great fit for Continental Airlines, if only the airline had the money to pay for it, the carrier's chief executive said on Friday.
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"We said we're ready to order, we're just not ready to pay," Continental CEO Gordon Bethune told reporters before taking delivery of the final 757-300 to roll off Boeing's assembly line.

Houston-based Continental, the No. 5 U.S. carrier, is also shunning Airbus SAS' mammoth 555-seat A380, which will come to market in 2006.

That decision is hardly a surprise, since Bethune is a former Boeing executive who arranged rock-bottom pricing for Continental's all-Boeing fleet.

But Bethune also questioned the benefits of flying on an A380, saying Continental's passengers were leery of long lines to board a jet with 600 others and were already getting low transatlantic fares on Continental's current jets.

"What's in it for the consumer," Bethune said. "He's already got a $99 (seasonal transatlantic) fare and I say statistically, one out of 600 people smell real bad. He might be sitting next to you."

Continental has a young fleet and no need to expand amid weak U.S. demand for air travel. But down the road Bethune expects Continental to order the 7E7, which was formally launched on Monday and is slated to replace Boeing's 757 and 767 models.

"We're waiting for you guys to buy more tickets and then we'll be responding appropriately," Bethune said.

U.S. air traffic has picked up recently, but traditional airlines like Continental face strong competition from discount carriers that often have lower operating costs, thanks to new fleets and younger workers earning lower wages, Bethune said.

"All I have to do is fire everybody every five years" to compete with low-cost carriers, Bethune quipped.

Continental has made progress cutting costs, despite high fuel prices. The carrier lost $124 million in the first quarter, improving from a $221 million loss a year earlier.

"It's ludicrous to believe that all the new guys are going to win and all the old guys are going to die. The people that stay up with the markets are going to always prevail and you're looking at them," Bethune said.



There you have it. Since year 5 will become the top of the pay scale before you start all over again, we can conclude that major airline salaries will not return to previous levels.

Wouldn't it be fun to have a few beers with Gordo?

 

[Publishers]

Defining the new world

Will the salaries return to the old level. Well if one adjusts for inflation and the real value of the dollar, the averages have probably come down consistantly for most of the last few years.

They have basically followed fares downward as more and more of the passengers are flying on a discount.

I also think that the difinition will change from major and minors to international and domestic. Southwest and Airtran along with Jetblue are airlines that are domestic, not LCC or anything else. Calling them the LCC's just implies that one has failed to reach the reality.

The cycles in the industry have always tended to adjust salaries that get out of hand when times are good. It was pointed out in the Gordon comments regarding 5 years. The fact that one gets paid more and more to do the same job because of senority and size of equipment tends to keep the base salaries low.

 

[lurker]

Gordon has some ideas on how to compete with the LCC's:


"What's in it for the consumer," Bethune said. "He's already got a $99 (seasonal transatlantic) fare and I say statistically, one out of 600 people smell real bad. He might be sitting next to you."

That might be the funniest quote I've ever heard a CEO make.