Writing on the wall for major airlines

[C150Commuter]

Can someone explain why making 110k/year is the future of the industry...and everyone is thrilled about it. I would rather make 250...guess thats just me.

 

[jarhead]

C150commuter

Why settle for 250K? Why not 500K? Heck, all pilots should make 5 or 10 million a year! Right?

Better wake up and smell the coffee. Did you ever take a course in economics in school? If not, you better consider doing so. There are LAWS of economics, not the least of which, is the law of supply and demand.

While we're at it, let's up the minimum wage for Burger King order takers to $200.00 an hour. Of course, my Whopper with fries will now cost me a few hundred bucks as well. Maybe I'd better skip eating there. Oops? No customers any more. Burger King shuts down, and burger flipper is out on the street with no job.

 

[C150Commuter]

I think you need to relax, sounds like the keyboard may be on fire over there. I wouldn't count the majors out just yet either. The LCC's have plenty of plans for growth now, but so did the majors 5 years ago. TWA was the launch customer for the airbus 318. This isn't the first time the majors have put people on furlough for years and years and it isn't the first time that a major has filed for bankruptcy and survived. No one has a crystal ball, at least not for sale anyway, i'd be intertested in a puchase. It will be interesting to see who survives and who doesn't.

 

[Obi-Wan]

Jetblue already had to drop from 3 to 1 flights a day from ATL to LGB as the result of DAL competition. We will see what happens in a couple of years when the majors recover and start competing on their routes.

 

[goldentrout]

Bravo to jarhead!

If you search posts from me from a year or so ago, you'll see that I predicted the rise of the LCCs...not because I'm a prophet, but because I took economics 101 in college.

The difference between this round of furloughs and previous rounds is that the LLCs' ability to come in and take market share with a safe, efficient, low cost operation is much greater than back in the early nineties.

The major airlines came back in the mid nineties because there was basically no alternative other than SWA for people to go get a decent schedule near the sities they needed to go...so they paid whatever price they had to to get there.

Now, and certainly 5 years from now, Jet Blue/SWA/AirTran/Frontier etc., will be posed to offer service to just about any mid to large sized metropolitan area in the country.

That was not the case throught the 1990s.

Additionally, this new service by the LCCs will be with new, clean, amenity filled JET aircraft.

The days of people flying a major airline to avoid the turboprops is over too.

Yes a couple of major airlines will probably survive. DAL is supposedly the strongest now, but wait two years from now after every fare they charge out of ATL has to match AirTran's fare.

There is no way DAL's business model can compete with LCC AirTran's business model out of ATL. As soon as AirTran gets enough planes to offer the same schedule of service as DAL out of ATL, they will destroy DAL, as DAL will not be in a position, as in the past, to take huge losses on a route to put someone out of business. DAL's pockets aren't that deep anymore.

Look at STL...there are what, 2 million or so people in the greater STL area...and soon no major airline will have a hub or significant presence there!

And who do you hear talking about going in there to fill the void...NWA? DAL? US Air? AMR? UAL?

One would think a major airline would be chomping at the bit to get into a 2 million person market.

The answer is SWA...because the major airlines know they cannot compete with SWA out of STL, especially since SWA is getting 42...count 'em 42...new planes in 2004.

For those who didn't take economics 101, here's a summary of two of the basic laws of economics.

The customer will generally pick the lowest cost product on the market that fits his/her needs.

As the supply of a particular product (i.e. LCC expanded operations) goes up, without a corresponding rise in demand, the price of a product (ticket price) will go down.

Every analyst and FAA prediction is that LCCs will continue in the forseeable future their trend of acquiring more and more market share.

So what are the ALPA major MECs doing to protect their pilots?

1. US Air---just told management they could not buy a bunch of 105 seat aircraft and place them at their wholly owned carriers, nor would they accept them at mainline.

So instead of letting their company get the right size plane for the right size market and keeping the flying 100% for their furloughed pilots...they "preserve the profession" and managment buys 100 seat aircraft and contracts the flying out to MESA....how arrogant and stupid that?

2. UAL MEC, according to UAL pilots I have talked to, say pretty much all they wanted from from management after the bankruptcy was the maintenance of one list and protection of the A fund retirement...preserve my retirement. Now UAL has worse work rules than I do at my RJ company! How self serving of the senior UAL guys!

3. DAL scopes out DCI from buying more than 56 70 seat aircraft. Yet, they won't fly them at mainline (or 90 seaters for that matter), because the pay rates to make those planes profitable at mainline would drag down the pay rates on all the other mainline aircraft.

So instead of getting a bunch of new planes, growth, and guys off furlough, the DAL MEC is "preserving the profession" by eliminating DAL's ability to buy right sized planes to compete with the LCCs, and letting his guys stay on furlough because they are too stubborn to accept a 70/90 seat pay rate that allows DAL to be competitive.

How dumb and short sighted is that?

ALPA/UAW/IAM and the steel workers union leaders must have all gone to the same school where the school moto was "max pay to the last day."

The last day, much as it did for the american steel worker and thousands of UAW members, may come much sooner than anyone thinks.

 

[Ty Webb]

Can someone explain why making 110k/year is the future of the industry...and everyone is thrilled about it. I would rather make 250...guess thats just me.

$110K is third year Capt. pay at AirTran. Top pay under the current contract for a 12th yr capt. is $152./hr., or about $160K a year. That's under the current contract, too, which only goes through '04.

How much do YOU think a Capt. of a 117 seat airplane should make? And, if you are geting intot his business for the pay, you are probably going to be very, very unhappy.

 

[C150Commuter]

Ty, I think that pay is excellent. I wasn't trying to take a shot, just say that i didn't think the majors were dead. Obviously no one is getting rich by flying planes, I realize that. But part of the reason I did get into this business is for the travel to many different places including international. Who will cover these routes? Not flamebait, actually wondering the answer to this question....

 

[chawbein]

Major airline or not, if there is a void in international flying because every major airline went broke, someone will pick up the slack. Maybe a company like SWA or Airtran might buy an assload of 777's and hit europe and Asia? It's not that far fetched. More likely that with the demise of major airlines in the US (a very fat chance indeed) more than likely a foreign carrier would pick up the slack.

My money is on Continental though. I was looking at their annual report and it looks like they are consolidating with Boeing products. By next year, most of their MD's will be gone. A common (somewhat) fleet, flying efficient aircraft, not in bankruptcy, they could be poised to take some market share from the majors as they will inevitably decline, but not go away.

 

[secks]

goldentrout:

Well said. Unrealistic union demands have buried many of the majors. For SWA, AT, and JB to survive, they must use extreme caution when accepting union contracts.

Let's face it: Earning $80+k/yr. flying jets many would fly for peanuts is a very sweet deal. Computer programmers learned a similar lesson when much of the U.S. IT business was outsourced to Asia.

Does anyone know what the going rate for a non-union 737 captain is? Does such a thing exist? Has it ever?

 

[DIAMONDDD]

History

Peoples Express, New York Air, these were the media darlings a few years back. They were going to change the majors, they were never going to be the same. I am not saying that major change isn't coming, but I am saying that folks were saying the exact same things a few years back. How can anyone be completely, and totally sure they are right this time?

 

[jarhead]

Just "being" an upstart company, in and of itself, does not guarantee success. Being an old and "established" company, also does not guarantee success. It is irrelevent. What is relevent, is a business plan and leadership, dedication, and a desire to compete in the market place. Nothing else matters.

 

[dogg]

Ty, nice choice of grammar....... not going to bother commenting on your lack of understanding....Golden, the number is an after tax, after providing for you own retirement and after paying a large chunk for your health care plan figure. IE what you can spend on your mortgage, your childrens college fund etc.....and 46 yes I would care to comment on that 1 million dollar number. First, of course the money must be spent and the training must be second to none.. I have no beef with that.
What I do have a beef with is for a pilot who accepted a job where training was provided for and retirement was provided for to take another job and then sit back and say that it really is not about the money it is about how much fun it is to fly and what a great company this is etc....etc....I only bring this up because at my current airline(no Ty it is not metro's but you would be a better pilot had you flown one) where we are being asked for a 23% pay cut and a significant increase in health care premiums and the abandonment of our A plan for some "pie-in-the-sky performance based program, it is the guys and gals that are still working part time for Uncle Sam or who have a retirement from Uncle Sam that are rushing to embrace this deal and are babbling about what a great job this is etc....So 46 I am not talking about you because I am sure you are not one to do that.
So in the end for me it is about the money plain and simple, not what I fly or where I fly. The money allows me to do what I want when I want with my own family not my " big happy airline family".
And one more thing....3 year upgrades are like pyramid schemes, they work great if you are in early but when your airline is 75 - 100 years old they don't come around so often so dont take less as a copilot because you will make more as a captain, they are trying to sell the copilots at my company that crap right now. What a bunch of bull.............there now I have ranted and I feel better so lets keep the discussion alive

 

[Clownpilot]

What an idiot

Jarhead, congratulations you just joined the ranks of Avbug and Skydiverdriver as the biggest idiots who post on these boards. Your fast food analogy is absolutely ludicrous.

Like the downturn that got us here the upturn that follows will help return this profession to what it should be for the top guys. A high paying and enjoyable career. Either that or the only pilots left willing to do it in 10 years will be idiots like you. It's cyclical. Stop being so **CENSORED****CENSORED****CENSORED****CENSORED** short sighted. Yeah it might take another 10 years to even out. But we arent going to the dogs like you think we are. This is just one contract period during the worst economic downturn since the depression. BTW the Nasdaq was once over 5000. I guess it will never go back up again huh idiot???

Knowing people like you are in the same air as me scares the crap out of me. Please find another profession and stop trying to destroy this one. We don't need any help from you.

Why settle for 250K? Why not 500K? Heck, all pilots should make 5 or 10 million a year! Right?

Better wake up and smell the coffee. Did you ever take a course in economics in school? If not, you better consider doing so. There are LAWS of economics, not the least of which, is the law of supply and demand.

While we're at it, let's up the minimum wage for Burger King order takers to $200.00 an hour. Of course, my Whopper with fries will now cost me a few hundred bucks as well. Maybe I'd better skip eating there. Oops? No customers any more. Burger King shuts down, and burger flipper is out on the street with no job.

 

[snowback]

. . . . let's not forget the fact that most major pilots spend a number of year being furloughed between cycles, and the impact of that on your life and finances.

I hate to sound rude, but that's about the most ignorant thing I've read on this forum for months.

Let me opine. When AMR, UAL, CAL, NWA, DAL, USAir and whoever else all go out of business and JetBlue, SWA and Airtan all have 1500 airplanes each, make gobs of money and become combersome megacorporations, what are the employees going to want in terms of pay and benefits? Is everyone going to sit there and be content to make 150K/year as a 20 year captain? Will everyone just get warm fuzzies over the prospect of flying 85 hours/month...every month of every year? Will everyone let the years of improvements in safety, quality of life, pay and benefits that unions like ALPA and APA have achieved just go down the toilet. I'd bet there will be a lot of greedy malcontents from the doomed airlines in the ranks of these new mega-LCC airlines making sure the "I'll fly an airplane for nothing 'cause it's really cool" attitude is subverted. That's what Ill be doing!

 

[Clownpilot]

STFU

What you understand about how the airline industry works could fit in a dimple on a thimble. Stop airing your complete ignorance. It annoys me. And no, its not as simple as supply and demand or simply having a good business plan. It's a lot more about adapting to the changes as they come. When the economy recovers and air travel booms again we will see large profits at the airlines that survive now. Not just the LCC. They arent going to be the only model in existence. In fact, in an up economy they are the low profit makers.

United was by far the biggest profit maker in the last up cycle.

Look at them now. Their model hasn't adapted to the conditions. But it must work cuz they were top dog. But when things changed they didn't. Guess what?? Things will change. And then things will CHANGE ........AGAIN........then they'll change......again after that.

Just "being" an upstart company, in and of itself, does not guarantee success. Being an old and "established" company, also does not guarantee success. It is irrelevent. What is relevent, is a business plan and leadership, dedication, and a desire to compete in the market place. Nothing else matters.