WSJ: Deregulation finally taking hold after 25 years

[SDF2BUF2MCO]

Some of those management guys should have taken Management/Labor Relations classes at Wharton.....
Bye Bye--General Lee

GL, I doubt taking a college class in LR at Wharton would have much impact. Think it starts long before. Something along the lines of attitude towards people and wanting work and play well with others.

 

[DesertFalcon]

Stating the obvious.... The industry is in dramatic change!

Part 121 carriers, are massive cash machines.

Unlike slot machines in Las Vegas, they must generate huge "Cash Flows" to make a profit. The difference between the "Slot Machine" and the "Flying Machine" is that the "Flying Machine" is much less cost efficient on a per unit basis.

What is needed to turn this industry around is innovative NEW technologies - new fuels, materials, new designs.

I believe the mass transit style, currently used by the airlines, will slowly -in the next few years- phase down to a smaller more robust system.

The real growth areas of aviation will develop from the SMALL personal transportation technologies now being developed.

Pilot salaries, in the Airline portion of the industry will continue to drop for 2 more years. After the shakeout, a slow reasonable rise in salaries should resume.

The days of the "Lifetime Pension" are over!

Basically, the GIANT companies like United and American are going to have to change, from Aircraft Carrier sized ships, into Destroyer type ships; smaller quicker, faster!

The newly configured companies will run more efficiently and will react to the changing business and technology environment without the risk of losing market share.

This is my view..... right or wrong.... only time will tell?

 

[Publishers]

cultuire

General

The culture at Southwest was for the most part past deregulation and set from the beginning. There is a tremendous difference between growing a culture and trying to change one.

The legacy carriers and their people thought that they had a legacy to continue a tradition carried from the past which is where they would like to live. Southwest created one for the future.

 

[Rez O. Lewshun]

Publishers... I always enjoy reading your well thought post. and I still do. I would like to respond to your receptionist example. Like CHQ and MAG, FO pay scales top out at 4 years. Your receptionist should have been made aware or [and here it comes].....had an agreement so that management didn't have to make behind the scenes changes to get her to.....go.


GL has it right with the five year cycle... And Bush is the Prez to help management do it....

Desert Falcon the industry IS changing.... The mini biz jets are coming. We are to become independent taxi drivers... just like independent truckers. You buy your own rig, I mean aircraft-taxi and you search for a fare, like a buzzard tow truck driver trolling for wrecks!.... It will become a dog eat dog biz, but someone has got to do it..... as dis-unification and true capitalism tears our safety record into shreds.... It is one thing to get into a shady taxi, it is another to climb into Capt Bobs Citation Mustang of the Checked FlagTaxi company at the local GA airport, cause pax wanna go 7miles/min....

The professional Air Line Pilot is becoming a legend and a static display at the NASM Udvar Hazy museum.

If I keep wearing my hat maybe I'll convince myself this isn't happening. Denial...Ignorance is bliss..... What are the sheeple doing? Maybe it is time to blend in the the flock.......

 

[DesertFalcon]

Desert Falcon the industry IS changing.... The mini biz jets are coming. We are to become independent taxi drivers... just like independent truckers. You buy your own rig, I mean aircraft-taxi and you search for a fare, like a buzzard tow truck driver trolling for wrecks!.... It will become a dog eat dog biz, but someone has got to do it..... as dis-unification and true capitalism tears our safety record into shreds.... It is one thing to get into a shady taxi, it is another to climb into Capt Bobs Citation Mustang of the Checked FlagTaxi company at the local GA airport, cause pax wanna go 7miles/min....

The professional Air Line Pilot is becoming a legend and a static display at the NASM Udvar Hazy museum.

If I keep wearing my hat maybe I'll convince myself this isn't happening. Denial...Ignorance is bliss..... What are the sheeple doing? Maybe it is time to blend in the the flock.......

REZ.... I used to be a Mirage Limo Driver and also have worked for a commercial limo company here in Las Vegas. I can see where what you have said about taxis' could apply to the industry, in the far future, but I don't think it will get to that level in the next 20 years? Who knows?

Basically, I think the industry will adopt the Air Limousine style of operation. High-end individuals, eventually middle class people will utilize the small jet services in a fractional/charter type of operation. Later, advanced technologies will make air transportation available to the masses.

We might see the exact process the Legacy carriers have experienced during the last 50 year. In the beginning, only the rich could afford to fly. Eventually, the Airlines attracted the Greyhound bus crowd; Now they can't make a profit.

Same process will occur with Commercial Space Travel. It seems to be the nature of things.

I figure that have about 20 years left in the Air Transportation business. I may end up flying Space Tourists, into Space, during the last few years of my career?

It'll probably be a pleasure to get away from all the crazies flying around in the lower atmosphere..... Rush hour traffic will be a bear!

 

[pilotyip]

Greyhound bus riders

And because of those bus riders there are five times as many pilots jobs as there was in 1975, and you do not have to be a military pilot to get an airline job. There is good side and a bad side to de-reg. If the industry is re-reged, how many of the presently employed pilots will give up there jobs?

 

[Publishers]

job growth

Sort of like the Netjets bitching on another thread. If they had not come up with the concept and been so successful, many of those bitching would be flying checks at night in a Baron.

 

[coolyokeluke]

Part 121 carriers, are massive cash machines.

Unlike slot machines in Las Vegas....

DesertFalcon the airlines aren't so different from those Vegas slot machines, sadly. You put money into them and get a poor return (on average).

 

[climbhappy]

Rez O. Lewshun.....couple of questions.

Quote: The industry is changing....The mini Bizjets are coming....

Sure, Forbes ran a story on POGO. Burr and Crandall need 8 million incash , and will need 70 jets to reach critical mass. Will also need 4 strangers who need to go to same place and enough marketing power to convinve them too.

someone said we'll allfly our own microjet. I've had a Part135 ticket. The insurance makes it cost prohibitive. plus you'd need two or three planes just for backup and revenue.
Forecast for microjets is 400 units to 4000. Question: Convince me this change will really happen since the forecast is all over the map. The one big change in fractionals is that three major charter brokerages with no assets and lots of ad money to spend have carved out a nitch and hammer on the small guy to use their 25 year old lear. They are Sentient , Bluestar and skybridge.

 

[Rez O. Lewshun]

Quote: The industry is changing....The mini Bizjets are coming....

Sure, Forbes ran a story on POGO. Burr and Crandall need 8 million incash , and will need 70 jets to reach critical mass. Will also need 4 strangers who need to go to same place and enough marketing power to convinve them too.

someone said we'll allfly our own microjet. I've had a Part135 ticket. The insurance makes it cost prohibitive. plus you'd need two or three planes just for backup and revenue.
Forecast for microjets is 400 units to 4000. Question: Convince me this change will really happen since the forecast is all over the map. The one big change in fractionals is that three major charter brokerages with no assets and lots of ad money to spend have carved out a nitch and hammer on the small guy to use their 25 year old lear. They are Sentient , Bluestar and skybridge.

It will happen if need or precieved need is real. Which is fast transportation with a high avg. speed. The GA airports are under utilized... Then of course there is the legislation changes that will aleviate the insurance and certification requirments... No need for three planes. Each owner/operator is thier own sole proprietor with all thier assets in one microjet. Think taxi but on a three dimensional regional scale. AOPA will become more powerful than ALPA and be the safety advocate like never before....

There will be two airline industries... domestic and international. UAL is already focusing on the int'l widebody market... The Airtrans, SWAa will run the domestic cattle call.....

SWA flying a B737-900ER? LAX to BOS

When these guys hit age 60..or 63 or 65 or whatever the required retirement age is they will cash out thier 401ks (no more pensions ) and buy a microjet. At this point real medical data will be determined as to when a pilot should not fly pax. Pilots trading out thier ALPA pins for AOPA pins.... (if ALPA is still around and/or effective)

As independent contractors they will perhaps use a third party quasi gov't run dispatching service. Customers will call up to get these taxi pilots dispatched to thier local GA airport..... At first this will be for the upper class but it will filter down to the middle. The upper class will then use GIVs and the middle class will use microjets. Last minute travel? No worries.. Just call up the service. They call back in 10 mintues and tell you to be a Smallville Municipal Airport in one hour... and away you go. Oh BTW the TSA will be waiting there to "check you out"


Just rambling.... any thoughts?

 

[shon7]

GL - you wrote:

"Gordon Bethune was recently quoted saying that anyone could make money in this business if they could start over every 5 years with a new employee group and have new airplanes with little or no maintenance issues. Would you like to try that also? Let's keep everyone's pay down, except management's of course! You guys fail to recognize that many management decisions have really hurt these airlines, and the result is LABOR really paying for their(management) mistakes. How about more managemet oversight?"

Firstly -- Bethune is right on. Ever think WHY he is saying airlines could make money in this business if they could start with a new employee group every 5 years?



Also, with regards to management pay -- yes it is high (compared to the pay for labor); compared to other industries -- the pay is right down at the bottom. However, I agree that the golden parachutes, retention packages and bonuses (at a time when the airlines were suffering and labor was being asked for concessions) were RIDICULOUS, UNETHICAL and EVEN IMMORAL. Pay should be based off performance and stock options that way are justified.



As publishers pointed out, "The point, if there is one, is that management is not out here trying to screw labor." HOWEVER, MANAGEMENT HAS SCREWED UP. BECAUSE -- what has happened is, you have these financial types running airlines and this is not really a business where you can apply management techniques that you do in a manufacturing based environment. They are looking at the business from a "nuts and bolts" perspective, applying their optimization, productivity, yield and deep lean models to a people business. And these types have consistently failed (Carty, Mullin, Goodwin, Dutta ...). The managers who have understood the importance of culture, morale and managing labor in general are the ones who have succeeded (Neeleman, Kelleher, Bethune, Branson).





The majors are in a situation where management does not know where to begin. Poor labor relations, LCCs, fuel prices, hub and spoke systems, aging fleets... where does one start.



The problem is -- first and foremost, this is a service business and with poor service the majors will not be able to increase revenue let alone retain existing accounts/clients. However, with poor management decisions and contentious labor relations, employees cannot provide good service and are not motivated to do so. Revenues decline and management looks for the ONLY other way to show a profit (cut costs). Fuel for the most part is a fixed cost (you can hedge your bets but buying options too costs money). So basically management is looking at labor costs. Items like fleet rationalization, training etc. are overlooked because unless you have a manager who has had time in the industry they are not going to understand any such aspects. Similarly, other expenditures like relocation etc. are overlooked. I remember UAL just after declaring bankruptcy had a few base closures and relocated employees. Managers at UAL never looked at their vendor for relocation (the most expensive vendor out there). UAL could have easily saved $1mil+ on this alone and this is a very conservative estimate at best. Not a lot of money in the grand scheme of things -- but items like this add up.



The Airline industry is UNIQUE. Not everyone can run an airline. New technology, the internet, real-time streaming data etc. might help make airlines more efficient -- BUT unless they create robots for customer service the airlines who DON"T GET THE SERVICE ASPECT OF THE BUSINESS ARE DOOMED TO FAIL.

 

[DesertFalcon]

Regarding the number of VLJ's (Very Light Jets) that will be produced in the next few years, I am not sure; However, I thing most of the profit potential for aviation is going to be in the VLJ or LJ market, initially. After the price comes down, with the VLJ and LJ jets, perhaps - just guessing - some of the higher end jets will push for technologies that will lower their operating costs?

Basically, however it happens "Personal Jet Transportation" will become cheaper. Hopefully, this will mean more jobs for all of us?

A big factor will be "tort reform." If, President Bush gets liability reform passed thru Congress then we could see a big drop in the price of everything. This would definently stimulate the economy.

My crystal ball is starting to fog up now. I will have to continue this discussion later.

Crystal Ball -[font=Verdana,][size=-1]100800Z 35008KT 1/4SM -RA BR SCT004 BKN008 OVC020 18/17 A2987


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