but the question, PIT, is what do you believe is the impact to airline labor if re-regulation does happen... or more likely, doesn't?
and what is your motivation for hoping the industry will be re-regulated?
WorldTraveler, on 07 August 2012 - 02:29 PM, said:
but the question, PIT, is what do you believe is the impact to airline labor if re-regulation does happen... or more likely, doesn't?
and what is your motivation for hoping the industry will be re-regulated?
I don't believe Labor would benefit either in a regulated or deregulated environment.
The Labor contracts (if you want to call them contracts) have been decimated during this deregulated environment for decades. The entire point of deregulation is to allow competition, supply and demand, to dictate the fare structure in the industry.
The public was to benefit from this, and they did, and have, for decades. But that benefit will come to an end as the industry finishes the consolidation.
Heck, that's how People's express came into being...deregulation. A jump start airline based in EWR competing fiercely on the East coast offering $19 fares one way. While they didn't stay in business long, and couldn't sustain those fares, there were many new regional carriers that opened up shop to compete with the legacies. The legacies that service these areas had to lower their fares, create new service ideas to compete with these carriers. LUV started service in 1978 competing with the legacies offering low fares and point to point service, going to cities that the legacies didn't service. They were smart.
The legacies competed with these new carriers by lowering their fares and creating the frequent flying program, looking for consumer loyalty...code sharing was created for better service and alliances to be more competitive and keep customers loyal. The consolidation occured as a strategy to gobble up your competition to get rid of the competition. Labor contracts were restructured outside bankruptcy and inside bankruptcy giving the same mantra to their labor groups that costs had to come down in order to compete. All the legacies have gotten their "free passes" in BK to lower their costs in order to compete. I actually made this prediction, in writing, on this very board and to U managment in e-mails back in 2002 when we were the FIRST to go into bankruptcy to demolish the labor contracts. I told them back then that every single legacy will go into bankruptcy to get their "free pass", and that I as a labor leader will not assist them in their endeavor to kill labor financially, cause on the otherside of this process of bk and consolidation in order not to perish....the airlines will just have to be reregulated again and labor nor the consumer will have benefits one iota.
Labor is cheap across the entire industry now. The only strategy I can see left for the legacies is to marry each other and become bigger and bigger to monopolize these areas where competition is fierce until these smaller carriers cease to exist, or eventually get gobbled up too.
Eventually, consolidation will be leaving only a few carriers left...taking out capacity and raising fares because of LESS competition.
That's how economics works. I am surprised you can't actually see this very clearly as the future when consolidation has been completed. Airline travel industry is different than many other industries. The government steps in as the only entitity that does this oversight with checks and balances to right the industry. Without competition, the airlines can charge whatever they want...and more cost for services that use to be part of the fare. If you want to fly to get to a destination in the future, you will have to pay a hefty price for the luxury.
Don't get me wrong, or think I am a hard core lefty. Capitalism is great because it creates entrepreneurship. And this is always good for the economies and the consumer. Greed is good to a certain point. Unchecked, it can run-amuck and hurt the consumer in all ways. Just like the banking industry. No one was enforcing the regs in place and no one was watching. Although this is a different discussion, greed created the banking crisis and housing collapse. Again, government had to step in create new regulation and enforce those regs that were not being observed....greed running-amuck and unchecked.
I see this in the airline industry. Corporate greed has ruined the industry, ruined labor relations and the public perception... really there is no loyalty anymore. The bottom line is that the public doesn't get any better service as a result of deregulation, cheap flights for now, indeed, but lousy service for the buck. And labor hasn't benefited on any level,whatsoever. And that's because the profits are intermittent and far and inbetween, and dependent largely on cost of fuel.
Yup, reregulation is on the horizon , no doubt.
PITbull
