It’s the Labor Costs, Stupid

[Zephyr]

We always hear about how US Airways just can’t compete with all the work rules and low wages of SoutWest and others.
When people say that US Air work rules and wages are too expensive and are ruing the company, are they averaging the work rules and wages of all the various work groups across the numerous companies (to include the many sweatshops that we affectionately call Express affiliates).
It seems to me that when you factor in the Express labor wages and work rules(keeping in mind that Express tickets cost customers “Mainlineâ€￾ prices/revenue) then there is no way that SouthWest (without large Express divisions) really has an advantage in labor costs. (especially now that even mainline employees are paid less than SouthWest)
???

 

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On 3/1/2003 12:16:20 AM Zephyr wrote:
It seems to me that when you factor in the Express labor wages and work rules(keeping in mind that Express tickets cost customers “Mainline” prices/revenue) then there is no way that SouthWest (without large Express divisions) really has an advantage in labor costs. (especially now that even mainline employees are paid less than SouthWest)

???

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[airlineorphan]

I believe one key difference between U's biz plan and LUV's historical approach is that a large part of the profit that the employees have created has to be diverted to service the debt load at U, while LUV has consistently avoided getting itself into deep hock. The same with many of the other big carriers.

That's not the only factor, and a lot of different management decisions, as well as other "technical" factors have gone into this differentiation, but I believe it is a big one and clouds the question of how productive U and other big carrier employees really are. Hard to see how productive they are with giant debt monkey on everyone's back.

-Airlineorphan

 

[oldiebutgoody]

WRONG!
It has very little to do with difference in labor cost. In fact, SW employees make very similar wages to most other airlines per group. It's their asset utilization. Planes don't make money sitting at the gate. SW understands that and uses their fleet and personnel MUCH more efficiently. They won't go anywhere that would jeopardize their planes making 20 minute turns.

 

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On 3/1/2003 759 AM oldiebutgoody wrote:

WRONG!
It has very little to do with difference in labor cost. In fact, SW employees make very similar wages to most other airlines per group. It's their asset utilization. Planes don't make money sitting at the gate. SW understands that and uses their fleet and personnel MUCH more efficiently. They won't go anywhere that would jeopardize their planes making 20 minute turns.
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