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IX ---“ As both the """"USAirways""""" (see if this works) Employee and the Organization age and mature, the system will once again encourage that both be replaced with new upstarts able to compete more cost effectivelyâ€---
For the Legacy Carriers to match the cost effectiveness of the Point-to-Point Business Model, they must logically abandon the Hub-and-Spoke concept and join the Low Cost Carriers in serving these high density, Point-to-Point markets. Likewise the Legacy Airlines must rationalize their fleet to match the simplicity of the Low
Cost Carriers. In an effort to survive and as a natural consequence of evolutionary business model transformation, the nation will experience less variety, less quality of service and less frequency of service to those, once served, far reaching, remote, end-of-the-line destinations and communities. These remote communities and smaller cities will no longer conveniently enjoy the luxury of diverse destinations served from their more rural Airport facilities.
A very important part of the Southwest Airline success story is that they engage in well planned, controlled expansions of service. Often, Southwest will study various markets selecting only those which guarantees the greatest promise for full capacity traffic, to and from these prospective, new destinations. In the Point-to-Point business model, full airplanes are a necessary ingredient for success. The targeted markets are selected carefully and only that frequency of service which supports a capacity load of passengers will be considered for Low Cost Carrier service.
Naturally, the Nation might not ultimately embrace a decline in variety, frequency and service which was once provided by the, previously successful, Hub-and-Spoke Business Model.
In the numerous writings and opinions, Mr. Kahn touts the benefits of Deregulation as well as the advantages of completive free Markets while defending the resulting pitfalls and discontents of deregulation with the necessity to control and regulate free market forces.
He preaches Deregulation, then, cheers for regulatory policies which hinder and thwart forces which naturally encourage consolidation. He’s opposed to innovative scaled economics which logically reduces costly duplication and waste. He’s opposed to a natural free market process which would reasonably contribute to an economically versatile, healthy, viable and broad ranging National Air Commerce system.
His ideas are an imaginative wrinkle of Economics. In terms of “Keeping pace with Inflationâ€, he’d like to cryogenically freeze the Airline Industry in the late 19th Century. Airline Revenues and thus Airfares are frozen in the 19th Century while the cost of Human resources and raw materials continue to naturally escalate with passage of time. Billions of Dollars of losses in the Industry are evidence of this failed economic theory.
What these economic policies are accomplishing, is a discriminate hamstringing of mature corporations in a Regulated fashion while providing political and economic shelter to those corporations, at the birth of their business life-cycle. The stress and strain of regulatory interference contrary to the elements of a truly free market is beginning to manifest. Major Corporations are failing. Billions of Dollars are lost. The Government is spending Billions to help protect a Nation’s vital Air Commerce. Lives are being destroyed. State and Federal Social Programs are being stressed. Taxpayers are suffering the additional social burden of supporting an aging population with the Industry’s loss of specialized skills as well as a lifetime’s loss of hard-earned Pensions. As a consequence of such industry interference, do the taxpayers ultimately gain in the long run?
Does Kahn et al really believe there’s never a price to pay? Does he really believe that his policies are comprehensively well thought-out? Does he really believe that this vital National Industry is balanced, secure and economically harmonious? Does he really believe that the Industry wont cyclically self-destruct as each Airline will certainly peak in its own Growth life-cycle?
Mr Kahn as well as several other industry observers are boasting that the economic devastation we’re witnessing in the Commercial Aviation Industry is indicative of the fruition stage of Deregulation. That we’re witnessing the Genesis of a new industry equilibrium of perpetual stability, reward and satisfaction.
If Mr Kahn along with other industry analysts were to observe a child on a swing at a city playground, they would falsely conclude, as the swing is propelled to the top of the arc, that the Child will remain there infinitely in a state of blissful equilibrium. I believe these industry observers fail to recognize that all the elements are in place for perpetual cyclic Industry instability and Airline failures.
Neither the Child nor the Industry will remain at the top of the arc in idyllic equilibrium. The laws of science will not allow such a thing. Nor will the conventional nature of business, in the real world, allow an enterprise to defeat the certainty of an aging employee group, as well as the ultimate maturation of the organization in its business life-cycle.
As both the Employee and the Organization age and mature, the system will once again encourage that both be replaced with new upstarts able to compete more cost effectively against the older, lumbering giants which approach their vanishing point of diminishing returns and growth potentials. Such policies of Airline reform discriminate against age, health, retirement and cost of living issues as it pertains to a maturing and aging population in the American workforce. State and Federal social programs must now provide economic and health care for those disenfranchised employees who become too mature in age and too costly to start anew in their own specialized industry. These programs, supported by Taxpayer money, will become more stressed as we encourage Maturing Corporations to become cyclically abandoned.
For the Legacy Carriers to match the cost effectiveness of the Point-to-Point Business Model, they must logically abandon the Hub-and-Spoke concept and join the Low Cost Carriers in serving these high density, Point-to-Point markets. Likewise the Legacy Airlines must rationalize their fleet to match the simplicity of the Low
Cost Carriers. In an effort to survive and as a natural consequence of evolutionary business model transformation, the nation will experience less variety, less quality of service and less frequency of service to those, once served, far reaching, remote, end-of-the-line destinations and communities. These remote communities and smaller cities will no longer conveniently enjoy the luxury of diverse destinations served from their more rural Airport facilities.
A very important part of the Southwest Airline success story is that they engage in well planned, controlled expansions of service. Often, Southwest will study various markets selecting only those which guarantees the greatest promise for full capacity traffic, to and from these prospective, new destinations. In the Point-to-Point business model, full airplanes are a necessary ingredient for success. The targeted markets are selected carefully and only that frequency of service which supports a capacity load of passengers will be considered for Low Cost Carrier service.
Naturally, the Nation might not ultimately embrace a decline in variety, frequency and service which was once provided by the, previously successful, Hub-and-Spoke Business Model.
In the numerous writings and opinions, Mr. Kahn touts the benefits of Deregulation as well as the advantages of completive free Markets while defending the resulting pitfalls and discontents of deregulation with the necessity to control and regulate free market forces.
He preaches Deregulation, then, cheers for regulatory policies which hinder and thwart forces which naturally encourage consolidation. He’s opposed to innovative scaled economics which logically reduces costly duplication and waste. He’s opposed to a natural free market process which would reasonably contribute to an economically versatile, healthy, viable and broad ranging National Air Commerce system.
His ideas are an imaginative wrinkle of Economics. In terms of “Keeping pace with Inflationâ€, he’d like to cryogenically freeze the Airline Industry in the late 19th Century. Airline Revenues and thus Airfares are frozen in the 19th Century while the cost of Human resources and raw materials continue to naturally escalate with passage of time. Billions of Dollars of losses in the Industry are evidence of this failed economic theory.
What these economic policies are accomplishing, is a discriminate hamstringing of mature corporations in a Regulated fashion while providing political and economic shelter to those corporations, at the birth of their business life-cycle. The stress and strain of regulatory interference contrary to the elements of a truly free market is beginning to manifest. Major Corporations are failing. Billions of Dollars are lost. The Government is spending Billions to help protect a Nation’s vital Air Commerce. Lives are being destroyed. State and Federal Social Programs are being stressed. Taxpayers are suffering the additional social burden of supporting an aging population with the Industry’s loss of specialized skills as well as a lifetime’s loss of hard-earned Pensions. As a consequence of such industry interference, do the taxpayers ultimately gain in the long run?
Does Kahn et al really believe there’s never a price to pay? Does he really believe that his policies are comprehensively well thought-out? Does he really believe that this vital National Industry is balanced, secure and economically harmonious? Does he really believe that the Industry wont cyclically self-destruct as each Airline will certainly peak in its own Growth life-cycle?
Mr Kahn as well as several other industry observers are boasting that the economic devastation we’re witnessing in the Commercial Aviation Industry is indicative of the fruition stage of Deregulation. That we’re witnessing the Genesis of a new industry equilibrium of perpetual stability, reward and satisfaction.
If Mr Kahn along with other industry analysts were to observe a child on a swing at a city playground, they would falsely conclude, as the swing is propelled to the top of the arc, that the Child will remain there infinitely in a state of blissful equilibrium. I believe these industry observers fail to recognize that all the elements are in place for perpetual cyclic Industry instability and Airline failures.
Neither the Child nor the Industry will remain at the top of the arc in idyllic equilibrium. The laws of science will not allow such a thing. Nor will the conventional nature of business, in the real world, allow an enterprise to defeat the certainty of an aging employee group, as well as the ultimate maturation of the organization in its business life-cycle.
As both the Employee and the Organization age and mature, the system will once again encourage that both be replaced with new upstarts able to compete more cost effectively against the older, lumbering giants which approach their vanishing point of diminishing returns and growth potentials. Such policies of Airline reform discriminate against age, health, retirement and cost of living issues as it pertains to a maturing and aging population in the American workforce. State and Federal social programs must now provide economic and health care for those disenfranchised employees who become too mature in age and too costly to start anew in their own specialized industry. These programs, supported by Taxpayer money, will become more stressed as we encourage Maturing Corporations to become cyclically abandoned.
