Morningstar Reviews AMR
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Surprised they didn't mention labor...
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Labor was never the problem to being with.
The problem was Government Welfare and Bankruptcy Laws keeping failing Ailines in flight combined with the inability of Carty/Arpey and other Airline Management to seethat the problem is a simple supply vs demand inbalance.
Crandall could see it clearly and discussed it several times while doing interviews but that old goat has been either not heard or has no influence in today's management ranks.
Carty and Arpey, along with the other inadequate Airline management in the industry were dead set on hammering labor even if it meant going to the Bankruptcy Court to get it done. And this has proven to be failed leadership across the board.
The sad shame of it if the common airline worker is that our Labor Leaders are so much in bed with Airline Management that they failed to listen to industry analyst that clearly explained the problem over and over. Labor Leaders buried their heads in the sand and followed the ignorant management lead. All in an effort to save jobs and dues payers in an industry completely over manned for the over capacity problem.
Today, capacity is still the problem. Supply vs Demand is still completely out-of-whack in this industry. Now the superior management that has stolen from the stock holders using stock award bonus scams finally appear to get the message. However, Labor Leaders want to fight about seniority rights and lay-offs so the management cannot get the mergers into full swing.
The common worker in the industry is not currently and never has been the problem.
The problem is really simple:
A Capitalist Government giving money away as if we are a Socialist Society.
Airline Management completely unqualified to accpet the reality of the situation. And to weak to make the require tough decisions because it is much better to be a large airline than one that makes a profit.
And Labor Leaders who would rather shoot themselves in the foot and take us all down, rather than accept the facts related to much needed capacity reductions to become profitable.
The video link above places blame on oil prices. That is NOT the problem in itself, but another symptom of the problems listed above.
eolesen
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Dave, I'm glad to see that you now can appreciate Crandall for who and what he was. Ten years ago, people were having parties to celebrate being free of his outdated and heavy handed ways of running the airline...
You're absofrackinglutely right that capacity is out of whack with demand, but that's a component caused as much by the majors as it is by the artificially low barrier to entry provided to carriers like Airtran and Jetblue, who were able to outsource entire chunks of the infrastructure necessary to run an airline.
To set up an airline today, all you really need are pilots, flight attendants, and aircraft. Everything else can be purchased services. There's some thought that the next flavor of outsourcing will be companies who lease out pilots and flight attendants. As cockpits and cabin emergency equipment become more and more common, that's not too far fetched of a concept...
But at an industry level, I don't think you can put it as simple as "labor wasn't the problem". Not the only problem, but it definitely played a role.
It's an easy pass to say that management agreed to contracts which were unsustainable (especially the 2000 contracts for UA and DL pilots). But it's all stuff labor demanded.
Management didn't say "hey, we're feeling generous. Here's a 20% pay increase, and we're going to let you have more paid time off, too!" And it certainly wasn't management casting the strike authorization votes.
Both sides are at fault here -- labor for never grasping the concept of working -with- management (Southwest being the exception historically, but even that has diminished), and management for never treating labor as partners instead of replaceable widgets.
You're absofrackinglutely right that capacity is out of whack with demand, but that's a component caused as much by the majors as it is by the artificially low barrier to entry provided to carriers like Airtran and Jetblue, who were able to outsource entire chunks of the infrastructure necessary to run an airline.
To set up an airline today, all you really need are pilots, flight attendants, and aircraft. Everything else can be purchased services. There's some thought that the next flavor of outsourcing will be companies who lease out pilots and flight attendants. As cockpits and cabin emergency equipment become more and more common, that's not too far fetched of a concept...
But at an industry level, I don't think you can put it as simple as "labor wasn't the problem". Not the only problem, but it definitely played a role.
It's an easy pass to say that management agreed to contracts which were unsustainable (especially the 2000 contracts for UA and DL pilots). But it's all stuff labor demanded.
Management didn't say "hey, we're feeling generous. Here's a 20% pay increase, and we're going to let you have more paid time off, too!" And it certainly wasn't management casting the strike authorization votes.
Both sides are at fault here -- labor for never grasping the concept of working -with- management (Southwest being the exception historically, but even that has diminished), and management for never treating labor as partners instead of replaceable widgets.
You raise several good points here, and I can't agree enough with your last statement. What I find most frustrating about the position we're in is that we've got strong egos out there on both sides of the table who aren't facing current realities. Everyone knows that fuel is a huge factor, but choose to turn a blind eye and still demand the unattainable. Management has to know of our plight and the strain these cutbacks have had on us and our families, but only see numbers and the bottom line. And then reports like this one make everything even worse. I feel like we're in a never ending state of purgatory.
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eolesen,
Do not disregard the Governments role in Corporate Welfare that kept mis-managed airlines flying.
Do not disregard the lawmakers and the Bankruptcy Laws that keep mis-managed airlines flying.
The Politicians and their policies are by far the biggest to blame in the current situation.
Do not disregard even the passenger who thinks they should be entitled to travel at 700 m.ph. for the same price as driving a car or riding a bus without the luxury of a shoulder on the road to pull over when something breaks or goes worng.
I personally hate being associated with labor faults when I have no choice in who my union leader is, I have no choice in what union represents me, and my so-called leader has the mail bought college credentials, thinks he can run an airline, and can sign a labor agreement without membership ratification. Thus I think there should a seperation between "labor" the dipshit unelected leader, and "labor" the worker. Fact is the pay and benefits were not near as expensive as keeping too many employees with nothing to do while cutting pay and benefits of those that do their jobs and making them disgruntled.
Yeah, there is alot of blame to go around, but I don't see anybody working to fix any of it !
Do not disregard the Governments role in Corporate Welfare that kept mis-managed airlines flying.
Do not disregard the lawmakers and the Bankruptcy Laws that keep mis-managed airlines flying.
The Politicians and their policies are by far the biggest to blame in the current situation.
Do not disregard even the passenger who thinks they should be entitled to travel at 700 m.ph. for the same price as driving a car or riding a bus without the luxury of a shoulder on the road to pull over when something breaks or goes worng.
I personally hate being associated with labor faults when I have no choice in who my union leader is, I have no choice in what union represents me, and my so-called leader has the mail bought college credentials, thinks he can run an airline, and can sign a labor agreement without membership ratification. Thus I think there should a seperation between "labor" the dipshit unelected leader, and "labor" the worker. Fact is the pay and benefits were not near as expensive as keeping too many employees with nothing to do while cutting pay and benefits of those that do their jobs and making them disgruntled.
Yeah, there is alot of blame to go around, but I don't see anybody working to fix any of it !
What about blaming those who go to work for the new startup low-cost carriers that offer introductory fares for $10 each way (Skybus), or who negotiate rediculously low pay rates (B6 and the E190 pay rates)? Do they get any of the bane either in your eyes for the current problem?
We have had a overcapacity issue for almost a decade now, why are startups trying to fill in niches that don't exist. Virgin America? JetBlue? Independence Air? ExpressJet?
Hopeful
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the government prefers low cost carriers so fares can stay low which keeps downward pressure on wages so they can widen the class warfare gap in this country. kinda like china and walmart....sell crap for low prices and pay crap wages so the low-middle class can stay there while the politicians and executives who lobby these class warfare initiatives shop at high end pricier brand name stores...
and soon to come, the congress will soon be taking up the issue of increasing foreign ownership of US airlines so hundreds of thousands and more airline workers can lose their jobs to outsourcing
T
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Reducing the USA to a two-class society (working class and lairds) has been the goal ever since the return of the troops from WWII. Societies that aren't oppressed are rather difficult to control. Some of the better paid unwashed (i. e., the airline mechs) have been targets for quite some time; it's becoming rather evident we are the lab rats in the "experiment".
Karl Marx commented that to "effect societal change", it takes 5 generations (in order to keep the masses from getting wise to the plans and not raise too much hell). Given that a 'generation' is counted as 25 years, we're almost 3 generations into the change that Marx described - how are they doing folks?
Another of Marx's comments was "the surest way to cause a country's downfall is to debase its currency". Again - how are they doing, boys and girls?
I'd say Bush and Cheney got a little impatient even though they did manage get a few things put in place that we'll play hell getting rid of like the "Patriot Act". It and other unconstitutional legislation will stay in place as long as the populace is presented with a bogeyman to fear such as Al Quada, 'Communism', Castro (et al, ad nauseum and etc.). If we think the other political party (whatever that might be at the time) will save us and/or be different in any way, we're badly mistaken. The two main political parties exist for our distraction only - they're both on the same page. To believe otherwise gives power to those who would do us harm.
Marx's "ideal" form of government is like many other things in that while appearing good on paper, in actual practice it sucks big green ones as was/is proven by the failed USSR, Cuba, soon to be Venezuela and eventually the USA, but - read and understand Karl Marx's writings - our enemies have been and they've been using what they read against us and have been for many years.
Whoever it was that said "Know Your Enemies" and "Keep Your Friends Close and Your Enemies Closer" knew exactly what they were talking about.
And last but certainly not least, some of us took an oath once upon a time to "defend the Constitution of the United States against all enemies, both foreign and domestic ..." - Did anyone ever wonder why that was there?
Hopeful
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Um, AA has been the king of adding overcapacity and filling "niches that don't exist " for years:
50 seat all first class F100's out of Love to LAX, LGA, ORD
Love Field flight coming to Chicago
See Kansas City and Vangaurd
Why is AA flying LGA to MSP
Houston Hobby to LGA
We could go on, but AA has be doing for years what the LCC are doing to AA today. It's hard to shed a tear
eolesen
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There aren't too many true niches left...
To mrman's rebuttal, it's one thing to invent a new market, and another to try and edge into existing markets. Running all-premium like Legend isn't a new idea. Ultrair, MGM Grand, and McClain's all tried and failed. Maxjet, Eos, and Silverjet all failed. And you can say it was due to competitive response, but the fact remains it is an unsustainable business model. Period.
Of all the examples listed, Expressjet's model was the most sustainable, and the one that avoided direct competition with other carriers. In a number of markets, it's working pretty well. Unfortunately, their timing sucks. But they proved that people are willing to pay a little more to fly nonstop between second tier cities too small to justify a 737 or MD80.
LGA-MSP? How can you say that wasn't a market waiting for competition. NWA has had a monopoly on that non-stop for years. AA has lots of corporate clients who ask for these services. AA is probably the most prudent in adding these point to point services. Just because CO & UA don't do it doesn't make it bad. AA is aggresive in those point-to-point markets because they have the customer base to support more often than other carriers. Rarely do they enter truely stupid markets.
