Swelbar recently wrote about oil and airline labor: http://www.reuters.com/article/2011/03/03/idUS403681395720110303
F*** Swelbar, he is nothing but a shill for Aircon and ECLAT masquerading as a professor from MIT.
Swelbar writes
"I am not expecting another $117 drop in the price of a barrel of oil like we witnessed in 2008".
Well I dont think anybody is, since after all its only $115/BBL.
http://www.businesslive.co.za/Feeds/businesstimes/2011/03/05/oil-no-immediate-threat-to-recovery
Swelbar cites figures for refining fuel from 1978 to 2001, without adjustments for inflation. IIRC if you look at the price of OIL during the gas crisis of 1979 and adjust it for inflation it was around what it was in 2008.
Based on findings by the Air Transport Association’s superb economic analysis team led by chief economist John Heimlich,
An ATA team, well thats like saying that a report on Gun Safety from the NRA isnt biased. The ATA is a lobby group for the Airlines.
He also revealed his intended motives for this tripe in this paragraph;
''As the industry added capacity, employment grew by nearly 220,000 full-time equivalents. During the same period, the total cost of an employee to the industry declined by eight percent in real terms. I can hear it now, ”no way – my salary is significantly less.” Yes, it is true salary costs when adjusted for inflation have decreased. On the other hand, the cost of pension and benefits paid to airline workers has grown at a rate faster than inflation. The cost of an employee to a company is not based on salary alone.
Mr Swelabar also fails to report the huge surge in revenue per employee, even in the case of AMR which is lower than other carriers who inflated their productivity through outsourcing. So as Mr Swelbar points out the cost per employee went down but he conviently leaves out how much revenue per employee went up. He mentions that productivity went up per employee by 44% but fails to mention what metrics he used to measure productivity which can vary greatly, no doubt he used the one that showed the least gain.
Another misleading statement;
The number of available seat miles produced per dollar spent on labor fell by 42 percent.
Well inflation alone should have driven those costs up by 72% over the 24 year period, in real terms labor costs per ASM went down 30%.
He also claims that Oil is not considered a controllable cost, well what exactly is the purpose of fuel hedges, winglets and buying new airplanes? Arent all these things means by which carriers try to control fuel costs?
More half truths from Swelbar;
In 2002, when the restructuring began, the average cost of a full time equivalent airline employee was $74,910. Today, the average cost of a full-time equivalent employee is $83,869.
Here Mr Swelbar goes on to claim that over a 9 year period the labor cost per employee went up by 12%, or 1.3% a year, with inflation averaging around 3% that means in "real terms" average cost per emplyee went down by 15%. This occured while the airlines were downsizing, which as Mr Swelbar pointed out brings costs up because the junior employees are let go first.
One of Mr Swelbar tactics is to swing back and forth between "Real" or inflation adjusted figures and unadjusted figures. He will minimize the numbers that dont support his message by using inflation adjusted figures and mislead by not remaining consistant and then use unadjusted figures.
Swelbar is a fraud. Clearly this was meant for the consumption of Airlline Workers and clearly he is saying that we should just shut up and accept the fact that everyone else is going to get a bigger piece of the much bigger pie at our expense. He makes a living at playing with numbers and getting them to say whatever it is he wants them to say, I have to wonder how much the ATA paid him for this little piece of alarmist propaganda.
FWAAA I'd still like to see your answers, or was that it?
