Overcapacity

[LGA / 037]

While i understand your bitterness toward DAL, they won't be going chapt 7. If anything, they lose the debt and somebody would be merging that fortress hub and outstanding Euro network into it's airline....

[post="271899"][/post]​

Buddy , if I was bitter towards DAL I would have called them the " Evil Empire ". Have you read DAL 's quarterly's over the last year ? They hedged on fuel and on UAIR going out of business and lost BIG TIME on the later. You can have ALL the Europe you want , but keep on fillin those 767-300 and 400 for $100- $130 RT Domesticly , and DAL will fail !

 

[wnbubbleboy]

There will come a day though, that the shoe will be on the other foot for those LCCs. Just my thoughts............

[post="271821"][/post]​

The day the disconnect comes between the frontline and management. You'll be right.

The day when the WN at least stopped aggressive control over buying ie, office supplies, aircraft warranties, fuel hedging, overtime costs, provisoning supplies for the aircraft (Coke, snacks). You'll be right.

The day we start saying that's not my job it's not in my contract. You'll be right.

I don't see it happening any time soon.

If the day comes though, shame on us.

 

[TomBascom]

Let's go over this again, this time more slowly so you can understand.

Ditto.

... When the "glut" of avail lift works itself out, prices will rise RAPIDLY.

You're living in a dream world.

 

[ClueByFour]

When the "glut" of avail lift works itself out, prices will rise RAPIDLY.

[post="271897"][/post]​

No, they won't.

The demand for air travel is incredibly elastic, and the changes in the last 5 years (notably with pricing transparency) have only made it more elastic. The majors won't sell $2000 transcon tickets in any great numbers ever again. If you are waiting for the mythical "capacity reduction" to return pricing power, I suggest you plan on waiting forever--it's not going to happen (at least not domestically).

 

[Busdrvr]

No, they won't.

The demand for air travel is incredibly elastic, and the changes in the last 5 years (notably with pricing transparency) have only made it more elastic. The majors won't sell $2000 transcon tickets in any great numbers ever again. If you are waiting for the mythical "capacity reduction" to return pricing power, I suggest you plan on waiting forever--it's not going to happen (at least not domestically).

[post="272000"][/post]​

For individual firms, it's highly elastic, for the industry, it's very inelastic. If every airline in the industry raised prices today by 15-20%, the drop in traffic would be negliable. One of the reasons it's not happening is there are too many firms operating with too much cheap additional capacity to add. That will change. If the government gets out of the way and allows more consolidation, it will happen sooner than later. Price increases happen much easier with 3-4 big firms than with 10.

LGA/037,
Don't get me wrong, I've been or your side of the equations. nobody likes being a giant target, which U, and UAL have been for a couple years now, and I like the fact that U is possible on the route to survival (if some of U's more irrational workgroups don't scuttle the whole deal with unrealistic sense of entitlement to the jobs of more junior AWA employees). When I say I "understand' you feelings about DAL, I UNDERSTAND!! I'm saying DAL won't liquidate. They may be part of a merger post Chapt 11 entry (to dump all the debt and bad leases), and that merger could include closing some fo the DAL hubs depending on the partner, but DAL's ATL gem and JFK routes will be part of somebody, and not from an "asset sale". either DAL will survive alone or as part of a MERGER. JMHO

 

[RowUnderDCA]

I agree, isn't ATL, JFK and FL about 2/3rds of DAL or more?

 

[firstamendment]

Don't you all worry your pretty heads on this one. 60 less aircraft will reduce capacity greatly. Obviously, many of you didn't read the same statement or listen to the same press conference that I listened to. 60 planes are ALOT of capacity.

 

[ClueByFour]

For individual firms, it's highly elastic, for the industry, it's very inelastic. If every airline in the industry raised prices today by 15-20%, the drop in traffic would be negliable. One of the reasons it's not happening is there are too many firms operating with too much cheap additional capacity to add. That will change. If the government gets out of the way and allows more consolidation, it will happen sooner than later. Price increases happen much easier with 3-4 big firms than with 10.

[post="272003"][/post]​

No, for the industry it's incredibly elastic. How you define industry makes all the difference, however.

You crank up prices by %20, you lose a relatively small percentage of business flyers, and the lion's share of discretionary leisure flying. It's the former that can't be absorbed. Cutting capacity won't help.

The other factor in play is the LCCs. So long as the 800 pound gorilla (LUV) is making money, that is the bar. No amount of capacity reduction is going to change that. The LCCs will just continue adding capacity (you can see this now).

 

[pit_needs_help]

I love all this capacity should be reduced but only by the legacy carriers please. The LUVS and BLUES are adding bigtime so to make room everyone else needs to get smaller. Based on this eventually all the legacies can go out of business to make room for them.

 

[Busdrvr]

No, for the industry it's incredibly elastic. How you define industry makes all the difference, however.

You crank up prices by %20, you lose a relatively small percentage of business flyers, and the lion's share of discretionary leisure flying. It's the former that can't be absorbed. Cutting capacity won't help.

The other factor in play is the LCCs. So long as the 800 pound gorilla (LUV) is making money, that is the bar. No amount of capacity reduction is going to change that. The LCCs will just continue adding capacity (you can see this now).

[post="272138"][/post]​

Simply not true. Which of the post Sept 11 fare increases resulted in less passengers?

 

[FWAAA]

Simply not true.  Which of the post Sept 11 fare increases resulted in less passengers?

[post="272166"][/post]​

Here's a better question: Which of the post Sept 11 fare increases resulted in more revenue or higher unit revenue??

Short answer: None. No USA airline has a higher yield or RASM today than in 2001. You can announce all the $10 - $20 fare hikes you want, but that doesn't automatically translate into higher unit revenues. Unit revenues have been falling due to domestic overcapacity since 2001.

 

[USAir757]

The day we start saying that's not my job it's not in my contract. You'll be right.

I don't see it happening any time soon.

If the day comes though, shame on us.

Ah, the perfect prescription to put the final flush on a business. That kind of attitude has never made anything work.

Yes, there may be a day when the "shoe is on the other foot" for the LCC's, but I'd be willing to bet my retirement that it's not going to be US/HP or any other legacy for that matter that will be digging the graves.

 

[TomBascom]

Simply not true. Which of the post Sept 11 fare increases resulted in less passengers?

[post="272166"][/post]​

I haven't noticed that anyone was having any notable luck increasing fares. Certainly not "rapidly" and definitely not substantially.

Go ahead. Raise them. Let us know how it works out.