The Death Of An Industry

[luvn737s]

If airlines (especially ones who control over 10% of the market) feel they can't raise fares to cover their costs, why don't they close up shop and get into a more lucrative line of work? There is little difference between a merged entity of two or three large airlines and how the industry as a whole operates now. An airline who can't raise it's fares because of a lack support for that fare increase among competitors is operating in a defacto oligopoly.

Why do consumers feel entitled to a $69 fare to anywhere in the world? Because some airline feels they can gain market share by providing unrealistically low fares. And maybe they will gain share, but in a market they have trained to demand below-cost fares. Those who have polluted the water soon find that it is their drinking water source too.

So I do not pity the airline industry that pounced on the opportunity provided by the tragedy of 9/11 to rid themselves of union contracts only to find that eviscerating labor couldn't save them from a lack of strategic vision. Labor has become the whipping boy for a mistake that has ultimately cost the industry it's pricing power: internet distribution through the likes of Priceline, travelocity and others. There is no need to put any fare out there other than the match to the lowest one (hello, ever heard of yield management?) so they do and then try to build an operation that can profitably provide such a fare. Alas next week some airline moves the benchmark lower and the whole concept of profitablity goes out the window.

Now we have an industry that has no new ideas, no more labor concessions at the well and bemoans the scourge of overcapacity. Hoping for an airline or two to fail to reduce capacity is like the homeless guy whose only hope is that a rich old aunt dies and leaves him something. Until the industry decides to revisit the laws of economics and behave logically, then aunty is alive, vibrant and kicking their ass.

So while employees continue to suffer the pain and uncertainty of an industry turned upside down and whose sacrifices go unnoticed and unappreciated by a consumer population that has no idea what a fair fare looks like, the investors in the airline industry (are their any left out there besides day-traders) would be better served by pulling support out and letting the industry collapse on itself. If the airline system, which was regulated and subsidized for 40 years in order to be built into a strong pillar of our nations infrastructure, cannot recognize the pricing power it holds as a result of virtually no existant competition from other modes of transportation, then there is little hope that it can exist for another 40 years, perhaps not even another 40 months.

 

[AirplaneFan]

The airlines can raise their fares anytime they want. However, their customers might go somewhere else. That's true of all businesses.

There are two ways airlines can get out of their predicament. More revenues or lower costs. Employees tell management the solution is easier raise revenues. Customers tell management that they aren't going to pay more money, they will just fly on a different cheaper airline.

 

[Borescope]

Do away with anti trust for the airlines. Let them get together and figure out a minimum fare for the routes that they compete on that they can make a profit with.

 

[MCI transplant]

<_< Or have the government do it as part of a "Re-regulated " Industry!!! Why should Airline employees be expected to subsidize low fares for the general public???????? :down:

 

[46Driver]

How do you think the general public would vote on re-regulating the industry - especially to drive up airfares?

 

[Segue]

Its not a death of an industry, its just that the industry has reached maturity.

This pattern has been repeated over and over in other industries.

I can think of no reason why airlines should not be subject to market forces like any other industry.

Yes, the internet played a big factor in the customer being able to find the best deal. Its called pricing transparancy. They follow the best deal, just like you do when you go buy a car or groceries. Hard to understand for most airline people because they don't buy tickets.

The consumer is now your boss and they set your wages. Better get used to it - its called capitalism and last time I checked its here to stay.

 

[whatkindoffreshhell]

<_< Or have the government do it as part of a "Re-regulated " Industry!!! Why should Airline employees be expected to subsidize low fares for the general public???????? :down:

Why should Wal-Mart employees be expected to subsidize low-cost goods?

Because that company has got revenue -- customers actually buy their product!

 

[Fly]

The fares will keep coming down, down, down. Of course there will be a stopping point but not until planes start crashing because of lack of (your choice) skilled mechanics, tired flight crews, inexperienced flight crews, etc.

 

[local 12 proud]

Its not a death of an industry, its just that the industry has reached maturity.

This pattern has been repeated over and over in other industries.

I can think of no reason why airlines should not be subject to market forces like any other industry.

Yes, the internet played a big factor in the customer being able to find the best deal. Its called pricing transparancy. They follow the best deal, just like you do when you go buy a car or groceries. Hard to understand for most airline people because they don't buy tickets.

The consumer is now your boss and they set your wages. Better get used to it - its called capitalism and last time I checked its here to stay.

yea and last time i checked you get what you pay for! perhaps when several jets knock a smoldering hole in the ground from that "capitalist" cheap outsourced maintenance that the airlines are so giddy about you "consumers" might start wishing it was qaulified techs who fixed that big ole jet and not some unliscensed hack who really does'nt give a #### about anything but "miller time"

 

[The Ronin]

I don’t hear LUV or Jetblue singing this malarkey. Timing is everything, like buying MS in the 80’s. The golden child made a lot of people very rich, now they are not such the golden child, you can still make money, but not like the days of old. Airline workers subsidizing the public….brother please. Your corporate governance, your outdated unionism, your own “legacy aviation culture†has led you to this day. And the few people who saw it coming, management and union, were dismissed and disregarded. NONE OF YOU WANTED TO HEAR IT!! LUV didn’t just appear one day; they’ve been around for over 3 decades. Yes, this maybe an overly simplistic overview. Yes the government roller coaster “administration†of aviation has been poor at best. But the simple truth is, selfish self-interests from multiple parties and lack of vision have cost us almost everything. Now we have set the ball rolling. Pensions will be targeted by EVERYONE in every industry as a way to find a competitive advantage in the marketplace. I for one have honestly never understood how UAL existed since the day I got here. The only thing to me is how LONG it has taken to get to this point. And I don’t think we are much different than any other legacy carrier in that regard.

 

[Segue]

yea and last time i checked you get what you pay for! perhaps when several jets knock a smoldering hole in the ground from that "capitalist" cheap outsourced maintenance that the airlines are so giddy about you "consumers" might start wishing it was qaulified techs who fixed that big ole jet and not some unliscensed hack who really does'nt give a #### about anything but "miller time"

I'm certainly curious because I fly Southwest, AirTran, America West and JetBlue on a regular basis.

I would like to see the facts to support your safety claims.

Also, which of these airlines are allowing unlicensed techs to do jobs that require licensed techs? How can these airlines keep their certification if they do so?

 

[local 12 proud]

the law of average will someday occur, in the meantime southwest is starting to bring more and more maint. inhouse due to shoddy structural repairs and other malodys, air tran's jets will suffer the same fate. how do i know all this you ask? ive seen first hand the hack job overhaul maintenace that goes on, the overlooked corrossion in the aft cargo thats turned stringers and ribs into powder, the illegal structural repairs, on and on i could go. you may want to brush up on your FAR's, because a "repair" station is certified by the FAA to do heavy repair/overhaul work and the technician works under that certificate thereby no A&P liscense required. as i said in the end you get what you pay for!............oh yea have you ever looked at how dirty those southwest jets look up close? makes you wonder about what you cant see! .......enjoy your cheap flight

 

[luvn737s]

Its not a death of an industry, its just that the industry has reached maturity.

This pattern has been repeated over and over in other industries.

I can think of no reason why airlines should not be subject to market forces like any other industry.

Yes, the internet played a big factor in the customer being able to find the best deal. Its called pricing transparancy. They follow the best deal, just like you do when you go buy a car or groceries. Hard to understand for most airline people because they don't buy tickets.

The consumer is now your boss and they set your wages. Better get used to it - its called capitalism and last time I checked its here to stay.

Pricing transperancy? Where did you come up with that one? On of the basic tenants of macroeconomic theory is imperfect knowledge on the part of the consumer. I can't go on a website and see every price and sku for every grocery store in my area. There are very few crawlers that search every retailer for the price on an item because companies do not want to get into the battle to erode their margins. Let the consumer do the legwork. Airlines aren't selling tickets on a ferris wheel, they're providing a service which in many cases cannot be replaced by any other viable alternative. They aren't the Salvation Army either. Their purpose should be to provide safe air transportation at the highest price the market will bear. Unfortunately the oligopoly doesn't want to find out what the highest fare is, and instead opts for a suicidal game of exchanging profits for market share. Please show me another industry that has engaged in such bizarre behavior and was able to recover. I wouldn't second guess the public's acceptance of a re-regulated industry. The government may have to step in and remind the airlines that the air transportation system is vital to the nations economy (hence the RLA in the airline biz) and that if they are unable to operate it properly, then the government will give it a go at the public peril via re-regulation.

 

[luvn737s]

I'm certainly curious because I fly Southwest, AirTran, America West and JetBlue on a regular basis.

I would like to see the facts to support your safety claims.

Also, which of these airlines are allowing unlicensed techs to do jobs that require licensed techs? How can these airlines keep their certification if they do so?

I can't say the tech's are unlicensed, but when airplanes are flown to Panama or Costa Rica for heavy maintenance they are surely unmonitored by the FAA. If the airlines were required to reimburse the government for travel to offshore maintenance sites for their FAA maintenance inspectors you would probably see less and less of it. Offshore security is another matter as well.

Ah, but the travelling public could care less, safety to them is a given and when it's your time to go..., you get the idea. When the lowest ticket price is spit out of travelocity or hotwire they take it. FF miles?, so much the better. RJ flown by a newbie? Everybody has to learn somewhere, why not with my family on board?/p/

The problem is you don't get what you pay for if you did you'd see airplanes dropping like flies. You get far more than you pay for and the difference is made up by the airline employee.

 

[luvn737s]

The airlines can raise their fares anytime they want. However, their customers might go somewhere else. That's true of all businesses.

There are two ways airlines can get out of their predicament. More revenues or lower costs. Employees tell management the solution is easier raise revenues. Customers tell management that they aren't going to pay more money, they will just fly on a different cheaper airline.

The problem is that the cheaper airlines don't go everywhere, but the majors respond like they do in order to jump on the LCC juggernaut. Also the LCC's operate under protection from predatory pricing practices (ah, remember when...) which limit how an major airline can respond to a threat to their market. Wait a second, protection doesn't sound very capitalistic to me?