Logos From United States, joined Jan 2000, 672 posts, RR: 2 Posted (5 years 4 months 3 weeks 1 day 13 hours ago) and read 1784 times:
An AP story today floats the idea that the airline industry will be healthier after several legacy carriers go belly up. The stable number of legacy carriers, either through failure or consolidation, is 2 according to the article.
AirTran737 From United States, joined Apr 2004, 3123 posts, RR: 15 Reply 1, posted (5 years 4 months 3 weeks 1 day 13 hours ago) and read 1772 times:
That article has been in a lot of papers today. I agree with it. There are too many airlines these days, and it's time for at least tow of them to die. I understand that people will lose their jobs, but business is business. UA and US just need to go tits up. I'm sure that between AA, NW, and DL those routes will get filled. NW will pick up the UA 747's and Airbusses, and AA will pick up the 777's and 737's. The 757's may go to either carrier, and when it is all said and done the flying public still wont care.
Nice Trip Report!!! Great Pics, thanks for posting!!!! B747Forever
NIKV69 From United States, joined Jan 2004, 8401 posts, RR: 56 Reply 2, posted (5 years 4 months 3 weeks 1 day 13 hours ago) and read 1767 times:
Good Article. Like I said if someone like US can't compete then maybe they should either fold or be bought up. To tread water and wage war with your work force so they take pay cuts is just a waste of time in my opinion.
JMV From United States, joined Jan 2000, 241 posts, RR: 1 Reply 3, posted (5 years 4 months 3 weeks 1 day 13 hours ago) and read 1753 times:
I think consolidation in the industry is inevitable, with the strong, agile, and best managed surviving. Failure is the likely scenario. I don't think there are any merger opportunities out there.
Leskova From Germany, joined Oct 2003, 6075 posts, RR: 82 Reply 4, posted (5 years 4 months 3 weeks 1 day 13 hours ago) and read 1743 times:
For a company like UA or US, trying to survive is hardly a waste of time... would the other airlines benefit from them failing? Obviously, because people that fly US and UA today won't just stay out of planes if these two were to fail... but failing to help others will hardly be on the list of "good ideas" for the management of these two carriers.
And if the failing of one or two majors creates a new round of startups trying to get as much of the business as possible? Where would the benefit be then? Sure, it'll be back with the surviving majors after a while, but most likely it will have cost them quite a bit by then - because fighting off the competition usually includes such things as lowering the fares...
And, for that much, why stop at one or two airlines? Just imagine how healthy the remaining airlines would be if three or four majors were to fail? Aside from the chaos that this would result in...
Tango-Bravo From United States, joined Jun 2001, 3346 posts, RR: 38 Reply 5, posted (5 years 4 months 3 weeks 1 day 13 hours ago) and read 1718 times:
NIKV69 writes: Like I said if someone like US can't compete then maybe they should either fold or be bought up. To tread water and wage war with your work force so they take pay cuts is just a waste of time in my opinion.
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Which is why labor needs to stop acquiescing to management. Sooner or later (if not already?), if labor at the legacy airlines fails to take a stand against rapacious management, they will find themselves working for the same or less than what their LCC counterparts are paid -- and be working to line the pockets of incompetent management they rightly view with contempt, to say nothing of hating to come to work every day.
If labor believes they have "no choice" but to cave in and work for le$$, wouldn't it be 10 times better to be working for the same lower wages and benefits for another airline (or other business) whose management has credibility and can be respected?
JMV From United States, joined Jan 2000, 241 posts, RR: 1 Reply 6, posted (5 years 4 months 3 weeks 1 day 12 hours ago) and read 1709 times:
I don't think there would be chaos if there was a turnover in airlines due to bankruptcies and startups.
Look at all that has happened since deregulation. We have innovative carriers like WN, FL, B6 here in the states, not to mention carriers overseas. Look at the technology that has been introduced to give the public access to flying (i.e., airlines using the Internet to sell tickets, select seat assignments, print boarding passes).
Braniff, TWA, Eastern and the original Pan Am are now pleasant memories of the golden age of aviation, but their demise certainly did not result in the demise of the industry.
More people today fly than ever before. Granted, I would like to reintroduce civility and manners to the masses, but aside from that, I think it is wonderful what deregulation has brought about.
It would be fantastic if struggling carriers can turn things around. But if it doesn't happen, someone with a better mousetrap will fill the void. That is the nature of business in a free society. I, for one, wouldn't want it any other way.
AirTran737 From United States, joined Apr 2004, 3123 posts, RR: 15 Reply 7, posted (5 years 4 months 3 weeks 1 day 12 hours ago) and read 1694 times:
I don't think that if UA and US fail it will be a large issue. Between FL and B6 the East Coast is covered. If Virgin America ever starts they along with HP will have the West Coast. And of course, WN is the grand daddy of them all, and they're everywhere.. I think that you will see the airlines that survive become a more well oiled machine, they will boost capacity, and frequency.
Nice Trip Report!!! Great Pics, thanks for posting!!!! B747Forever
LTBEWR From United States, joined Jan 2004, 9373 posts, RR: 7 Reply 8, posted (5 years 4 months 3 weeks 1 day 11 hours ago) and read 1655 times:
NO! The failures of both US and UA would probably mean even higher fares on the remaining major/Legacy carriers. Not all people want to use LCC's due to many limitations such as depth of service, ability to change airlines if you flight cancelled/delayed for examples. The failure of UA would bring chaos for many travelers as it would take a number of months for their routes and rights to be taken over by others, especially critical and profitable international routes.
One problem as to USA Chapter 11/reorgainzation bankruptcy law is that at one time, it could be used to terminate union and other worker contracts. This is no longer possible due the fallout of one of the CO bankruptcies, where the then law was used - and believed abused - to get out of Union contracts. This got a lot of attention from labor thoughtout the US, pressure was put on Congress and as a result the bankruptcy laws (parts of Ch. 11/Reorganization) were changed to prevent that, affecting allcompanies, including airlines. This gives unions a lever to use in that any labor wage/benefits cuts must be negotiated in a bankruptcy and unions are going to be very hard on any cuts. This further means that airlines are limited in cutting their costs and putting themselves in greater position to go Ch.7/Liquidation or sale to someone else.
Atrude777 From United States, joined Aug 2003, 4176 posts, RR: 56 Reply 9, posted (5 years 4 months 3 weeks 1 day 8 hours ago) and read 1612 times:
Delta CEO Gerald Grinstein told a group of his flight attendants in May that he believes only two of the legacy carriers will remain after the next five years.
This is shocking to me for a CEO to predict....., I have a feeling if he is right, the United States Aviation industry is in DEEP SHIT! I dont care about the LCC, they WILL raise prices, do you honestly think if WN was the only airline to fly they would still have these low fares? The less competition........the more higher the prices are. I preditc if he is right, AA, and CO will be the remaining ones.
The rest of the LCC, are fine, I think, unless we see the addition of new airlines coming in.
Alex
Good things come to those who wait, better things come to those who go AFTER it!
Aerokiwi From New Zealand, joined Jul 2000, 1605 posts, RR: 18 Reply 10, posted (5 years 4 months 3 weeks 22 hours ago) and read 1545 times:
Tango-Bravo: While I agree that inept management at US legacy carriers has not helped their situation, arguably the greatest impediment to profitability amongst US carriers has been stubborn, abnoxious labour unions that would rather see an entire airline shut down and all of their employees out of work than make even the most sensible of concessions.
Labour is also the biggest impediment when it comes to airline mergers, that would improve the long term prospects for airlines.
WGW2707 From United States, joined Aug 2003, 1197 posts, RR: 52 Reply 11, posted (5 years 4 months 3 weeks 20 hours ago) and read 1527 times:
I wholeheartedly agree Aerokiwi. Delta especially is a portrait of union excess, with the pilots literally screwing everyone else in the company over.
Very unfortunate.
Aa777flyer From , joined Dec 1969, posts, RR: Reply 12, posted (5 years 4 months 3 weeks 14 hours ago) and read 1504 times:
I have talked to some of my friends still at AA, they have told me it is almost unanimous that the employees of AA would rather see the company FAIL than give up another penny of their pay/benefits. They do not understand that with running record load factors how AA is still loosing millions of dollars. A second quarter loss of around .02 cents per share is expected Wednesday.
The employees feel management is running the airline into the ground and we should just charge more money, and people will pay it (dont think this works, personally). AA will never have their costs down to a B6, JB, FL, HP, F9 level. It is basically impossible given AA's vast route structure and various fleet types that are necessary to support the vast route network.
I dont think that should 4-5 of the big six to collaps would be good for the industry. There is no way the LCC could absorb that type of capacity, cant happen. The fallout and trickle down effect would be devistating for the US economy should the legacy carriers fail, we are talking around 500,000 jobs in the airline alone, not to mention the rental cars, hotels, etc that would also be effected.
IMHO, I think the BUSH administration needs to tackle oil prices, screw the damn enviromentalists and start drilling for oil in AK. If it was not for high fuel costs, the industry would be alot better off.
Aa717driver From United States, joined Feb 2002, 1565 posts, RR: 18 Reply 13, posted (5 years 4 months 3 weeks 13 hours ago) and read 1483 times:
LTBEWR--You exclaim that we must have lower fares at all costs. Well, I'm pretty tired of taking pay cuts and losing my job so you can save a few bucks on tickets.
WGW2707--I don't see the Delta pilots screwing the other employees. I see the other employees failing to unionize and leaving themselves at the mercy of a merciless management. I guess you don't consider management pay and perks as "screwing" the employees...
There is a minimum cost to running an airline. The legacy's costs are out of whack because of a change in the landscape. When AA, UA and Delta were expanding to fill the void left(of soon to be left) by the absence of EAL, PAA and the shrinkage of TWA, they felt it was necessary to have a huge infrastructure that they could control internally.
Now, outsourcing is the way to go. Oops. AA can't just spin off TUL, MCI, DFW and outsource the maintenance. They can't overnight change to an all web-based res system. They can't sell and lease-back the terminal at JFK or LAX and shed the cost of construction.
There may well be room for a couple of legacy/network carriers but why subsidize those in deep trouble just to keep ticket prices down for a few? It may be that ALL the legacy carriers have to go belly up before the travelling public realizes they will have to pay more than $300 R/T to go to Europe.
Somewhat off topic, I find it very interesting that operations like Privitair(sp?) and other luxury/business airlines are springing up in Europe and you can't even move around on the floor of the Gulfstream factory because they have 35+ aircraft in production continuously. The high dollar travellers have found a way to bypass the airline hassles and are taking their money and running. Corporations are starting their own shuttle service and cooperating with other companies to share-a-ride.
We may be seeing the end of the full-service airlines(some may make the argument that they are long gone anyway... ) and only LCC's may survive.
As usual, it's an interesting ride!TC
InnocuousFox From United States, joined Dec 2003, 2578 posts, RR: 25 Reply 14, posted (5 years 4 months 3 weeks 10 hours ago) and read 1441 times:
"IMHO, I think the BUSH administration needs to tackle oil prices, screw the damn enviromentalists and start drilling for oil in AK. If it was not for high fuel costs, the industry would be alot better off."
Have to agree with that!
For those of you that think that the failure of a major will increase ticket prices, let me ask you this... do you think, perhaps, that the ticket prices being so low (as they all struggle to attract pax) is the reason that the airlines are in trouble to begin with? If one major were to fold (or be absorbed or whatever), then the rest of them could increase ticket prices enough that they (the remaining ones) would be able to survive.
We talk about how selfish we perceive the unions to be in that they would rather see an airline fail than to give up their money. If we bitch about some slightly higher ticket prices that an airline needs to stay alive, then aren't we saying the same thing?
Dave Mark - Intrinsic Algorithm - Reducing the world to mathematical equations!
Isitsafenow From United States, joined Feb 2004, 4133 posts, RR: 32 Reply 15, posted (5 years 4 months 3 weeks 3 hours ago) and read 1378 times:
Aa717driver...You need the facts, not dreams.
NW shut down ATL maintenance and have almost 4000 few union mechanics then they did 5 years ago. Have a NW mechanic tell you how many "brothers" he had in 1999 and how many are in the system today.
HP weeded out some mechanics and don't use that big hanger in PHX at the end of 26R like they did 2 months after it was built. HP outsoures a lot of heavy manintenance.
AA came close to shutting down MCI, not spinning it off. They didn't have a buyer and the city of Kansas City and state of Missouri came up with super tax incentives to keep the place open and people working. Thats why AA kept MCI.
You need facts, son. Pipedreams don't work in this volatile business of commercial aviation. The rules changed big time on 9-11-01. They will probably never go back to 9-10-01 either.
safe
If two people agree on EVERYTHING, then one isn't necessary.
Aerokiwi From New Zealand, joined Jul 2000, 1605 posts, RR: 18 Reply 16, posted (5 years 4 months 3 weeks 3 hours ago) and read 1377 times:
What an unusual reaction - there's a problem in the industry, SO DRILL FOR OIL!!!!!!!!!!!!!!!!!!! I suspect you have other issues simmering here. And wouldn't make far more sense to begin seriously investigating oil alternatives?
Actually, oil is still relatively cheap when compared to the price spikes in the 70s and 80s. What isn't cheap is the labour inputs. Legacy carriers simply can't get their costs down because of an enormous brick wall called "The Unions". If a carrier can't make money (as in the AA example), despite having record load factors etc, then there needs to be a more fundamental change in the way the business is run.
Raising fares wont work because the competition is so great. Aircraft leasing and outsourcing helps but can also only go so far. So all you have left is your workforce and if they're being paid far in excess of the competition's workers, for doing about the same amount of work, then the answer is staring you right in the face.
If the Unions wont budge and an airline goes under because of that, I certainly hope that the Union members will hold their "leadership" responsible. Shouldn't they be accountable too?
Aa777flyer From , joined Dec 1969, posts, RR: Reply 17, posted (5 years 4 months 2 weeks 6 days 23 hours ago) and read 1342 times:
AeroKiwi-
The airline industry CANNOT survive at $40 a barrell. If Southwest had not hedged at $25 a barrell it is a safe bet even Southwest would be posting losses now. AMR's CEO said that in the first quarter of this year, had AA the same oil/fuel prices as they did in 2000, AA would have made a faily good profit of around $200M in the first quarter. AA has done more than any major (legacy) carriers to streamline its operation and get its cost down.
The American people need to wake up and realize it does cost more money than $200 in 2004 to fly round trip coast to coast. I have in my hand a 1976 American Airlines timetable...In 1976 the round trip fare LAXJFKLAX was $396.00..Thats hard dollars, not adjusted for inflation....
Aa717driver From United States, joined Feb 2002, 1565 posts, RR: 18 Reply 18, posted (5 years 4 months 2 weeks 6 days 22 hours ago) and read 1317 times:
Isitsafenow--First off, don't call me "son". I didn't just roll in off the ERAU campus.
Second, I stand by my statement that the legacy carriers cannot just snap their fingers and outsource mx and do away with the associated facilities. I really don't care what the NWA IAM agreed to. (The ATL facility was an oddball anyway. That would be like AA putting a hanger in SLC.)
To HP's credit, they outsourced before their maintenance people built an "empire" in the hanger. (If you remember, it was a debacle initially. I think they used Dyn-air and it was a mess.)
UA had to put a gun to the head of the IAM while in bankruptcy to allow them to rape the IND base employees. USAir's IAM would have taken the place down when they wanted to outsource the Airbus maintenance.
Shutting down a facility costs money. USAir took a big charge when they closed some of their res centers. There are contracts with the cities and with labor groups. Some can be changed and some cannot. It gets expensive.
AA got a deal from KC. The city would have been on the hook for MCI and the job losses so they ponied up. If you think AA is keeping in house maintenance because of their high quality standards, YOU are dreaming. They would outsource in a heartbeat if the TWU would allow it.
Bottom line is the legacy carriers have huge infrastructures supported by mostly union labor and it doesn't just disappear overnight.TC
KevOC3 From United States, joined Mar 2002, 45 posts, RR: 0 Reply 19, posted (5 years 4 months 2 weeks 6 days 21 hours ago) and read 1300 times:
I am sick of people blaming the unions for the "downfall of the industry." Poor management is as much to blame as anyone. The unions job is to get the best salary and benys for the people that they represent. It takes two to sign a contract. Don't blame the DAL pilots for the contract they received, at the time it was competitive with the industry and DAL was making loads of money. Chopping pilot pay is not the only solution to the problem. US has slashed pilot pay and what has it done... Nothing, now they want more. There must be a plan that works, that is what DAL is waiting to see. A pilot is not a bus driver, there is a lot of work and responsibility to it. I challenge many of you enthusiast to go through the training to see what it takes. You would not believe it. Would the industry be better off with a few airline to go under, maybe, but a lot of people would be out of a job because people insist on paying ridiculously low prices to go from point A to B. That is where poor management comes in. Drilling for oil in Alaska is not the answer. It won't drive prices down more than a couple of cents. If oil costs a lot at the time, charge the customer for it, every other industry charges for an increase in fixed cost other than the airlines. I am sorry for the rant but I am sick of all of this stuff.
Donder10 From Canada, joined Oct 2001, 6656 posts, RR: 30 Reply 20, posted (5 years 4 months 2 weeks 6 days 17 hours ago) and read 1272 times:
The airline industry CANNOT survive at $40 a barrell
It will have to in the long run because the return to days of cheap oil may not occur and some are predicting a steady rise in oil prices ,in terms of long-term trend,up to around $100/bl.
LMP737 From United States, joined May 2002, 3916 posts, RR: 26 Reply 21, posted (5 years 4 months 2 weeks 6 days 14 hours ago) and read 1241 times:
AA717driver:
Keeping MCIE open was a mistake(so was buying TWA but that's another subject). The whole M&E operation would've been better served if they had closed the facility and consolidated all narrow body maintenance at TUL. As for NWA the IAM does not represent the mechanics there anymore.
The situation at HP was a debacle and you know what they ended up doing, hiring more AMT's.
Aa717driver From United States, joined Feb 2002, 1565 posts, RR: 18 Reply 22, posted (5 years 4 months 2 weeks 6 days 13 hours ago) and read 1207 times:
LMP737--I agree. MCI was an albatross around TWA's neck for 30 years(along with Hanger 12 at JFK). The performance at MCI picked up dramatically after AA's purchase when they thought the jig was up. AA should have shut it down ASAP.
(I agree that post 9/11 the TWA acquisition was a bad deal for AA. However, looking at the world in July 2000, AA was out of space at ORD and DFW. Plus, TWA was holding down prices in the middle of the country and in the Carribean. Plus, IF TWA had survived after 9/11, there would have been another AirTran right in the middle of AA's big hubs. Oh, well, that horse is dead.)TC
NIKV69 From United States, joined Jan 2004, 8401 posts, RR: 56 Reply 23, posted (5 years 4 months 2 weeks 6 days 13 hours ago) and read 1191 times:
If US and or UA fail I don't think we will see higher fares. I mean back in the day before B6 was even around and before WN was the force they are now you had US charging ridiculously high fares. After 9/11 and with the growth of LCC now you have seen US trying to compete and they are failing to keep up with B6, WN, Airtan etc. Let US die already. UA May or may not survive but in the long run it will be better.
InnocuousFox From United States, joined Dec 2003, 2578 posts, RR: 25 Reply 24, posted (5 years 4 months 2 weeks 6 days 9 hours ago) and read 1146 times:
"Poor management is as much to blame as anyone. The unions job is to get the best salary and benys for the people that they represent. It takes two to sign a contract."
And yet, the unions hold a far bigger gun to the head of a company than does management to the unions. There is no reasonable equivalent to a strike that a company has to wield.
Dave Mark - Intrinsic Algorithm - Reducing the world to mathematical equations!
LMP737 From United States, joined May 2002, 3916 posts, RR: 26 Reply 25, posted (5 years 4 months 2 weeks 6 days 8 hours ago) and read 1120 times:
AA717:
Bob Crandall had it right when he swore off mergers after the Air California "merger" in 1987. Unlike Carty he was smart enough to figure out it was not worth the headache.
Never take financial advice from co-workers.
26 Planemaker: The airline industry CANNOT survive at $40 a barrel $40/barrel is cheap as oil has not kept pace with inflation. The true cost of oil, according to th
27 Ken777: I have worked for a company that was liquidated and believe that any employee that wants that is nuts. To say you would rather see your company fail t
28 Aa777flyer: Mr. Planemaker- The industry is not passing the cost on to the consumer via surcharges. That is why the industry is still suffering despite record loa
29 InnocuousFox: "The industry is not passing the cost on to the consumer via surcharges." Really? I wonder why some airlines call the extra dollar amounts "fuel surch
30 Planemaker: The industry is not passing the cost on to the consumer via surcharges. $9.30 fuel surcharge for one way Chicago to New York! They are more than cover
31 RCS763av: I still don't understand why carriers such as DL,CO,AA and NW, that have load factors of about 80%, cannot be profitable, there must be a root problem
32 InnocuousFox: "I still don't understand why carriers such as DL,CO,AA and NW, that have load factors of about 80%, cannot be profitable, there must be a root proble
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