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Too Many Airlines- Opinions?

Sun Apr 20, 2003 10:13 pm

The following is an article by George F. Will saying maybe
the United States has too many airlines. Then he turns
the table and shows everything from a different perspective.
This is a wonderful article in my opinion and I suggest that
you read it.

Halfway down in the article he states how there is some good
coming from all of this and I agree with him.
He states:
-1). The laying off of young pilots is putting the more experienced pilots in the cockpit
-2). The getting rid of aircraft means that all airlines fleets are new makes for safer fleets in the air
-3). Consumers are paying 1987 ticket prices

Now I can say that I do not wish for the demise of any airline,
but I think we all must come to reality, we must face the storm,
that by 2004-2005 one or two of the MAJOR U.S. carriers will no
longer be of existence. Though I hope that no such thing happens.

What are your thoughts?
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RE: Too Many Airlines- Opinions?

Sun Apr 20, 2003 10:37 pm

I disagree with number one.

"Thank you for calling XYZ airlines, we are currently close for the next several years while awaiting our young pilots to become experienced pilots... this is for your safety."

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RE: Too Many Airlines- Opinions?

Mon Apr 21, 2003 12:57 am

1) More experianced pilots in the cokpit. Yeah right, which at some stage are going to retire. So then you get an explosive number of young pilots when these oldies are retiring. In any line of work, it is a good thing to have a nice mix of seniority, for operational reasons, for social reasons, for cultural reasons, for innovation reasons, etc. Not accepting fresh labour can be very dangerous in the long run.
This line of thinking is short sightness.

2)First: like old aircraft are endangering the "safe fleets in the air"! Obviously this guy didn't bother looking at the NW DC9 operations and their brilliant safety record.
Secondly, this guy is again shooting himself in the foot since at some stage those "older" aircraft [which he describes as "unsafe"] will return to the air, since they will have become dirt cheap. These aircraft [which have been stored for an undetermined time] will usually fly with young new airlines, which are going through the difficult task of setting up decent maintenance / engineering / operations departments. Not sure what this will do to "safer fleets in the air".
Again short sightness.

3)Ticket price has gone down, and probably are here to stay. In the long run, this is a good thing. However, bankruptcy [Ch7] is not good for consumers, and it may take some time for the market to stabilize. Generally consumers are beter off [sp?: is that of or off?] in a stable market.

However I do agree that the network carriers [I prefer "network" over "the majors", since some LCC are becoming pretty major now] will have to reduce capacity, or change the way they do business. It looks that the point-to-point market is going low cost. However there will still be a very large market for network operations, since it will be impossible for all 400 or so US commercial aiports to be linked non-stop to each other. In additon, only a couple of dozen airports will have decent international services [long haul that is], so the other 350 airports will rely on network carriers for their international pax. The network market however is not sufficiently large to sustain all current operations.

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RE: Too Many Airlines- Opinions?

Mon Apr 21, 2003 1:28 am

Deltadude8.... you beat me to it!!! I just finished reading George Will's column in my local paper and was going to post it myself, but as a good member, I checked first to see if anyone else had done so. Kudos to you!!

I think it is an excellent opinion piece, the above critcisms notwithstanding. AIR757200 and PW100 are being dragged into the minutia and not focusing on the real message -- that of excess capacity and excessive government meddling. The 3 points mentioned above are only noted in passing, as unintended consequences that may be of short-term benefit to consumers.

The question of over-capacity is a double-edged sword. Capacity is now so tight that I often find it impossible to get on my preferred flight. What is an optimum level of load factor that balances good economics with an acceptable level of convenience? Note that being delayed will cost my employer money, as he has to still pay my salary while I wait at an airport. Not that I am totally unproductive (I have a laptop), but less productive that being in my regular work environment.

On the issue of government policy, I totally agree with Will -- government should just provide a robust free-enterprise environment where the airlines can duke it out fairly, without the government rewarding the poor performers.


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RE: Too Many Airlines- Opinions?

Mon Apr 21, 2003 2:48 am

The question of over-capacity is a double-edged sword. Capacity is now so tight that I often find it impossible to get on my preferred flight. What is an optimum level of load factor that balances good economics with an acceptable level of convenience?

This underlines a big part of the problem. Before deregulation, travelers set their schedules around when the airlines flew a route. Post-deregulation, airlines tried to accomodate everyone by having heavy frequency on all major routes (NYC-LAX is a prime example). The problem is that, to get all of those flights filled, fare sales abounded and, to make up the difference, last-minute travelers paid through the nose for the "convenience". If the majors would just drop the frequencies to more realistic levels and passengers understood that XYZ Airlines flies JFK-LAX at 0800, 1200 and 1800, make your plans accordingly, things will stabilize in the industry. The convenience to fly whenever you want still exists - its called charter aircraft flights. Short of that, fly when the airlines are going!

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RE: Too Many Airlines- Opinions?

Mon Apr 21, 2003 3:30 am

"....Short of that, fly when the airlines are going!"

Well, that doesn't quite answer my question. I don't have a problem with the frequency of flights, just with the shortage of seats on certain flights. I have to assume that an industry's primary marketing concern would be to supply what customers demand, as opposed to expecting customers to take what's thrown at them. That's how Henry Ford discovered that he had to make cars that were other than black, otherwise someone else would fill that need.

Deregulation allowed many airlines to compete on the same routes, while competition was limited before. This may have led to over-capacity. So my question stil stands...."What is an optimum level of load factor that balances good economics with an acceptable level of convenience?"

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RE: Too Many Airlines- Opinions?

Mon Apr 21, 2003 2:25 pm

The key issue, it seems to me, is that the balance of traffic between the two airline industries is changing. In 1995, the Cartel-network carriers and their regional affiliates carried 90 percent of scheduled passenger traffic, and the low-fare carriers carried 10 percent. Now, the Cartel & affiliates carry about 80 percent and the low-fares 20.

The reasons, of course are the bad economy, 9-11, and most importantly the spread of low-fare carriers nationwide. Once People Express was vanquished in 1987, the East and Midwest had no one to hold the Cartel carriers and their bloated cost structures accountable. So they gouged their way through the '90s. But then Southwest spread east; the new AirTran rose from the ashes of ValuJet and prospered with new shiny 717's; and of course JetBlue was born.

The majority of the US population now has a choice, unlike the 1990's when most of us had to take it up the poopchute from the Cartel. Both leisure travelers and corporate travel departments are finding the low-fare product to be a much better value. Today's low fare carriers are well-managed, high-quality operations, which can economically serve a large number of city-pairs.

These structural changes have reduced the demand for network-carrier capacity in most markets. So one or two of them will probably go under in the next few years. My admittedly rough estimate is that within five years, LCC's will carry 40-45 percent of USA traffic. The network carriers won't all be able to maintain critical mass as traffic continues to shift the the LCC's. United is the likeliest candidate for Ch. 7 in my view, and US Airways is far from out of the woods (if in miraculously better shape than a year ago, and possibly a survivior now).

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