AviationAddict
Topic Author
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Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 3:20 am

I can't help but wonder if the liquidation of a major USA carrier would actually help the market a little bit. My thinking is this: all these airlines that are operating under government protection are basically using all their earnings to pay off the legal bills and pay their employees, which means they really aren't making any profits. Therefore, the money that customers of airlines like NW and DL are spending on tickets really aren't helping to improve the condition of those carriers. However, if those passengers migrated over to companies like CO and WN then they'd actually be supporting a healthy market. I could be completely crazy and I have no economics background whatsoever, but I just think the marketplace is a little over saturated right now, especially with companies that barely have a pulse. But then again, I'd hate to see any airline go under, but maybe that's what it'll take for the market to rebound. The loss of smaller carriers like Independence certainly had an impact on the market in the short term, but in the end I don't think it will make a huge difference. What do you all think?

[Edited 2006-02-04 19:30:13]
 
FLALEFTY
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 3:48 am

In a word - "No!"

If DL were liquidated, for example, it would be a disaster for smaller cities in the South - Montgomery, Jackson, Augusta, Daytona Beach, Melbourne, etc.. These cities would lose mainline service, with scant hope that one of the surviving major airlines would be willing to offer replacement services.

Delta is the primary airline for business travellers in the South, so losing them would have a severe negative impact on economic development in the region.

Southwest, JetBlue and AirTran may temporarily get fatter with some additional "white shoes" business, but none of these airlines could successfully fill Delta's key role in the Southern economy.
 
DLPMMM
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 4:03 am

Quoting AviationAddict (Thread starter):
can't help but wonder if the liquidation of a major USA carrier would actually help the market a little bit.

Absolutely! It is basic supply and demand. The supply of airline seats is far too high at this time, leading to unsustainably low prices for an inflated quantity of seats.

This is ECON 101, not rocket science.

FLALEFTY's response, while understandable (I do like DL, as you can see by my screen neme), is merely a knee jerk reaction that is very common.

With the abolition of any airline, the market would work quickly to redistribute the profitable routes among the living. Some unprofitable and marginal routes might disappear completely, but that's life. They can drive a couple of hours to a more major airport.
 
lehpron
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 4:10 am

Note: Do not reply until you have read the whole thing, message changes twice.

I think yes, but put it this way:

While I agree with some of FLALEFTY's points, it is not like those people wll ever have a job again. What I think, and keep thinking, is that everyone should asymilate back into the airline market; those carriers' only problem is lack of sales, they are rolling in dough then go bankrupt.

They're not MC Hammer from the early 90's, he made 30 million one year and filled for bankrupcy the next, wow. Big grin

I think if the top execs were smart (as opposed to running away with millions not entirely like the Enron deal), they would formulate a plan to start from clean slate and use the resources available. That is, start a new airline annd use all of the previous employees, but with a change in contract (for the time being) and direction of interest. Something must be dramatically different to keep the same things from happening again.

These idea are not without their disadvantages. In order for these ideas to work, a bunch of someones must invest millions, possibly of they're own money, to make this work. I do not know how many current employees would invest so much ino their employer for the company's sake and their own. Most I run into seem quite selfish, based on that alone, perhaps none of this would work.
The meaning of life is curiosity; we were put on this planet to explore opportunities.
 
bmacleod
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 4:18 am

Quoting FLALEFTY (Reply 1):
If DL were liquidated, for example, it would be a disaster for smaller cities in the South - Montgomery, Jackson, Augusta, Daytona Beach, Melbourne, etc.. These cities would lose mainline service, with scant hope that one of the surviving major airlines would be willing to offer replacement services.

DL may be the only option in the South, but if NWA were to shut down due to union woes (remember Eastern?) and it's starting to look more like it will happen, I can't see why UA, AA or CO wouldn't be able to handle the gaps at DTW, SEA, MSP.
The engine is the heart of an airplane, but the pilot is its soul.
 
Gilligan
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 4:24 am

Quoting FLALEFTY (Reply 1):
Montgomery, Jackson, Augusta, Daytona Beach, Melbourne, etc..

Well express jet serves MGM, JAN, and DAB. I'm sure either they or Gulfstream would be more than willing to pick up Melbourne. As to all the other smaller markets in the south, I seriously doubt they'd go very long without anybody picking up service. One large carrier biting the dust is what most analysts have said needs to happen for years.
Warm winds blowing, heating blue skies, and a road that goes forever, I'm going to Texas!
 
zippyjet
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 4:28 am

No way! Like a bad case of the flu, an airline closing can be contagious plus all those folks out of work in a now deteriorating economy!
I'm Zippyjet & I approve of this message!
 
AviationAddict
Topic Author
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RE: Would Loss Of Major US Carrier Help The Indust

Sun Feb 05, 2006 4:28 am

Would the loss of NW be enough to really shake-up the market though? Despite it's size it still seems to hold on to a sort of niche market. The loss of UA, AA, DL, CO or US would probably have a much greater long term effect. I don't really see any of those carriers going under anytime soon though; NW is probably the most likely candidate for closure. By the way, this is my first day as a FirstClassMember, so I'm sorry if I do something 'wrong' or say something that offends someone, I'm still learning!  Smile

[Edited 2006-02-04 20:30:00]
 
Dreamflight767
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 4:30 am

I kinda asked this question on the NW pilot strike thread. There has been no response so I'm still wondering...

If NW goes on strike and does go into CH.7. What happens to all the small communities where NW, Pinnacle, and Mesaba are the ONLY airline service. Like here in Grand Forks, ND and several other ND cities/townships where NW is the sole airline link to the outside world. I have yet to hear of any other airline(s) putting these small towns on their "just in case" route map.

With that said, which ever airline does step up to replace NW should CH.7 occur...they will become an over night hero. Especially in MSP.
 
FLALEFTY
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 4:38 am

Quoting DLPMMM (Reply 2):
Absolutely! It is basic supply and demand. The supply of airline seats is far too high at this time, leading to unsustainably low prices for an inflated quantity of seats.

There is an old saying that the hole left in the water after pulling a finger out would be how much impact an individual person would have if leaving a big company. I think the loss of a major carrier would have a similar impact on the airline industry.

The supply of airline seats is far too high - on some routes: JFK-FLL, MCO-BOS, MIA-ORD, etc.. And that is the problem - all airlines, be they LCCs or legacies, want to fly the same high volume/low yield routes. Losing a major airline will not change this dramatically, especially with LCCs like AirTran and Spirit (for instance) in the process of adding capacity.

Even with the potential loss of Delta, I bet a passenger will still be able to fly to Boston from Orlando cheaper than flying to Miami.
 
WesternA318
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 4:38 am

In the case of the smaller communities in the Midwest, isn't the airline serving those cities protected under the Essential Air Service?
Check out my blog at fl310travel.blogspot.com!
 
luv2fly
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 4:39 am

I think the one thing that would help the industry the most is.

Airline higher ups start running it like a money making business, what I mean by that, stop the nonsense about keeping market share and start running flights because they are profitable.

Stop the pissing fare war battles and sell your product for the amount you need, not the amount to gain market share and run out another airline.
You can cut the irony with a knife
 
FCYTravis
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 4:40 am

UA's SkyWest jets to DEN and ORD would be logical replacement service to the upper Midwest.
USAir A321 service now departing for SFO with fuel stops in CAK, COS and RNO. Enjoy your flight.
 
9252fly
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 4:41 am

Short answer:No

It's my opinion that if a major airline were to go under,the vacuum would be filled in short order and you would be back to where you were. So having a major carrier go bankrupt is not the solution. What we are dealing with is rather complex. So long as any carrier see opportunities,it will continue to add capacity(Jetblue),it then becomes a question of whom to blame for the excess capacity in the market,Jetblue and Southwest for continually adding capacity,or the legacy carriers for not ceding market share to the low-cost carriers? If the legacy carriers can be profitable overall and not have their domestic operations cause an annual loss,then I think they should continue to maintain a domestic presence. The dilemma that most legacy carriers face is that without a domestic operation,they risk losing the connectivity to their international operations(domestic as well). It's a two-edged sword for the legacy carriers when faced with what domestic routes to cut.

[Edited 2006-02-04 20:48:35]
 
ckfred
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 4:43 am

If NW went under, you might see some of the surviving carriers set up focus-city operations at either DTW or MSP. Some of the cities in the upper Great Plains and Montana could get service to ORD (AA, Eagle, UA, or UA Express), SLC (DL or DL Connection), SEA (AS or Horizon), or DFW (AA or Eagle.)

But, any service added to these hubs would, in total, be less than service to MSP and DTW. DFW is a long flight from places like Grand Forks or Butte, MT. ORD is under operation caps set by the FAA, so increases would be somewhat limited.
 
Dreamflight767
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 4:48 am

Quoting FCYTravis (Reply 12):
UA's SkyWest jets to DEN and ORD would be logical replacement service to the upper Midwest.

I thought so too but...

Alot of the airports here can't handle an RJ. NW used the Saabs on a lot of these routes, I don't believe Skywest has enough prop equipment to handle up here. The airports cannot afford to lengthen/upgrade the runways or the fire fighting equipment, ect.

Also, just not enough demand or paxs. to fill an RJ too and those who do fly, they want to go to and LOVE MSP not ORD or DEN that's all they know is MSP. The culture is kinda funny up here. They love love love NW as it has been their sole carrier for eternity. And many people here do business and have family in MSP. So this area is in big trouble.
 
AviationAddict
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 4:48 am

Quoting 9252fly (Reply 13):
If the legacy carriers can be profitable overall and not have their domestic operations cause an annual lose,then I think they should continue to maintain a domestic presence.

But the problem is that so many of the legacy carriers are not profitable, or if they are profitable they are making way less than the best LCCs. US and UA have filed for C11 so many times I think they probably have the bankruptcy court on speed dial. After a while the government, and all us taxpayers, are probably going to get tired of bailing out crappy companies that can't seem to get their acts together. Something has got to give eventually, and even if the liquidation of a major carrier doesn't "help" the industry, I really don't think it would hurt it any more, at least not in the long term. Sure the little markets would be in trouble at first, but eventually another carrier would certainly pick them up.
 
isitsafenow
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RE: Would Loss Of Major US Carrier Help The Indust

Sun Feb 05, 2006 5:04 am

Hell yes. Planes are fully now. I ought to know, I am on them a couple of times a month..last week and again next week. If DL shut down, it would be an impact on a few burgs in the south, yeah but someone else would pick up the slack. Same with NW only in the midwest. Branson wants to start up and thats suicide. Just what we need....... another el cheapo to finish off markets already sick. If the carriers will raise price 9-11 per cent, and fuel dropped 40-60 cents a gallon, the carriers have a real shot at turning a dollar. Perhaps the sick balance sheet and dire futures on JetBlue is what the industry needs. Once the LCC raise fares the big guys will follow suit.
Its the SW and the JetBlues and the AirTrans saying no to increases over the past 18 month. Now the tide is turning because Blue is going red and there is one surefire way to fix that....and its not start another airline.
safe
If two people agree on EVERYTHING, then one isn't necessary.
 
FLALEFTY
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 5:13 am

Quoting AviationAddict (Reply 16):
US and UA have filed for C11 so many times I think they probably have the bankruptcy court on speed dial.

Well said!

I'm not implying that Delta's financial problems are not self-inflicted. When times were good (like in the Big '90's), Delta's management spent money like drunken sailors on leave. When times got bad (after 9/11), the managers woke up with a "hangover" consisting of uneconomically-sustainable labor agreements, a mish-mash of incompatible fleet types and a heavy debt incurred by foolishly purchasing two of their regional carriers (ASA and Comair).

And by the way, as much as it would hurt to lose them, I would never support using our tax dollars to bail Delta out.
 
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Stitch
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 5:17 am

When it comes to supply and demand, remember that the majors have all reduced supply a great deal, but the LCCs came in and make it up. WN has expanded as the majors have retreated, because the majors can no longer use overwhelming capacity as a weapon to "flood out" the LCCs as they did in the 1990s. When both a major and WN operate a few flights a day, those passengers displaced by the major's reduction of capacity (and therefore faced with higher fares) are now migrating to the LCC.

Where the loss of a major will help is the supply of last-minute and flexible "extortion fares" in Economy and the First Class fares, which is where the majors really make their money. Remember the LCCs can (in theory) survive on a $299 one-way transcon fare, where the majors cannot. So if a major goes under, there will be less supply - but constant demand - for those $699/$999/$1999 fares, which means the remaining airlines will see improved revenue at the top end.
 
AviationAddict
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 5:24 am

What's the real benefit of flying a legacy versus a LCC on a typical domestic route? The legacies have had cut back on so many of their frills which made them a "legacy" carrier in the first place that now they've basically turned into an overprice Greyhound bus that flies. I mean, I fly a lot between the Boston area and the DC area, which up until the recent introduction of B6 service between IAD-BOS, meant that tended to fly either WN or US because those two airlines offered the most flights. Yet, after a while I got smart and stopped flying US because I realized I was generally paying nearly twice as much for the same size seat, glass of water and bag of peanuts. So honestly, why continue to pump money into an overpriced, poorly managed company?
 
HunUtazo
Posts: 229
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 6:42 am

....relax, consolidation is in process,



here ya go, I'll say it again....


CAL/ual

AMR/nwa

LUV/dal?

LCC/fragments?


many many lemming like, domino'esk changes around the corner..  biggrin 
dude
 
FCYTravis
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 7:00 am

LUV and DAL?

Yeah, that'll happen oh, exactly... Never?
USAir A321 service now departing for SFO with fuel stops in CAK, COS and RNO. Enjoy your flight.
 
9252fly
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 7:00 am

Quoting AviationAddict (Reply 20):
The legacies have had cut back on so many of their frills which made them a "legacy" carrier in the first place that now they've basically turned into an overprice Greyhound bus that flies.

...and who's fault is that? Yes,it's you the consumer(Not you specifically Aviaiton Addict)! Stop whining about the legacy carriers turning into the Greyhound(Mass transit) of the skies(Domestic). I've never heard so much whining from people on this forum about how the legacies have cut back on this and that. Somehow it's okay to pay LCC fares,yet somehow think a legacy carrier still has enough margin in the fare to continue to offer the "frills". Please don't' give me that BS story that legacy carriers fares are all 10X the price of the LCC's. If the whiners on this site had their way we wouldn't have any legacy carriers,which by the way,make for great discussion on this site. Imagine having only Jetblue,Southwest,Frontier and Airtran as the only domestic airlines in the country,oh boy,that sure would make for fascinating comparisons! Topics on domestic travel would simply become boring and mindless.
 
AviationAddict
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 7:57 am

Quoting 9252fly (Reply 23):
If the whiners on this site had their way we wouldn't have any legacy carriers,which by the way,make for great discussion on this site. Imagine having only Jetblue,Southwest,Frontier and Airtran as the only domestic airlines in the country,oh boy,that sure would make for fascinating comparisons! Topics on domestic travel would simply become boring and mindless.

Well, sorry, I didn't realize the legacy airlines were still around to give you something to talk about. Honestly, the consumers surely have some role in the demise of these carriers, but I would argue that high gas prices, older and less fuel efficient fleets and some overall bad managment decesions are much more to blame. I still don't understand why you'd pay more money for the same flight; it's like people that go to gas station A when gas staion B right next door has the same fuel for $0.08 less. I still don't think I'd be inclined to fly a legacy even if it were able to offer all the extras is used to so long as carriers like WN, B6 and others undercut the fares. I don't fly so I can sit in a big cushy lounge chair, watch movies on my personal TV and eat ice cream, I fly for the thrill of it (but hey, I can get a lot of that stuff on the "boring" LCCs too at lower prices, so why not)? I don't think anyone was whining, I myself said I didn't want to see any airline go under if it was avoidable. And to be honest with you, I think the whole legacy vs. lcc argument will become irrelevant eventually anyways because somewhere down the road the thrill of cheap fares or ultraluxurious cabins will cancel eachother out and the industry will have to find something else to attract more customers.
 
NWDC10
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 8:02 am

Not really. Robert NWDC10
 
AviationAddict
Topic Author
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 8:21 am

Ok, I probably got a little carried away with that one.
 
swissy
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 8:23 am

[quote=Luv2fly,reply=11]Airline higher ups start running it like a money making business, what I mean by that, stop the nonsense about keeping market share and start running flights because they are profitable.

You are right, that was one of the main reason why PA went under, get rid of the good stuff and keep the crap at any price....... the courts should start
looking in to these "irresponsible clowns" and take them to court.

How many employees does NW have???
How many suppliers does NW have????
There will be very well a impact to the US economy wait and see........

Cheers,
 
CIDFlyer
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 8:36 am

Quoting Dreamflight767 (Reply 8):
If NW goes on strike and does go into CH.7. What happens to all the small communities where NW, Pinnacle, and Mesaba are the ONLY airline service. Like here in Grand Forks, ND and several other ND cities/townships where NW is the sole airline link to the outside world. I have yet to hear of any other airline(s) putting these small towns on their "just in case" route map.

With that said, which ever airline does step up to replace NW should CH.7 occur...they will become an over night hero. Especially in MSP.

I think the new US could pick up some of NW airbuses and the MSP hub, it would fit perfectly in their route system and give them a centralized hub. As for DTW, I think CO would ditch CLE and build up a larger midwest presence at DTW with its larger terminals and multiple runways. The could also contract Pinnacle for a CO Connection carrier. MEM would probably be left to an Airtran expansion and most likely Southwest coming in.

I honestly believe that MSP and DTW would not sit empty and become hubs or at the very least large focus cities for the remaining airlines.
 
BOS2LAF
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 9:27 am

Quoting Luv2fly (Reply 11):
Stop the pissing fare war battles and sell your product for the amount you need, not the amount to gain market share and run out another airline.



Quoting Isitsafenow (Reply 17):
If the carriers will raise price 9-11 per cent, and fuel dropped 40-60 cents a gallon, the carriers have a real shot at turning a dollar.

EXACTLY!

People go on and on about, "There's too many airlines!" "Theres too much capacity!" etc. and it drives me up the walls because facts dont support it. The reality is, and you can check the facts with the ATA for yourself, that the US airline industry is posting its highest load factors since the 1940's. Its the fare wars, selling tickets at a loss, and scorched-earth tactics thats causing the problems.

The legacies are caught between a rock and a hard place on this one. They can raise fares to sustainable prices, but then your leisure passengers will go elsewhere, and the legacies will have even fewer cheeks in the seats, and as lucrative as first and biz classes are, they alone can't sustain an airline. The only other option is to continue to compete with the LCC's pricing and lose money, although probably less than they'd lose if they raised fares.

In the long term though, in order to remain competitive, they need to cut their cost structures (i.e. extravagant golden parachutes, among other things). In the long run though, I also see the LCC's cost structures going up as employees gain seniority, and second fleet types are added. Hopefully things will settle in some sort of middle ground. I don't plan on holding my breath for that one though.

Kudos Luv2fly and Isitsafenow  goldmedal 

Quoting HunUtazo (Reply 21):
here ya go, I'll say it again....

CAL/ual
AMR/nwa
LUV/dal?
LCC/fragments?

Ok, CO and UA, I'll give you that one as theres lots of speculation flying around about that one.

I'm not going to bother dissecting the other ones.

It makes me wonder, what are you smoking, and where can I get some?  hypnotized 
 
AviationAddict
Topic Author
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 9:43 am

Quoting BOS2LAF (Reply 29):
The reality is, and you can check the facts with the ATA for yourself, that the US airline industry is posting its highest load factors since the 1940's.

I agree with you 100%, but just because they are posting record numbers doesn't mean they are filling their entire capacity. The airlines also have many more planes that also happen to be much larger than at any other point in history (the routes that used to be served by DC9s and 732s etc. are often times being served by 738s, A320s and other models that many more seats than the older planes).

I don't know, this is a debate that will rage forever, only time will really show who is right.
 
FlyDeltaJets
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 10:15 am

As saturated as the market seems every airline has its own market and to lose one that's thousands of jobs. The economy will defiantly suffer
The only valid opinions are those based in facts
 
incitatus
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 11:18 am

It's not supply and demand only. We also have new entrants with lower costs undermining the established companies in the sector. This situation will persist until those established companies have reduced their cost of doing business to a level similar to the new companies'. Or yes, exit.
Stop pop up ads
 
rampart
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 12:38 pm

Quoting AviationAddict (Reply 30):
the routes that used to be served by DC9s and 732s etc. are often times being served by 738s, A320s and other models that many more seats than the older planes

I beg to differ. I've no statistics, but my simple observation is that a lot of 727, 737, DC9 and MD80 service has gone to RJs, in a vast number of medium and small cities. If you think greater frequency of smaller planes equals out the loss in large jets, there might be an even swap in capacity. But not the incremental increase you suggest in larger sized aircraft of the same family.

And what about the loss of widebodies in many domestic markets, replaced by 737s and A320s?

-Rampart
 
acjflyer
Posts: 294
Joined: Mon Aug 15, 2005 9:44 am

RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 2:55 pm

Quoting AviationAddict (Reply 7):
By the way, this is my first day as a FirstClassMember, so I'm sorry if I do something 'wrong' or say something that offends someone, I'm still learning!  

First of all, don't worry about it, new or not you are entitled to your opinion as much as anyone else.

Quoting BOS2LAF (Reply 29):

People go on and on about, "There's too many airlines!" "Theres too much capacity!" etc. and it drives me up the walls because facts dont support it. The reality is, and you can check the facts with the ATA for yourself, that the US airline industry is posting its highest load factors since the 1940's. Its the fare wars, selling tickets at a loss, and scorched-earth tactics thats causing the problems.

Second, Amen to that statement, yes the demand is there but the airlines need to start running the company more effectively and putting the appropriate equipment with the appropriate route. Be smart about it in a business sense, quite running a company because you want everyone to feel good. You can't serve everyone and make ALL of them happy. Bill Cosby hit it on the dat when he said "I don't know the key to success, but I do know the key to failure is trying to please everybody."

****THIRD**** The problem with this forum with this particular thread is that many opinions here are being based on the airline we love and don't want to see go down. NW was my first flight as a kid from SLC-MSP-MCO and I have been in love with them ever since, BUT even though I am an aviation enthusiast and student pilot I am an economics major. Look at it from an economice standpoint and not from a plane lovers standpoint.

Yes, losing a major carrier would help the industry but if and only if the slack that was picked up by other companies was picked up correctly meaning the appropriate carrier at the appropriate airport with the right equipment. The indifference curve of economics is calling for a change and through specialization by each carrier when it abides with the law of supply and demand is what will help the industry out of it's slump, WHICH ECONOMICALLY speaking is definately possible.
 
AviationAddict
Topic Author
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 3:06 pm

Quoting Acjflyer (Reply 34):
Yes, losing a major carrier would help the industry but if and only if the slack that was picked up by other companies was picked up correctly meaning the appropriate carrier at the appropriate airport with the right equipment.

Do you think the loss of a company like NW would help the market more if the other major companies were in better shape and therefore in a better position to buy up the NW equipment, employees, slots, etc?


Let me ask another question: We all seem to have strong feelings about the liquidation of airlines, but what would everyone think if another new airline was formed today? Would you all say that another airline would just hurt everyone else by slicing the already thing pieces of pie up even more, or would you say it would be good because it would add more competition?
 
uadc8contrail
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 3:18 pm

Quoting AviationAddict (Reply 16):
US and UA have filed for C11 so many times I think they probably have the bankruptcy court on speed dial. After a while the government, and all us taxpayers, are probably going to get tired of bailing out crappy companies that can't seem to get their acts together. Something has got to give eventually, and even if the liquidation of a major carrier doesn't "help" the industry, I really don't think it would hurt it any more, at least not in the long term

Aviation,
US has done the dance twice...UA has been in judge genes courtroom of comedy once, i dont think that qualifies your post as "so many times". excluding the atsb loan given to us, which by the way is not a govt bail out, what cash has the govt given US,UA or any other ch11 carrier????. flydeltajets put it correctly, the loss of any jobs would have a big effect "short term" and add the vendors to the hit list and the economy would deffinately suffer...
bus driver.......move that bus:)
 
acjflyer
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 3:45 pm

Quoting AviationAddict (Reply 35):
Do you think the loss of a company like NW would help the market more if the other major companies were in better shape and therefore in a better position to buy up the NW equipment, employees, slots, etc?


Let me ask another question: We all seem to have strong feelings about the liquidation of airlines, but what would everyone think if another new airline was formed today? Would you all say that another airline would just hurt everyone else by slicing the already thing pieces of pie up even more, or would you say it would be good because it would add more competition?

That is basically what happens in all of corporate America. Apple for a time could not compete with Microsoft because Microsoft outperformed them, BUT instead of going head to head with Microsoft by creating software for the office environment they said, "hey why don't you create Microsoft office even for mac users as your specialty and we'll specialize in graphics, movies, and music." Deal! They both win in their respective markets. Airlines need to act just as any other corporation.

Yes people will lose their jobs, but that happens in every industry in every city. There is no way we can avoid that. If a new airline starts tomorrow, can do a better job at running the industry, and can save us all money while making profit and providing great service then they should be able to push the non-profitable companies out. They have learned to do what others could not do in the industry, and like other companies they shouldn't constantly be slapped on the hand and told, "now the big guys were here first and even though they aren;t doing so well you better learn your place and quite dreaming." It would do us good to remember that the Legacy carriers were small start'ups in their days too. Once again everyone needs to look at it from an economic standpoint.

LCC's are what people love to hate and yet they still use them and support them. A change in the industry is not bad, jobs will be lost, but that does not mean the economy will suffer, a few will, but the national economy will not. I am in no way wishing to show disrespect to those that would suffer from the tradgedy of losing a major world corporation, namely an airline, but we must llok at it as what will be beneficial in the long run.

AGAIN losing a major carrier in and of itself is not the solution, it will only be effective if the right steps are taken if or when that happens to prevent us frommaking the same redundant mistakes over and over again.
 
scotron11
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RE: Would Loss Of Major US Carrier Help The Indust

Sun Feb 05, 2006 4:14 pm

Quoting Acjflyer (Reply 37):

LCC's are what people love to hate and yet they still use them and support them. A change in the industry is not bad, jobs will be lost, but that does not mean the economy will suffer, a few will, but the national economy will not. I am in no way wishing to show disrespect to those that would suffer from the tradgedy of losing a major world corporation, namely an airline, but we must llok at it as what will be beneficial in the long run.

Well, look at PanAm, TWA, Swissair & Sabena. Ansett. We're still here, right? If AZ went belly up tomorrow, tons of people would cry, but who would really miss them? Eastern, PeopleExpress, NewYorkAir, Republic, RenoAir, Ozark, PSA, Western. Granted they all were merged into so called "majors", but they're still not around. (I liked Braniff too!)

Northwest & Delta? Well, consolidation has been coming for a long, long time. Is that time now? Hard to say. In all probability, we'll end up with maybe 3 "major" US carriers. Who those three will be is anyone's guess.
 
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LTU932
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RE: Would Loss Of Major US Carrier Help The Industry?

Sun Feb 05, 2006 6:04 pm

For me, it all depends. The most affected ones are not only the employees, but also for service and major hubs alike. Correct me if I'm wrong, but STL used to be a major international hub during the times of TW. After AA absorbed TW, there seems to have been major cutbacks at STL, especially with transatlantic services.

If NW was to go under, it would be a major blow to MSP and DTW. Of course, there would be other legacies or even LCCs taking up those routes, but what would happen with NW's pacific network and most of all the flights to Japan? Would there be another airline willing to pick up those flights? Maybe, but the problem would be the issue of establishing a new hub at either MSP or DTW, just to continue serving those flights, and whether it would be economically viable to establish them, unless of course the flights would be relocated to other airports like ORD, LAX or JFK/EWR if possible. The same with DL. The issue with picking up flights and hubs is the location of them. DL and NW have a customer base in their hubs (MSP, DTW, MEM for NW and SLC and ATL (excluding JFK as it is also an AA hub) for DL) and probably also a very long history, which would make it for an airline like AA, UA, US or even CO very difficult to establish themselves. The economical implications, though major and very painful for the regions of those hubs, could in some way still be absorbed nationally (though through a lengthy timeframe), but then again, as I said, those regions would suffer even more. This is just my opinion, though I'd still like to understand the implications of the liquidation of airlines like PA or EA to to have a better picture of a US legacy carrier declaring Chapter 7 in the present and in the past.
 
FLALEFTY
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RE: Would Loss Of Major US Carrier Help The Industry?

Mon Feb 06, 2006 1:52 am

Of the two major airlines "on the bubble", NW is probably in the worst shape. NW's labor union members are hard-line, that is, more like the Rust Belt unionites that work in the steel, rail, trucking, maritime and auto industries. I'm afraid that their pilots' union will strike, and if they do so, then NW will be forced to liquidate.

If NW does cease operations, UA will probably be the main beneficiary west of the Mississippi and Trans-Pacific, while DL (if they survive) will enjoy a near-lock on the Deep South. But overall, I don't think the LCCs will gain too much by NW's demise.
 
hamad
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RE: Would Loss Of Major US Carrier Help The Industry?

Mon Feb 06, 2006 2:30 am

I am a graduate student at the airline management technology in Arizona state University, and its funny that this is what we have been talking about lately in class.

i would disagree with FLALEFTY and say "YES". but how does the YES works? it doesn't come with an airline just going out of business like independence air. the "yes" comes through mergers or reducing hubs. for example, look at what happened at independence air. Independence air came out in a hub for a strong major airline, tried to compete but didn't work.

Each region of the USA has a dominant major carrier. for example CO is strong in Texas, midwest and new york. Northwest, with its hubs for example feeds traffic to places like Grand Forks in North Dakota, where other airline service seems Null. Delta with its hub in atlanta as mentioned before is a dominant carrier that feeds traffic to Florida (the only airlnie that has mainline service to daytona beach).

When the airline choose hubs. they should make sure that this hub is going to benifit them rather than harm them. for instance, we have United Airlines at IAD (dulles international airport). a lot of critiques tried tucking United into closing that Hub, but United proved that IAD is a strong hub for it, as its the gateway to Europe. It feeds traffic from places in other parts of the country to IAD and then European cities such as Munich, Frankfurt, Amsterdam and Paris.

Bottom line, a Major US carrier going out of business wouldnt exactly be the answer, but its going out of the market due to a merger is more like an answer
at least, my opinion
PHX - i miss spotting
 
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northwestEWR
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RE: Would Loss Of Major US Carrier Help The Industry?

Mon Feb 06, 2006 2:32 am

What we really need is to lose an LCC like Jetblue or AirTran who dump extra seats on an already over saturated market at really low prices ! The loss of one of the LCCs or more would help the industry in the long run because the majors would be able to raise fares and become profitable again. What good things have the LCCs done for the industry ? None that I can think of....
Northwest Airlines - Now You're Flying Smart
 
hamad
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RE: Would Loss Of Major US Carrier Help The Industry?

Mon Feb 06, 2006 2:46 am

Quoting NorthwestEWR (Reply 42):
What good things have the LCCs done for the industry ? None that I can think of....

and what caused them to do this? well, to start with, LCC's came out with the deregulation of 1978, where the government deregulated the airline industry. any airline before that was always controlled by the government in terms of routes its flies, market entry and exit. the only thing that the airlines competed with back then was "who offers the best amenity on board". comes deregulation, and the majors started to struggle.
PHX - i miss spotting
 
incitatus
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RE: Would Loss Of Major US Carrier Help The Industry?

Mon Feb 06, 2006 2:55 am

Quoting NorthwestEWR (Reply 42):
What we really need is to lose an LCC like Jetblue or AirTran who dump extra seats on an already over saturated market at really low prices ! The loss of one of the LCCs or more would help the industry in the long run because the majors would be able to raise fares and become profitable again. What good things have the LCCs done for the industry ? None that I can think of....

Maybe they have brought lower cost travel to people who otherwise would not afford to travel as often? And that's what having free enterprise is about - If a group of people is willing to set up a company and offer the same service other companies are offering but at a lower price, why not let them?

Should we shut down all Walmarts because Sears can't make money? No.
Stop pop up ads
 
ikramerica
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RE: Would Loss Of Major US Carrier Help The Industry?

Mon Feb 06, 2006 3:18 am

Quoting BOS2LAF (Reply 29):
People go on and on about, "There's too many airlines!" "Theres too much capacity!" etc. and it drives me up the walls because facts dont support it. The reality is, and you can check the facts with the ATA for yourself, that the US airline industry is posting its highest load factors since the 1940's. Its the fare wars, selling tickets at a loss, and scorched-earth tactics thats causing the problems.

The biggest major carrier that could go away and would help the whole industry would be WN. Fares would be higher for the rest of us, but that's part of the point. WN is fostering an artificially low fare environment by their hedging. Smart management or not, they are hurting the industry as a fuel trading company that happens to fly planes to put the fuel someplace. It creates a market imbalance. They could make just as much money, BTW, by trading their hedges to other airlines or selling discount fuel to them, and not flying planes at all. As an airline model, this demonstrates that it isn't WNs LCC status or fare structure that is sustaining profits, but their investment arm.

Apple computer was in a similar position in 1999. They're book value was nearly entirely due to investments. They were like an investment fund that happened to sell computers on the side. That is (was) WNs business model for the last few years.

Quoting FlyDeltaJets (Reply 31):
As saturated as the market seems every airline has its own market and to lose one that's thousands of jobs. The economy will defiantly suffer

Not if WN goes away. They don't have their own market, they piggy back on other established markets at pull off enough pax to make money. If they went away, no city (basically) would be left without service, and most of the employees would find other jobs.

The US economy has lower unemployment than most large 1st world nations on earth. Some developing nations with rural bases have lower figures, but that's because if you farm to sustain yourself, you are considered employed.

Losing even a carrier like AA would not send the USA economy into the toilet in terms of job losses. No more than GM and Ford closing a few plants.
Of all the things to worry about... the Wookie has no pants.
 
hamad
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RE: Would Loss Of Major US Carrier Help The Industry?

Mon Feb 06, 2006 3:33 am

Quoting Ikramerica (Reply 45):
The biggest major carrier that could go away and would help the whole industry would be WN

Southwest is never a major carrier!!!! yes it might be the biggest LCC in the US airline industry, but not a major. Major carriers are airlines such as United, Delta, Continental and Northwest. those Majors offer benifits that the flying public are not aware off, but they are there. Interlining for example in terms of codesharing and bags. Southwest, would never do something like this, because it costs money. Southwest is another world
PHX - i miss spotting
 
luv2fly
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RE: Would Loss Of Major US Carrier Help The Industry?

Mon Feb 06, 2006 3:34 am

Quoting HAMAD (Reply 46):
Southwest is never a major carrier!!!! yes it might be the biggest LCC in the US airline industry, but not a major. Major carriers are airlines such as United, Delta, Continental and Northwest. those Majors offer benifits that the flying public are not aware off, but they are there. Interlining for example in terms of codesharing and bags. Southwest, would never do something like this, because it costs money. Southwest is another world

Well I hate to burst your bubble Southwest is very much considered a major carrier here in the states.
You can cut the irony with a knife
 
hamad
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RE: Would Loss Of Major US Carrier Help The Industry?

Mon Feb 06, 2006 3:40 am

Considered, is different than actual. it might be a major LCC, but not a major Legacy.
PHX - i miss spotting
 
AviationAddict
Topic Author
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RE: Would Loss Of Major US Carrier Help The Industry?

Mon Feb 06, 2006 4:33 am

Quoting HAMAD (Reply 48):
Considered, is different than actual. it might be a major LCC, but not a major Legacy.

Who cares if it's a major lcc or a major legacy? The key is that little word 'major'. WN accounts for a massive amount of the commercial airline service in the USA, so all those 'benefits' that the legacies offer don't seem to be doing them much good right now. You even said it yourself, "those majors offer benifits that the flying public are not aware of." Can't be that good if no one knows about them.

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