apodino
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Why Are Airline Employees Paying And Not Customers

Mon Mar 06, 2006 8:17 pm

In recent years I have seen employees at airlines give concession after concession because the airlines are in such bad financial shape. My question is this. If it costs an airlines X amount of dollars to operate a flight, why can't they price that flight so that they at least break even? I can see if flights aren't attracting enough passengers, but I find it hard to believe on some of these routes? I mean, not long ago I flew DL from BOS-LAX and only paid $170 for a round trip ticket? Thats insane, and I know that there is demand on that route. And if you can't operate a flight profitably, drop it. For example, NW on a route like FAR-LAS? There is no way that there is enough demand on that route to make it profitable so why fly it? And then ask the pilots for concessions later on in Chapter 11 to pay for it?

I know the consumers are benefitting in the short term, but I don't see how anyone benefits in the long run. For one thing, the pay and benefit cuts are driving a lot of good people out of the industry, and keeping a lot of good people from joining the industry. Qualified pilots will not be as easy to find because schools like Embry-Riddle, which has been a great school for years, is now charging $12,000 a semester not including flight training or room and board, and there is no return on investment. Some Skyway pilots in fact are living below the poverty line. Flight attendants won't be as easy to find for the same reason. Dispatchers won't be as qualified, which is ashamed cause its not an easy job and there is a lot you have to know just to get a license. Mechanics will not be as competent, leading to more mx delays, and cancellations, inconveniencing a lot more customers. I just don't see why there is no panic button being pushed. As much as I hate to say it, I don't like where its heading, and I fear it will take another incident, or reregulation, to fix the problem.
 
highguy76
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 12:49 am

Good points, but I am biased (airline employee.) I am sure you will hear from some investor/shareholder capitalist clones with messages of "employees are paid what the market allows, who cares if its below the poverty level" and "if they don't like it, they should find another job."
Not much is done in the airline industry anymore to ensure anything long term. If short term investors and high paid execs aren't making quick millions, they figure there's something wrong. I wish it were different.
Just my opinion, but I expect you will get others.
Highguy76
 
fxra
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 1:05 am

Quoting Apodino (Thread starter):
In recent years I have seen employees at airlines give concession after concession because the airlines are in such bad financial shape. My question is this. If it costs an airlines X amount of dollars to operate a flight, why can't they price that flight so that they at least break even? I can see if flights aren't attracting enough passengers, but I find it hard to believe on some of these routes? I mean, not long ago I flew DL from BOS-LAX and only paid $170 for a round trip ticket? Thats insane, and I know that there is demand on that route. And if you can't operate a flight profitably, drop it. For example, NW on a route like FAR-LAS? There is no way that there is enough demand on that route to make it profitable so why fly it? And then ask the pilots for concessions later on in Chapter 11 to pay for it?

I'm biased too, also an airline employee, but the answer is this. You have Airline X that can sell a seat from BOS-LAX for $170 roundtrip and at least break even. So, Airline Y has to match that far einorde rto attract customers..and my have a higher cost structure and cannot not sell the same seat profitably. Here u have the "new" LCC with lower employee wages and fixed costs vs the "old" legacy with higher average employee wages and costs. But the legacy does not want to give up amrket share to the LCC... and thus your losing money on flights.

I would make the preidiction that in about 20years, you'll see a new round of start up "LCC" and similar problems competing facing the Frontiers and Aitrans and Jetblues as their costs rise... but i could be wrong, Southwest seems to be bucking that trend for the moment. Just my opinion.

later
Visualize Whirled Peas
 
apodino
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 1:16 am

Quoting FXRA (Reply 2):
But the legacy does not want to give up amrket share to the LCC... and thus your losing money on flights.

If the primary duty of a company is to make money for their shareholders, then let me put this question at you, is it better to take the market share at a loss, or concede it and focus on more profitable routes.

Doug Parker said years ago that there is no reason for them to match fares on service from DFW-SEA because they aren't going to be able to get much market share on that type of route, so they don't try to undercut people, they just charge a premium for it. Many carriers would try to compete, and would do so at losses. If this type of thinking has caused airlines to lose money for many years, why do they still practice it? You would think they would try something different.
 
goingboeing
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 1:33 am

As long as legacy carriers put market share ahead of profits, nothing will change. Southwest doesn't care if they lead in market share. In a recent interview, Airtran's CEO said they really don't pay attention to market share. Both those airlines are profitable. It's true that legacies have to meet the price of an LCC in a market, but in far too many cases, the legacies not only meet...but BEAT the LCC's on price...all in the quest to "maintain market share".
 
luv2fly
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 2:08 am

Quoting Goingboeing (Reply 4):
As long as legacy carriers put market share ahead of profits, nothing will change. Southwest doesn't care if they lead in market share. In a recent interview, Airtran's CEO said they really don't pay attention to market share. Both those airlines are profitable. It's true that legacies have to meet the price of an LCC in a market, but in far too many cases, the legacies not only meet...but BEAT the LCC's on price...all in the quest to "maintain market share".

This sums it right up. And if all airlines saw this and operated this way it would be a whole nother ball game. Sure it sounds to simple to work, though look at the airlines that are making money right now.
You can cut the irony with a knife
 
3201
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 2:29 am

Quoting Apodino (Thread starter):
My question is this. If it costs an airlines X amount of dollars to operate a flight, why can't they price that flight so that they at least break even?

For some flights, there is no such price -- as you raise the price, fewer people buy tickets, and the total revenue stays the same or goes down. Even if you're not looking at sub-optimal profitability to capture market share or other higher-order issues, just at the price for a single flight, price should not have anything to do with cost -- it should be set to maximize revenue at fixed cost or to maximize profit with variable cost, and value-based pricing is always more optimal than cost-markup-based pricing.

The short answer to why employees take concessions while fares don't rise is that the traveling public is more willing to "not travel" based on price than the airline workforce is to "not work" based on pay. People work for airlines because they like to or they have no other option, and as long as there are more willing to work for lower pay, and as sleazy as it is to take advantage of people trapped into a career choice made when the career was very different (i.e. the pay and working conditions were a lot better industry-wide), that's what the economic situation dictates doing for the airlines.

And as much as people say "the industry really needs one or more large airlines to liquidate," that will further hurt the equation, since that many more employees will be on the market looking for work.

It SUCKS, and the rest of us definitely sympathize, but it's life, and it's happening in other industries too.
7 hours aint long-haul
 
Ken777
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 2:34 am

The legacies and their employees had a very good time for many years, but a lot of factors have changed the industry - the dot com bust, 9/11, LCCs, fuel costs, etc.

One of the challenges for the legacies is their fleet, which was established when times were good. These flees are now either out of sync with the directions the companies want to take, or are demanding heavier maintenance costs than the newer planes - and consuming more fuel. It's going to be difficult for the legacies to convert their fleets to a more efficient configuration, and it is going to take years.

On the personnel side, the unions took care of their members when times were good and those were very good years indeed for many. Things are dramatically different today and there will be an on-goign need to adjust the approach both the unions and airlines take in keeping the airlines viable. I do see changes in pension plans as well as other benefits.

What I would hope to see when these changes take place is an agreement where the employees share in the profits to a large degree. When you reduce the pay of employees who are in contact with customers then you had better provide them with something that strongly motivates them to take very good care of the customer. I would put profit sharing for the workers ahead of profit sharing for the management level. (Managers are not living below the poverty line.)

As far as the pax goes, they will generally head to the cheapest product. Most really don't care who they fly with. Frequent flyers will give more weight to the airline/alliance they are loyal to, unless there is a huge difference in fares. The public has supported this Wal-Mart of the Skies approach to flying and the legacies (and their employees) are stuck with playing in that game. There is a lot of work ahead of both in order for them to have some long term security. I hope they make it.
 
SeeTheWorld
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 2:44 am

Wow!!

It's so nice to read messages in a topic stream that are thoughtful and on target. What a nice change from some of the BS spewed out by some of members on this site!
 
MD11Engineer
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 2:45 am

At the moment with all the fight going on for market shares and airlines outpricing each other I see in near future several airlines going bust or being bought up by more successfull competitors and after some years a consolidation (due to less competition) when the fares will rise sharply.


Jan
Je Suis Charlie et je suis Ahmet aussi
 
ikramerica
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 2:53 am

Quoting Apodino (Reply 3):
If this type of thinking has caused airlines to lose money for many years, why do they still practice it? You would think they would try something different.

Airlines need to look at John Nash's theories a bit more, stop all fighting over the hottest chick in the bar...

Quoting 3201 (Reply 6):
The short answer to why employees take concessions while fares don't rise is that the traveling public is more willing to "not travel" based on price than the airline workforce is to "not work" based on pay.

Also a very good point. There are obviously many people willing to work as airline employees at these lower wages, but there aren't as many (so the theory goes) willing to pay higher prices to fly. I'm not sure I buy that, because our USA society has become so reliant on air travel, we've spread out so much from family, etc., that we'd still have to fly for the large part, and cut back spending elsewhere.

When gas prices went up, studies have shown we haven't stopped driving as much, but have cut back on entertainment expenses like movies instead.

Quoting Ken777 (Reply 7):
One of the challenges for the legacies is their fleet, which was established when times were good. These flees are now either out of sync with the directions the companies want to take, or are demanding heavier maintenance costs than the newer planes - and consuming more fuel.

One of the reasons CO is in better shape than many legacies. Relatively modern fleet, heavily weighted toward narrowbodies, all widebody planes are less than 10 years old.
Of all the things to worry about... the Wookie has no pants.
 
planespotting
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 2:54 am

Market Economics.

In market economies, there are no principle elements of self organization...that is, everything about the market itself is based on each participant persuing its own interests...generally, ad-hoc self organization and fair pricing develops based around the needs of nearly all participants...except the workers.

This is evident in the airline industry. The airlines biggest expense is still labor (although fuel is getting to be a close second), and it just happens to be the cost that is easiest to manipulate. The airlines can't control what their customers are willing to pay, or what their suppliers are willing to charge.

But people do need jobs, and the only real stipulations they face when it comes to what they pay their workers are from the federal government minimum wage requirements. This of course does input some limitations on the sort of people they employ (not saying that everyone who is willing to work for lower wages are irresponsible or bad employees, because that is hardly the case, but it does dictate that some of these people may be less than ideal job candidates).

Would the airlines rather attract all around better employees by offering higher wages? Probably, but if they can get by paying lower wages even if it means getting less than ideal employees, they will do it, especially if there is no other option.
Do you like movies about gladiators?
 
vv701
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 2:56 am

Quoting Apodino (Thread starter):
If it costs an airlines X amount of dollars to operate a flight, why can't they price that flight so that they at least break even?

There are two very different break even figures for every passenger journey.

The first is the break even figure for a fully costed passenger journey. Included in the cost for this journey is a small part of every expense that the airline incurs from the cost of buying a 10 cent pencil to the salary of the CEO.

Then there is the break even figure incurred that is calculated by subtracting the total costs that the airline would have incurred if the passenger had not bought a ticket from the airline's total costs if the passenger did buy the ticket and use it. Effectively this incremental cost is the sum of all the extra costs of ticketing , boarding, carrying and disembarking that passenger. If the cost of ticketing, boarding, transporting and disembarking a passenger flying BOS-LAX return is less than $170 then selling one ticket at that price will make the airline more profitable (or less unprofitable) than if that passenger's seat remains empty. But if the airline sells too many seats at this price . . . Well if you added together all the losses of the US legacy carriers it would be, comparatively, small beer - unless, of course the airline's CEO received a $0 remuneration package and employees supply their own pencils at their cost - plus, of course, the rest!!
 
mrocktor
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 3:30 am

Good answers. To flesh it out a bit:

Price and demand are tightly correlated. The "demand curve" depicts this correlation, basically the lower the offered price the greater the demand for the product (and this goes for any product at all).

LCCs usually enter the market with a lower cost structure (they don't have years or decades of short sighted management on their backs). They usually use the low fare strategy to gain market share quickly (they want to become "majors") and count on the demand curve to make up for the loss of margins due to low pricing ("make it up on volume").

The established carriers usually can't compete on these terms due to their debt, pensions, pay rates and a myriad of other liabilities aquired during the "boom" years or due to mismanagement. They either compete at a loss (to keep their share), demand a premium for their service (which works, if the service is actually better than the LCC competition - which is not always the case) or cut loose and run.

Long term, the LCC's cost base is bound to move a bit higher - if they are well managed though they will not necessarily get to the point where current "legacies" are. Conversely, good chrisis management (and some visits to Ch11) may unburden the legacies of their unsustainable obligations.

What must be learned from this convulsion in the market is that the business exists to serve the customer and to make money doing this. The current chrisis in the major airlines can be put entirely at the doorstep of management and employees with incorrect priorities. Managers who put status ahead of results and employees who put wages ahead of company viability (and the managers who capitulate to them) are the responsibles for the troubles.

The seniority system and other barriers to free labor in the market are the distortions that allow an unbalance in wages versus company profitability to endure long enough to become a chrisis.

If there are so many qualified people to fly planes that the market wages are not what they used to be (or even are "poverty wages", as some here put it) it's certainly not the customer's fault. Regulation, of course, is not the answer. The best thing that could possibly happen for pilots and airlines would be the scrapping of the seniority system - it's doubtful that this will happen in a sensible time frame though.

mrocktor
 
Mich
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 3:52 am

Dont blame the passengers blame management.

Would venture a guess though that a half full plane is losing less money then a plane sitting on the ground. No cargo or pax revenue.. May be an empty plane but whats in the cargo..
 
apodino
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 4:43 am

Quoting Mrocktor (Reply 13):
The best thing that could possibly happen for pilots and airlines would be the scrapping of the seniority system - it's doubtful that this will happen in a sensible time frame though.

I will not disagree with that at all. I say make pay based on merit instead of scales. And have the pay scales for captains determined by qualifications, not time spent on the company. Assuming that a captain at jet blue has had 20 years experience flying jets, why shouldn't he be entitled to the same amount as someone who has been with united for 20 years? This should have happened with the TWA pilots. Eastern Pilots and Pan Am pilots as well. It seems to me like pay is determined by how lucky you are to land with the right airline at the right time, not by qualifications or market value. That seems wrong to me.
 
ikramerica
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 5:07 am

I don't agree that a B6 pilot with 20 years experience is "entitled" to the same pay as a UA 20 year pilot. If someone wants to fly for B6 with 20 years experience, they are entitled to what B6 wants to pay them. If the value is there, they will do it.

The problem is the concept that seniority matters. Beyond a 2-3 year "probation" period, seniority should NOT matter. Do the same job, get the same pay. Want more pay, do more work or work to get promoted and take more responsibilities. Why airline employees (and other union employees) think they deserve a cost of living increase per year AND a seniority pay scale increase for just showing up for another year is beyond me.

Teachers think the same way, and fought tooth and nail in California to squash an initiative that would have paid teachers based on merit, qualifications, performance and responsibilities, not just on how long they've been sitting in their seats. But the unions are too powerful and killed it, and unlike the airline industry, there's no alternative for "customers" to get a better education at a better price.
Of all the things to worry about... the Wookie has no pants.
 
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lightsaber
Crew
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 5:28 am

The one thing I haven't seen on this thread is the impact of price transparency. Once upon a time, one had to really work to compare two or three airfares. Now it takes seconds to compare dozens. Remember when travel agents would "forget" to mention switching a flight time would save you $100 a leg? I do (and thus I switched a travel agents over this). Last year the WSJ had an article that noted the median air travel will check two internet sites for prices before purchasing.

Quoting 3201 (Reply 6):
It SUCKS, and the rest of us definitely sympathize, but it's life, and it's happening in other industries too.

Its definitely happening in other industries, my department has over doubled its efficiency in the last five years and that has just barely kept ahead of the pace of the industry. One thing that strikes me about the airline industry is how few people are held accountable for the customer experience. I'm not implying people don't take their job seriously, but for instance in other industries employees who receive the same pay as a pilot are held accountable for productivity, sales, or some other metric.

Quoting Mrocktor (Reply 13):
The seniority system and other barriers to free labor in the market are the distortions that allow an unbalance in wages versus company profitability to endure long enough to become a chrisis.

This continues the thought on what I was saying above. Since there is no benefit for exceptional service in a seniority system, how does one motivate employees to be exceptional? We do it by holding out the carrot for the next promotion.  Smile A win-win situation.

Quoting SeeTheWorld (Reply 8):
Wow!!

It's so nice to read messages in a topic stream that are thoughtful and on target. What a nice change from some of the BS spewed out by some of members on this site!

 checkmark 

Quoting MD11Engineer (Reply 9):
and after some years a consolidation (due to less competition) when the fares will rise sharply.

And if fares rise sharply it only encourages new entrants and the cycle repeats... Alcoa used to intentionally keep their profits moderate to impede the entrance of competition into their markest. (One example)

Quoting Ikramerica (Reply 10):
here are obviously many people willing to work as airline employees at these lower wages, but there aren't as many (so the theory goes) willing to pay higher prices to fly. I'm not sure I buy that, because our USA society has become so reliant on air travel, we've spread out so much from family, etc.,

Then why is air travel used as an example of an elastic market where demand is very price dependent? For example, in April my girlfriend and I are taking a vacation. We had a choice between a driving vacation and a flying vacation. Since the tickets were less than $500/pair, we decided to fly to an area we would like to see. Due to reasons of convention schedules the hotel discounts more than made up for the cost of airfare.  Smile Like it or not, the reality is that for this trip, meals and entertainment will end up costing us more than airfare, hotel, and local transportation combined. But if that wasn't the case, I would have picked a driving trip despite my love of air travel.

Quoting Mrocktor (Reply 13):
demand a premium for their service (which works, if the service is actually better than the LCC competition - which is not always the case) or cut loose and run.

Excellent post. I would add also market momentum or the tendency of consumers to hesitate switching unless the cost benefit is there. (e.g., why people buy the same brand of running shoes even though another brand might fit better, be more cost effective, etc.)
"They did not know it was impossible, so they did it!" - Mark Twain
 
9KBOS
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 5:37 am

I think it is important to remember that we (airline workers) have a real passion for the industry...I don't want to say we feel priviledged to work at an airline...but I do think we have a general interest for the industry, the company and the passengers. The wages passed down from those above us are not what is keeping us working, because that is not the reason we work for the airlines. This is my opinion....and by the way, a great topic.
 
JayinKitsap
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 6:02 am

WN now has been flying a few decades, thier pilot & FO pay scales have risen some relative to F9 or other LCC's. However, when I fly FCC's their planes are generally cleaner, the crew seems happier (at least neutral). I certainly don't get the "I hate my job" look from the FA's like I do on a United domestic or US Air flight. WN was the most profitable airline in the US last year (about $500m profit).

Alaska was the 2nd most profitable at $50 M, they were a small legacy type carrier that has embraced much of being a LCC, but also have a lot of routes with little competition.

I think many of the legacies suffered with their use of RJ's or tie ins to commuter lines to feed passengers to their system. A couple years ago I needed to fly to South Dakota. Well flying a RJ from Salt Lake to Rapid City alone was like $300, but SEA to Rapid City via was only $330. So where was Delta eating costs (subsidizing the regional or cutting their own).

I think the retreat of regionals & the legacy problems opening up routes that a LCC could find profitable, possibly some milk run routes.

Airlines are not the only one facing this - look at the Auto Industry. GM has huge costs for workers that are no longer there. Can they compete when these costs exceed $2,000 per car? I think we are watching a death spiral.

ESOP's and employee owned companies do work well and allow for profit sharing in the good times without jacking up costs in the bad times. However, I am unaware of any good example where ESOP's have worked well with strong unions involved. United is a great example of how it can fail when strong unions are involved.
 
planemaker
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 6:07 am

Quoting Goingboeing (Reply 4):
It's true that legacies have to meet the price of an LCC in a market, but in far too many cases, the legacies not only meet...but BEAT the LCC's on price...all in the quest to "maintain market share".

No one has yet brought up the obvious that legacies are mainly network carriers while LCCs are mainly P2P... thus, legacies do have to maintain market share or their network business model looses efficiency. Somewhat simple example but... over time, imagine the consequences of continually losing connecting pax from several spokes onto a hub-to-hub flight... coupled with losing some O&D pax on that flight... and then some more pax from hub-to-spoke flights at the other end.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
G-CIVP
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 7:22 am

"If it costs an airlines X amount of dollars to operate a flight, why can't they price that flight so that they at least break even?"

They do attempt to price the flights to make a profit. I think what you are trying to say is 'why don't airlines price their flights so that they get bums on seats to at least make some revenue'. It's all to do with service cost accounting; you've got to pitch the price at the 'best price' (for want of a better phrase) to make a profit. In short, there isn't a lot of point selling cheap as the margins will be thin.
This is BA's argument; 'yes, we can fill planes with loads of punters but we're interested in moving punters at higher ticket prices so our profits are higher'. The most obvious examples of this shift was the move from B757's to A319's were the tourist class is smaller. (and please, no arguments about Boeing -v- Airbus).

The main issue with the big American carriers is structural (as mentioned above), too many routes, too many aircraft, too many costs.
 
sllevin
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 7:29 am

Quoting Apodino (Reply 3):
then let me put this question at you, is it better to take the market share at a loss, or concede it and focus on more profitable routes.

The best thing to do is keep market share, get your costs down, and make profit. That's why costs -- employee salary being a large part of cost -- are being cut.

Steve
 
commavia
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 7:32 am

Quoting Apodino (Thread starter):
My question is this. If it costs an airlines X amount of dollars to operate a flight, why can't they price that flight so that they at least break even?

One word: C-O-M-P-E-T-I-T-I-O-N.

If two airlines are both flying the same route, and it costs one airline X to operate the flight, and another Y, whichever is lower -- X or Y -- basically determines the price for the other.
 
Dreamflight767
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 7:38 am

Quoting Apodino (Thread starter):
, NW on a route like FAR-LAS? There is no way that there is enough demand on that route to make it profitable so why fly it?

Not true! The FAR-LAS route is very very popular. People in this region flock to LAS and Mexico. HUGE numbers every winter (escape the cold and family vacation during summer). There is such a demand that NW and Allegiant serve LAS from FAR. Allegiant started service first, that pissed NW off so they jumped on the band wagon too.

The only reason that this route won't/isn't profitable for NW is because of the higher price NW will charge vs. Allegiant. So I'm almost positive most of the pax will fly Allegiant. The only advantage NW has, is that they are the sweet heart airline of this area.
 
aogdesk
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 7:59 am

Let me start by saying that I'm no expert in the area of yield management. That being said, it seems like all the arguments and justifications for the current industry climate are very much based in reality..BUT...I'd like to bring another consideration into the mix.
LCC competition is ALWAYS the mantra for execs to hammer on when they push concessions onto employees. Why do they treat air travel as if theres only one flavor, and it just happens to be of the no-frills variety? Where is the innovation that sets you apart from your competitors, so that you don't have to compete on price alone? Everyone knows what the end result is when that happens. BMW will never court the Chevy Sprint crowd, (unless it means a high potential for a long term BMW customer), Mariott won't aggressively go after the Motel 6 customer, and Hertz HAS to set itself apart from Thrifty. Not perfect examples, but it just seems as if there could be some real innovation that would help to create differentiators. Is it AA thats selling cheap helicopter transportation between airports or airport/city location? That to me is innovation!!!
 
apodino
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 7:59 am

Quoting Sllevin (Reply 22):
The best thing to do is keep market share, get your costs down, and make profit. That's why costs -- employee salary being a large part of cost -- are being cut.

Thats why the legacies are losing money, and the carriers that are making money, don't worry about it as much. Lets see, to paraphrase from the book nuts, Southwest Philosphy is, put your own employees first, then your customers. And look who has profited.
 
planemaker
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 8:06 am

Quoting Aogdesk (Reply 25):
BMW will never court the Chevy Sprint crowd,

But just how many BMW's are there out there compared to all the Chevy Sprint types? Inversely, in aviation there are too many "BMWs" and not as many "Chevy Sprint" types.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
Simpilicity
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 8:54 am

I don't think anyone has metnioned taxes & charges on tickets these days.

The TSA is the U.S. is an absolute joke & at same time costing everyone a lot of money.

Get rid of the TSA & its NON-Security & get rid of all taxes/charges & part of the problem goes away.
 
AirRyan
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 9:26 am

I used to work pricing for NW and their irrationally based pricing combined with the hypocritical hypocrisy from the Goverment really soured my opinion. I agree, it's BS that fares are cheaper now than they were 10 years ago but for all those that think WN's shat don't stink, they could increase all of their fares 50% overnight, all of the other carriers including the legacy carriers would match it on the next fare change transmission and the industry as a whole would all benefit. Right now the legacy carriers have to pull teeth just to get WN to raise their fares a paltry $2-$3 and even then they rarely respond - and the irony is that WN needs the fare increases to cover the costs just as much as any carrier from this moment on now that fuel hedges are not going to be saving any carriers anytime soon, so raise the fares to meet the costs I say!

The attention that FAR receives from NW is just puke-worthy - dump that damned market just like you would any other unprofitable market or at least reduce the service to meet the demand!

In my opinion, I think the legacy carriers should all raise their fares significantly and to heLL with what the LCC's do as eventually they will fill up and people will have no choice but to pay "market value" for the services that they are requesting. LCC - see what happens when you let the Jerry Springer crowd into the skies? It's a business people, not a charity and the Government has done too much already to hinder the carriers and the ways they set their prices.
 
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lightsaber
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 9:28 am

Quoting Simpilicity (Reply 28):
I don't think anyone has metnioned taxes & charges on tickets these days.

The TSA is the U.S. is an absolute joke & at same time costing everyone a lot of money.

Get rid of the TSA & its NON-Security & get rid of all taxes/charges & part of the problem goes away.

Good additional point. What is it now, 25% of the cost of a flight is now taxes and fees? And people wonder why we complain about government inefficiency.

Lightsaber
"They did not know it was impossible, so they did it!" - Mark Twain
 
bistro1200
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RE: Why Are Airline Employees Paying And Not Custo

Tue Mar 07, 2006 10:33 am

Quoting G-CIVP (Reply 21):
No one has yet brought up the obvious that legacies are mainly network carriers while LCCs are mainly P2P... thus, legacies do have to maintain market share or their network business model looses efficiency. Somewhat simple example but... over time, imagine the consequences of continually losing connecting pax from several spokes onto a hub-to-hub flight... coupled with losing some O&D pax on that flight... and then some more pax from hub-to-spoke flights at the other end.

At last check something like 30% of Southwest's pax were connecting... hardly P2P (at least not as much as believed). The truth is, SWA is becoming more like a legacy, with legacies becoming more like LCCs. I think in 5 years it'll be hard to tell the difference as LCC costs rise.

Second point: LCCs have limited revenue potential, since they are de facto based on "no frills". As legacy costs come down, legacy revenue is not completly tapped, whereas LCC revenues are second to cost containment (see B6). Large legacies have better economies of scale and are able to cross-subsidise better, and place better equipment capacities on the routes they serve. Not every market is best served with a 737NG or A320.
Measure to the millimeter, mark with a crayon, cut with an axe.
 
hz747300
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 11:06 am

Quoting FXRA (Reply 2):
I would make the preidiction that in about 20years, you'll see a new round of start up "LCC" and similar problems competing facing the Frontiers and Aitrans and Jetblues as their costs rise... but i could be wrong, Southwest seems to be bucking that trend for the moment. Just my opinion.

Actually, I think you summed up the exact problem. If the airlines do not cut costs, unfortunately human costs are usually the easiest slash, they risk going under completely. Consequently, it is easier to deal with some public backlash and hard feelings in the press, than try to change the core business.

As for Southwest, they operate their business like greyhound and they don't change fleets and they do not refurbish the interiors with TVs so they are able to keep costs low. They always will.

The jetBlue's are already suffering a bit. The legacies will have a tough road to go, but there is room in the market for 1-2 premium carriers as business travelers rarely have an interest in flying Southwest.
Keep on truckin'...
 
luv2fly
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 11:13 am

Quoting HZ747300 (Reply 32):
as business travelers rarely have an interest in flying Southwest.

Really? Then what are all those suits doing flying between DAL and HOU to name only one example!
You can cut the irony with a knife
 
goingboeing
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 11:26 am

Quoting HZ747300 (Reply 32):
As for Southwest, they operate their business like greyhound and they don't change fleets and they do not refurbish the interiors with TVs so they are able to keep costs low. They always will.

When I want a good meal, I go to a restaurant.

When I want to watch a movie, I go to the theatre.

When I want to watch Ron Popiel sell his "set it and forget it" machine, I turn on the TV.

When I want to take a business trip and not put the company I work for in Banrkruptcy, I fly Southwest.

I'm curious though, since you indicate you live in Australia, how are you so familiar with the clientle of Southwest?
 
cairo
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 12:04 pm

Quoting Apodino (Reply 3):
If the primary duty of a company is to make money for their shareholders, then let me put this question at you, is it better to take the market share at a loss, or concede it and focus on more profitable routes

Whoever above said that in the network model market share is key is exactly right - and herein lies the insanity of the extreme network model - routes are flown that are absolutely unprofitable.

A simple connecting hub, like say AirTran's Atlanta operation, is fine as there is actually demand on each of those routes to stand alone. The extreme network model like Delta's Atlanta hub is dependent in large part on volume and size - adding more bodies to the system, mixing them in Atlanta, and hoping through some miracle that they are delivered to their destination at a profit is their goal.

Quoting Ikramerica (Reply 10):
stop all fighting over the hottest chick in the bar

Absolutely right - a big part of every legacy's thinking is that several routes are untouchable holy cows and that the sky would fall if they stopped flying them. Even if ORD-LGA is unprofitable, AA and UA will drive themselves into Chapter 7 before they quit flying it.

Cairo
 
AirWillie6475
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RE: Why Are Airline Employees Paying And Not Custo

Tue Mar 07, 2006 12:06 pm

Quoting Apodino (Thread starter):
DL from BOS-LAX and only paid $170 for a round trip ticket?

Uh, because there are like 6 airlines that do that route. Still that's unusually cheap though. Pardon but this question sound very stupid and poorly thought out. So your saying that customers should pay extra because an airline has no money to operate? Who cares? I'll try the other dozens of U.S airlines competing for my business. The reality is that nobody cares about inflight movies or food anymore, they just want the cheapest ticket. Legacies are trying to adjust to LCC operations, the problem is that it seems like their employees are stuck in the pre-9/11 world.
 
highguy76
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 12:22 pm

Quoting Lightsaber (Reply 17):
I'm not implying people don't take their job seriously, but for instance in other industries employees who receive the same pay as a pilot are held accountable for productivity, sales, or some other metric.

I would say that's an unfair compairison, pilots are held accountable for the safety and comfort of hundreds of people per flight. I'm not sure it can be measured as a metric.

Quoting Lightsaber (Reply 17):
We do it by holding out the carrot for the next promotion. A win-win situation.

Here is another instance where promotion and merit are hard to measure. My airline has over 8000 FAs spread around the globe. How do you measure merit and grant promotion in a fair manner among that many employees without some form of supervision on every flight?
As for the seniority system, even if we didn't use it to measure pay, how do you allow 13,000 flight crew members to bid on various routes and working posistions on aircraft in a fair manner?
Highguy76
 
Simpilicity
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 1:30 pm

Quoting Lightsaber (Reply 30):
Good additional point. What is it now, 25% of the cost of a flight is now taxes and fees? And people wonder why we complain about government inefficiency.

Seriously, we should all protest about these taxes & charges which are a joke.

We need to get airlines to issue tickets without taxes & charges & then let the agencies try & collect taxes/charges from us.

Alternatively, we could have a protest day & book seats (thru a travel agent & not online so don't have to pay straight away) & then put it to certain airlines that we are hving a protest & if they want tickets paid for, we don't want to pay ANY taxes/charges.

We could book a few thousand itineraries in a few hours, if necessary.

We probabaly need to clog the flights in & out of places like Washington DC & Canberra Australia to get protest noticed.

What day would be a good one for international day of protest? 1APR or some significant day where politicians are sitting???
 
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lightsaber
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RE: Why Are Airline Employees Paying And Not Custo

Tue Mar 07, 2006 2:57 pm

Quoting Highguy76 (Reply 37):
How do you measure merit and grant promotion in a fair manner among that many employees without some form of supervision on every flight?

I'm in a similarly large organization albeit not an airline. One divvies up the responsibilities enough. For instance, one adds mentoring responsibility for a certain level of f/a. If the F/A blows off the responsibility... no more promotions. IF they do well, then maybe they are responsible for handling Assignments, etc.

Quoting Highguy76 (Reply 37):
I would say that's an unfair compairison, pilots are held accountable for the safety and comfort of hundreds of people per flight. I'm not sure it can be measured as a metric.

Touche' and well argued. I should have stated I agree with pilots being paid well. Its a position that requires training, weird schedules (as do F/A's, e.g., having to fly on Thanksgiving, etc.) Perhaps some of the pay should be tied to bonus training, working on aircraft turn times, "hidden customers" surveys, etc.

I don't propose a perfectly fair system, there is none. I just believe without continuous improvement every customer service organization stops... serving the customer.

But I do know I would dread the idea of being stuck at one company I worked for. The fact that I could take my experience and pay grade and directly shift to another company is part of the industry today. I guess I'm baffled, why shouldn't a NW A320 pilot who is looking at horrid pay cuts be able to jump to another A320 operator for better pay? Or an Indy A319 pilot be able to transfer experience? I'm not trying to be argumentative; I honestly don't understand not keeping one's skills ready for transfer to another position. Then again, I work in an industry where projects are cut pretty quickly and one must reinterview within a company for each new position. Its amazing how well a workforce is treated when you know everyone has a current resume. But when its a downturn... I admit it can be brutal. But then again, who needs to tell anyone on this forum about furloughs? (Hence, this thread topic...)

Quoting Simpilicity (Reply 38):
Seriously, we should all protest about these taxes & charges which are a joke.

I agree we should make more noise and protest these stupid and job killing taxes. But did you mean to be Ironic when suggesting April 1st as a protest day?  Wink

Since "employees paying" is this thread's topic, I feel this is on track: I honestly believe the TSA has done more to kill aviation jobs than anything else. Do you remember back in 2000 when you could show up 15 minutes before a flight and still make it? Ok, it was still 30+ minutes at LAX... But I made it onto a flight at BDL when I was at the airport 17 minutes before a the scheduled time (minutes before the door on the aircraft was shut).  Smile Let's just say I could continue on the damage to aviation via taxes and the TSA... but my rant on this subject would make Boyd's  hissyfit  on the same subject seem mild.  Wink Grrr.... Yes we need security; why the cost and inconvenience for so little security?

Lightsaber
"They did not know it was impossible, so they did it!" - Mark Twain
 
Simpilicity
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 3:14 pm

Quoting Lightsaber (Reply 39):
Do you remember back in 2000 when you could show up 15 minutes before a flight and still make it? Ok, it was still 30+ minutes at LAX... But I made it onto a flight at BDL when I was at the airport 17 minutes before a the scheduled time (minutes before the door on the aircraft was shut).

getting a bit of topic but OzJet in OZ (SYD & MEL) allow check in up to 15 minutes prior to departure, if already checked in online & Carry-On Baggage ONLY, but then again only 60 seats total on their 732's & with that few seats, they can try harder, as Avis used to say !!!

Have heard of people literally rocking up minutes before departure & getting on flight !!!

I haven't flown them yet, but imagine as long as pax at gate, no reason he/she couldn't get on as long as flight not closed.

see:-

http://www.ozjet.com.au/flying/
 
SpruceMoose
Posts: 72
Joined: Sun Jan 08, 2006 9:12 am

RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 3:23 pm

Quoting Highguy76 (Reply 37):
Here is another instance where promotion and merit are hard to measure. My airline has over 8000 FAs spread around the globe. How do you measure merit and grant promotion in a fair manner among that many employees without some form of supervision on every flight?
As for the seniority system, even if we didn't use it to measure pay, how do you allow 13,000 flight crew members to bid on various routes and working posistions on aircraft in a fair manner?

Why can't there be some sort of supervision on every flight? Have a senior FA on every flight supervise and coach the newer folks, and evaluate them. FAs who earn good evaluations would rise up the pay and schedule-preference scale faster, and eventually get offered those supervisory positions.

To clarify, I don't mean sit back and watch; I mean work along-side and coach. Same number of FAs per flight.

That's how it's done in a lot of other industries and it seems mostly to work. What you'd give up in stability you'd get back in mobility - if you didn't like conditions at one airline, take your experience, safety training, and customer service skills, and go work for another airline without having to start at the bottom.

That said, my customer service experience is fairly limited. I don't pretend to be an expert in how it's done, but I do know I steer my business to the vendors who do it better, even if they're a little more expensive. If I'm missing something, please help me understand.
It flew at an altitude of six feet for a distance of four and a half feet. Then we discovered rain makes it catch fire.
 
sllevin
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RE: Why Are Airline Employees Paying And Not Custo

Tue Mar 07, 2006 3:26 pm

Quoting Apodino (Reply 26):
Southwest Philosphy is, put your own employees first, then your customers.

"pound for pound" Southwest employees work much harder for their money. If you look at their work rules, and the roles they play, they really hustle. Broadly speaking, legacy employees have been unwilling to hustle to that level, which leaves but one alternative: lower wages.

Steve
 
SpruceMoose
Posts: 72
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 3:27 pm

Quoting Lightsaber (Reply 39):

Heh. You posted while I was typing, and said it far better than I did!
It flew at an altitude of six feet for a distance of four and a half feet. Then we discovered rain makes it catch fire.
 
AeroWesty
Posts: 19551
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 3:45 pm

Quoting AirRyan (Reply 29):
Right now the legacy carriers have to pull teeth just to get WN to raise their fares a paltry $2-$3 and even then they rarely respond - and the irony is that WN needs the fare increases to cover the costs just as much as any carrier from this moment on now that fuel hedges are not going to be saving any carriers anytime soon, so raise the fares to meet the costs I say!



Quoting Lightsaber (Reply 30):
What is it now, 25% of the cost of a flight is now taxes and fees?

When I moved to Oregon in 1995, I could buy a round-trip airline ticket on United or Alaska from PDX to SFO for $78 including taxes.

In 1998, Southwest bought Morris Air and moved into the north-south west coast market north of California.

Today, the least expensive ticket I can buy from PDX to OAK (forget SFO, way too expensive) is $158 round-trip plus taxes of $20.60.

Have airfares gone up? Sure they have, in a lot of markets. Are taxes 25% of the cost of a ticket? On some, especially low-priced international tickets, but not the kinds that U.S. domestic passengers buy day-in, day-out.
International Homo of Mystery
 
cellardoor
Posts: 17
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 3:49 pm

Quoting Apodino (Thread starter):
not long ago I flew DL from BOS-LAX and only paid $170 for a round trip ticket



Quoting AirWillie6475 (Reply 36):
Quoting Apodino (Thread starter):
DL from BOS-LAX and only paid $170 for a round trip ticket?

Uh, because there are like 6 airlines that do that route. Still that's unusually cheap though. Pardon but this question sound very stupid and poorly thought out. So your saying that customers should pay extra because an airline has no money to operate? Who cares? I'll try the other dozens of U.S airlines competing for my business. The reality is that nobody cares about inflight movies or food anymore, they just want the cheapest ticket. Legacies are trying to adjust to LCC operations, the problem is that it seems like their employees are stuck in the pre-9/11 world.

I'm working BOS-LAX on MAR 17 (FL 283/41)! According to the AirTran website, it's only $262. That's less than three Ben's to fly with me... I would consider it worthwhile!  eyebrow 
 
blueflyer
Posts: 3703
Joined: Tue Jan 31, 2006 4:17 am

RE: Why Are Airline Employees Paying And Not Custo

Tue Mar 07, 2006 4:54 pm

Quoting Apodino (Thread starter):
And if you can't operate a flight profitably, drop it

Besides everything else that has been printed already, there are three additional reasons why airlines are not necessarily in a rush to drop a loss-making flight.

At an individual flight level, an airline may need to move an aircraft from A to B, even at a loss, because the aircraft is needed to operate a flight from B to C at a profit that is more than enough to make up for the loss incurred in positioning the aircraft to B to begin with. One may see this as poor route planning on the part of the airline, but it is very possible that the plane got to A on a C to A routing, at a profit.

From a fleet/macroeconomic point of view, it may make sense to operate a certain number of loss-making flights because the volume purchase they generate with the airline's suppliers warrants a lower price point than the airline would otherwise receive if it operated only profit-making flights. Say an airline operates 100 flights, 75 of which make a profit. Forget for a moment the possible need to position an aircraft as explained above and imagine that the 25 loss-making flights are cut. Because of the lower volume overall, caterers, ground handlers, refuelers etc... raise their unit price for the airline to a point that, out of the 75 remaining flights, 20 have suddenly become so much more expensive to operate that they too operate at a loss now. How did getting rid of the initial 25 loss-making flights help exactly ? Coca-Cola route drivers deliver to small mom-and-pop stores (at least the ones left) for the exact same reason. If they started delivering to Wal-Mart and Kroger exclusively, their unit cost for the preservatives and cans they buy would increase and they would have to raise their prices, losing market shares to Pepsi.

Finally, keeping an aircraft parked on the ground isn't free. It may just be that the loss incurred by flying the aircraft around is lower than the expense of parking it for a few hours somewhere. Just because you drop a loss-making flight doesn't mean that there is a profitable route waiting for an aircraft.

Bottom line is, not every flight of every airline is going to make money, nor should anyone look at the economics of flying on a flight-to-flight basis exclusively.

Quoting Apodino (Thread starter):
I mean, not long ago I flew DL from BOS-LAX and only paid $170 for a round trip ticket?

Questions like when you made your reservation or how full the plane was come to mind. I have flown long distances for little money on tickets bought a few days ahead of the flight because the plane was already close to capacity and the additional cost to the airline of carrying me was only $25 or so (I think this is the average marginal cost once break-even is reached) and the airlines' pricing experts decided that, statistically speaking, the greater revenue would be reached by adding just a $150 premium on the few remaining seats and stealing some passengers from Southwest, rather than, as it was done just a few years ago, slap a $1,000 premium on those seats and hope/pray for one or two last-minute passengers desperate enough to fly that they will pay the price.

Quoting Apodino (Reply 15):
It seems to me like pay is determined by how lucky you are to land with the right airline at the right time, not by qualifications or market value. That seems wrong to me.

That isn't specific to the airline industry, similar practices, for good or bad reasons, are plentiful both in government and private employment. A pilot friend of mine once told me that all pilots were supposed to be equal anyhow, meaning that ongoing (re)qualification requirements were so strict that two 737 captains with only years of seniority to differentiate them should be equally adept at flying their aircraft.

Quoting Lightsaber (Reply 17):
Then why is air travel used as an example of an elastic market

Air travel is/should not be used as an example of an elastic market, because it is one of the most complex markets there is. It is very elastic for many, and about as far from being elastic for just as many others, hence the difficulty of reliably and constantly coming ahead in yield management. If you want an elastic market, go to the nearest Ferrari dealership.

Quoting Aogdesk (Reply 25):
Why do they treat air travel as if theres only one flavor, and it just happens to be of the no-frills variety?

Because that's what most passengers want. There are different flavors, but you don't see passengers rushing to taste them. All-first-class Legend Airlines didn't last a year, Midwest is growing very slowly (although that is partly management's smart move), American's "more room in coach" didn't result in "more cash in the bank" and I have heard that MaxJet isn't especially thrilled with their initial load factor. Not that different flavorings can't work, all-business-class transatlantic flights are doing well by all accounts and MaxJet thinks that their load factor will improve with their rescheduling of the NYC-LON leg. It just seems that the number of people willing to stick with something other than vanilla is fairly limited.
Democracy 2016: 3 million California votes < 100,000 Midwest votes.
 
planemaker
Posts: 5411
Joined: Mon Aug 25, 2003 12:53 pm

RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 7:04 pm

Quoting Simpilicity (Reply 40):
Quoting Lightsaber (Reply 39):
Do you remember back in 2000 when you could show up 15 minutes before a flight and still make it? Ok, it was still 30+ minutes at LAX... But I made it onto a flight at BDL when I was at the airport 17 minutes before a the scheduled time (minutes before the door on the aircraft was shut).

And I remember even further back rushing to Logan to catch the N.Y. shuttle without a reservation, running hard through the airport to board the aircraft and only then buying my ticket enroute. That was truly efficient air transport!
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
Simong
Posts: 97
Joined: Tue Jan 04, 2005 2:42 pm

RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 8:00 pm

I think it is all the fault of the job .......... in the sense that an airline position is still seen as glamorous..... and every time an airline posts a Flight Attendant vacancy the applications come pouring in! Better to work for an airline and see the world than accept the position at McDonalds. It doesn't matter that the qualifications and demands are higher, it doesn't matter what experience and glamour you bring to the table ...... if you ask too much or your demands are too high ..... +#&8%^ U .....there are a thousand others waiting to jump at the opportunity. If General Motors were offering minimum wage to hit the assembly line they probably wouldn't have hoards of takers ..... unfortunately when an EasyJet ad hits the newspaper all the F/A wanna bees appear in droves. We have let this happen .... or should I say have no choice but to let this happen .... because there are so many others that want our jobs. In most industries competitors try to to work together to a certain degree to maintain levels where everyone has a fighting chance to make a buck. Airlines seem to love cutting each others throats and don't mind throwing therir employees into the equation. Freddie Laker was seen as a hero in 1977 with airfares of $299 across the pond. You can pay less than that today, but the aircraft used costs 10 X as much, the fuel cost is way higher and just about every other associated expense EXCEPT employees has gone through the roof. The employees have borne the major brunt of it all and the airlines don't don't give a rats A- - ......... cause there are still plenty of people who want those positions....... and as long as that remains the case things will not change, and it is very very sad. I wish I could buy a loaf of bread, or a car or a house at 1977 prices today !!!
BA all the way !!!
 
Broocy
Posts: 116
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RE: Why Are Airline Employees Paying And Not Customers

Tue Mar 07, 2006 8:29 pm

I beg to differ with the assertion that the customer is not paying with these cut backs. My experience of flying on US airlines domestically is that of crowded airport terminals that were not designed to handle the masses of people; severe cut backs to in-flight services; shrinking seat pitch; interactions with many service personnel who often express their dissatisfaction at their wage cuts through words, deeds and attitude; having fewer frontine-staff to help out; and systems that are designed to minimise cost instead of assisting customers when things go wrong like lost luggage or flight cancellations.

The effect of this is that the product and experience has no longer become one that inspires customers to pay a premium or feel that they are receiving value for money at all but the lowest fares. The prices may be low, thus allowing consumers to travel more frequently if they so wished, but the product is not conducive to this.

The cost to the customer is that they no longer value the product and find the whole travel experience stressful.

This post is in no-way inferring that the hassles I have experienced in my travels are in anyway akin to the hardships caused by pay-cuts and the loss benefits like pensions. It is always sad to hear of people who have to work for less pay with the very real threat of job cuts hanging over their heads. You have my respect for keeping going.

[Edited 2006-03-07 12:31:53]

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