Moderators: jsumali2, richierich, ua900, PanAm_DC10, hOMSaR

 
winginit
Posts: 3051
Joined: Sat Feb 23, 2013 9:23 pm

Re: Article: 'Flying the Unfriendly Skies'

Wed Nov 08, 2017 6:47 pm

commavia wrote:
seat24charlie wrote:
If I have to buy lunch, and there's three restaurants in town, all serving the same menu - those restaurants can easily justify any poor standards by saying "you voted with your wallet."

'Voting with your wallet' only applies when you have a reasonable selection of...


Sorry, but no. That line of argument is simply baseless. Consumers have lots of choices. Checking a bag? Fly Southwest. Like potato chips? Fly JetBlue. Want access to a global network? Fly AA, Delta or United. Traveling with just a backpack and want the absolute cheapest possible fare? Fly Spirit or Frontier. And on and on. To the extent that many of the product/service offerings in the market tend to resemble each other, this is yet again simply a natural market response to the behavior of the vast majority of consumers. In other words - it's an effect, not a cause. All the airlines pretty much offer somewhat similar products because that is, pretty much, what the vast majority of consumers have clearly communicated that they want. Airlines are just responding to consumers. The day that consumers are willing to pay more for, say, more legroom or free hot meals at every seat on the plane, that's the day airlines will rip out rows, expand legroom and reinstall ovens in the back. But, alas, the vast majority of consumers have repeatedly demonstrated that they aren't willing to pay more for those things which is, of course, precisely why airlines are now segmenting their product to tailor offerings with, for instance, more legroom for people who value it and are willing to pay for it.


Bingo - not to mention at the end of the day travelers still have the option to go with an even lower price point and hop on a bus, train, etc. Fast, safe, and reliable air transportation is not, never has been, and never will be, some sort of god-given right intended to permanently vanquish all other means of distance travel. To swing back to the restaurant metaphor - if you don't want to go to any of the restaurants in town for whatever reason - make your own damn lunch.
 
winginit
Posts: 3051
Joined: Sat Feb 23, 2013 9:23 pm

Re: Article: 'Flying the Unfriendly Skies'

Wed Nov 08, 2017 6:49 pm

TWA772LR wrote:
L0VE2FLY wrote:
winginit wrote:
Ah but of course. It's just so awful that I have to today sit in a lie-flat Business Class seat while connected to the internet airing my grievances about how air travel is so much more expensive, (no) less safe (no), and generally less pleasant (still no) than it was before deregulation. The horror.

Nonsense.


You do realize that the vast majority of flyers are not as lucky as you are?!

I would realize that the vast majority of fliers always have a neutral-to-good experience and that the ones always complaining are the 1% that happen to have a totally crappy time.


Spot on. Evidenced by articles like this one stating that airline customer satisfaction reached an all time high in 2017
 
gwrudolph
Posts: 438
Joined: Sat Sep 13, 2008 3:46 pm

Re: Article: 'Flying the Unfriendly Skies'

Wed Nov 08, 2017 6:55 pm

I just bought a RT ticket ORD-LAS for 160.25 including tax. In 1980, I remember my parents paying 199.00 RT for PHL-MCO, which is about 50 percent less stage length. Good idea, lets go back to regulation with 12 percent guaranteed margin on 55 percent load factor--most people won't be able to afford to fly!

I might also mention that using quotes from the head of the labor unicorns always makes me think that an article is objective and unbiased!

This article misses and misrepresents many critical points It is interesting, but it is nonsense!

BTW, before everyone jumps all over me, Let me mention that I was one of those who took pay cuts and lost pension during my airline career.
 
User avatar
AI126
Posts: 83
Joined: Thu Nov 17, 2016 2:03 am

Re: Article: 'Flying the Unfriendly Skies'

Wed Nov 08, 2017 7:31 pm

*snort* All the Wall Street apologists on this forum are what has caused the wage stagnation, income inequality, medical bankrupticies, lack of worker safety, eroding water quality, increased pollution, and pretty much every other harm to the working class possible. That these people are STILL defending it tells you just how brainwashed they are.

The government exists to protect and serve the PEOPLE of the country, i.e. the majority, NOT the wealthy 1%. It's time to activate the Sherman and Clayton Anti-Trust Acts and break up EVERY airline in this country, not to mention the banks, healthcare providers, news papers, media conglomorates, etc. The result of oligopolies, ask literally any economist in the world, is that there is ALWAYS an efficiency loss for society which yields higher profit to the supplier. Supply side economics has been supported by too many jack***** in this country, and it's time to realize that it does not work and that it never has! Say's Law does NOT work! Anyone who thinks that supply side economics works should go take a freshman level college economics class. Or open an AP Economics textbook and read the chapter on market structure, oligopolies, and efficiencies.

Every single argument that is supported by the Wall Street apologists has been disproven time and time and time and time again by economists of all colors, from the Far Right Austrian School to the most liberal Keynsians. As long as people don't listen to the people who have actually studied and researched this, we as a country and people will continue to be used and abused and thrown at the wayside with our noses broken in and our faces bleeding like David Dao was. The greatest horror to me for this past year was that the DoJ did not use that instance of absolute tyranny by and for the rich and wealthy to literally DESTROY the average person to break up the entire industry.

The old Reagan apologists are the greatest cancer on this country, and until they are driven out of power and replaced by people who actually represent the working class and the majority, this country will remain absolutely and completely f*****.
 
nikeherc
Posts: 670
Joined: Thu Sep 13, 2012 8:40 pm

Re: Article: 'Flying the Unfriendly Skies'

Wed Nov 08, 2017 8:00 pm

Let's talk about consolidation. In the era of regulation, my hometown airport (CAE) had four airlines: Delta, Eastern, Southern and Piedmont. You could basically go four places non-stop: Charlotte, Atlanta, Augusta, Newark. Anywhere else and you changed in Charlotte or Atlanta. After deregulation, there were six airlines and you could go about twelve places non-stop. Now there are three airlines and you can go to about nine places non-stop. The prices are lower and the service is commensurate with the fares. One thing I miss is relatively cheap first class. My company only paid for coach, but by paying about $20 I could upgrade my Friday afternoon flight home to F and get a couple of free drinks and a sandwich. This eliminated the need for cooking or going our when I finally got home (Atlanta at the time.) You get what you pay for and you pay for what you get.
DC6 to 777 and most things in between
 
Bald1983
Posts: 623
Joined: Wed Jun 15, 2016 8:04 pm

Re: Article: 'Flying the Unfriendly Skies'

Wed Nov 08, 2017 11:54 pm

blockski wrote:
Bald1983 wrote:
ltbewr wrote:
This is an excellent article discussing the changes in the airline business in the USA over the last 40 years from deregulation to now, how it is much worse for workers and passengers: http://prospect.org/article/unfriendly-skies


This is not an excellent article. This is a piece of crap article. Many things stated, are true to a point. However, at least my perusal of the article, shows that the author left out a salient point. That point is that in those so called "glory days" air fares were much higher in real dollar terms then they are now. The reason the government could set a bench mark of a twelve percent profit on a fifty-five percent load factor was that fares were so high, that only the rich could travel by air, even in coach. The article also ignores the upgrades to premium cabins with lie-flat seats, video and audio entertainment. The article also omits the fact that there was much less air service available. In those ancient times, United was the largest carrier in the World and had a fleet of less then 200. Continental, the smallest of the trunk line carriers, had a fleet of less then sixty. By the way there was still over booking.

What de-regulation did was make air travel available to many more people. It allowed for competition, meaning the government was not deciding what niche to allow a particular airline to fill. Is it possible that one of the reasons for Pan Am's demise was that the government prevented it from having a domestic route network until very late in the ball game?

I will take todays system over the "glory days" anytime, because what de-regulation did do was make air travel accessible to many more people.


So, this is all true - but you're missing the article's stronger points. Yes, deregulation allowed for competition, but it also paved the way for consolidation, which is now eroding the competition within the industry, The arguments about common ownership and Wall Street's incentives for executives are particularly strong.

I don't find the author's nostalgia for the CAB days to be persuasive at all, nor do I find his prescriptions to be compelling. The points about airline networks seem particularly off-base.

But the exploration of the downsides of consolidation, oligopoly, and the decline in passenger rights (not just a lack of seat space, but an actual degradation of a passenger's rights) is worth discussing. Part of what gives those airline networks their power is their immense control over certain markets; and that's where there's a lot less actual competition happening today than their used to be.


If I want to go anywhere in the United States from where I am located, I will have at least four choices almost always and sometimes five or more. That means competition. Fares are still lower then in the CAB days. The industry has finally hit an equilibrium where the fares are affordable enough but allow the airlines to make a (Shudder) profit.People voted with their wallets. With consolidation Yes things are more basic but middle class people can afford to fly, instead of just the rich.
 
Socrates17
Posts: 157
Joined: Sun Sep 28, 2003 3:47 am

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 12:41 am

Well, I must say that you got flamed far less than I expected from this board. The article is a pretty good history, imo, but the barn door was left open and the horse is 62 leagues away in the next parish by now. Regrettably, I can't think of much in the way of regulatory action which could bring back the good bits of the CAB era without also bringing back the bad bits.

But the US model does seem to be egregiously aggressive. I got real spoiled when I was working and did extensive J traveling, including 8 round-the-world business trips, where it was my habit to book on *A airlines like SQ, NH, NZ & OZ, then LH or SK, never UA. I did like CO, the last US airline I felt any loyalty to. Now that I'm retired and on a fixed income, I don't like feeling like I'm paying Châteauneuf-du-Pape prices for cheap plonk. I get that feeling on the US3. I do not get that feeling on European LCCs where the fares are generally commensurate with the product, according to my totally unscientific experience.
You Can't Take the Sky from Me
 
Bobloblaw
Posts: 2406
Joined: Fri Jan 13, 2012 1:15 pm

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 1:14 am

ltbewr wrote:
This is an excellent article discussing the changes in the airline business in the USA over the last 40 years from deregulation to now, how it is much worse for workers and passengers: http://prospect.org/article/unfriendly-skies


It is certainly not worse for passengers. There is far more choice today than during regulation.
 
irelayer
Posts: 1129
Joined: Wed Jul 06, 2005 4:34 pm

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 1:56 am

IPFreely wrote:
KRIC777 wrote:
The majority of passengers who whine about how bad service is will continue to go on Expedia or "cheapo air.com" of whatever and book the cheapest flight they can find.


You got that right. And that same majority will continue to complain incessantly about the cramped seat and poor service that they are "forced" to endure. You can see examples of it even in this thread.


I think air travel over long distances has become so commonplace that we take it for granted. On the other hand, we then see commercials that evoke a rather positive image of the airline (mostly with the premium products). So the gap between perception and reality is very high.

I think we need to drop this notion of fantasizing about how air travel SHOULD be and recognize it for what it is. In order to get the prices we are expecting, the airlines have to implement basically what they have been implementing, and that's what the market bears. It's quite obviously a race to the bottom in Economy, and that's because THAT is what customers want.

Basically let's stop pretending that air travel is supposed to be glorious and refined. It's not. It's a bunch of sweaty people jammed together in the back of the bus with flip flops and t-shirts trying to endure 5 hour transcons with narrow seats with the absolute minimum amount of legroom for the average person.

If you want it to be like it was, you must pay for the privilege of J/F. J/F is what you think air travel should be. Sorry to burst everyone's bubble, but that's the truth.

Now...do I think everyone at the airline is generally rude or at least "meh"?. Yes. I don't blame them. I think that's a function of them having to handle more and more things with more and more people with less and less pay. I honestly don't know how some of these people get by. And it's a negative feedback loop. The FAs get more and more fed up because the passengers are complaining more and then the FAs don't want to deal with it and put up walls. Not like these people are being paid anywhere near enough to care about enforcing the policies of an airline as front line employees even though they probably hate doing it. If I was an FA I would probably punch the 7th person that complained about the Wifi not working or the TV is messed up. I fly a lot and I see my fair share of entitled jerkbags and if I had to deal with them I'd rather just be a babysitter.

Gate agents too. I mean with all this "quick turn" mentality and trying to get the most utilization with these frenzied schedules, they run around like chickens with their heads cut off and I honestly feel badly for them.

At the check-in counter? Having to tell Grandma she needs to pay $75 dollars to check a bag of Christmas gifts for her grandchildren. Oh Grandma you also want an aisle seat because you have to get up and walk around or you might get a blood clot and die from DVT? That'll be $15. That's a thankless job and you can never make anyone happy except maybe once in a while with some empty gesture.

-IR
 
IPFreely
Posts: 2630
Joined: Sun Dec 24, 2006 8:26 am

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 3:05 am

gwrudolph wrote:
In 1980, I remember my parents paying 199.00 RT for PHL-MCO,


That's the equivalent of about $591 in 2017 dollars.

irelayer wrote:
If you want it to be like it was, you must pay for the privilege of J/F. J/F is what you think air travel should be. Sorry to burst everyone's bubble, but that's the truth.


Considering the example gwrudolph provided. I wonder how much people would like it if the only fare between PHL-MCO was regulated today as it was then, and the fare was $591?

Those who say everyone would be okay with it as long as service is the same as it was in 1980 are in luck. Because I looked at PHL-MCO RT fares for one month from today, and you can fly PHL-MCO RT first class on UA or AA for $528. That's slightly less than the equivalent price in 1980. Yes, you can also fly PHL-MCO RT in Basic Economy for fares as low as $58-84 on F9, AA, and NK. But nobody has to endure it when first class is available for less then it used to cost in the "good old days".
 
User avatar
zckls04
Posts: 2785
Joined: Fri Dec 30, 2011 6:55 pm

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 4:40 am

Here's an interesting counterargument:

https://www.bizjournals.com/bizjournals ... el-is.html

Some serious cherrypicking I suspect, but it is true that comparing the value you get from the two fares isn't always apples to oranges.
Last edited by zckls04 on Thu Nov 09, 2017 4:45 am, edited 1 time in total.
Four Granavox Turbines!
 
pezzy669
Posts: 211
Joined: Sun Oct 28, 2012 10:30 pm

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 4:43 am

While I cannot say I ever flew pre-deregulation I will say over my 23 years of flying on my own accord (from 10 years old until now at 33) there have been some hiccups along the way across every carrier including now defunct carriers, but I firmly believe the big 3 are on very solid footing as of the last 4-5 years to where they can finally re-invest in their hard and soft products after years of losses.

I honestly prefer 3 strong and profitable carriers that can re-invest in their hard and soft product versus 6 near bankrupt carriers that don't have a dime to do much beyond fill the gas tank to fly to the next destination.
 
flyguy89
Posts: 3129
Joined: Tue Feb 24, 2009 6:43 pm

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 5:54 am

zckls04 wrote:
Here's an interesting counterargument:

https://www.bizjournals.com/bizjournals ... el-is.html

Some serious cherrypicking I suspect, but it is true that comparing the value you get from the two fares isn't always apples to oranges.

Cherrypicking indeed...notice how for the lowest one-way fare he throws out there for a regulation-era ticket $97 ($450 today) he just casually glosses over the fact that get that you would have had to buy round-trip for a total of $900 in today's dollars.

I don't think the argument has ever really centered on a claim that product-for-product what you get today is cheaper, but rather that today a multitude of cheaper options exist for those who would like the choice. A quick query of a fully refundable ticket that includes all the pre-deregulation amenities the author points to is roughly $650 (bags, priority boarding, enhanced legroom, etc), so you can still get the pre-deregulation product for about the same price. But how many people before deregulation who were simply priced out of the market would have preferred the option to fly if they could trade off any combination of those amenities? That choice to travelers just did not exist back then...it was either cough up $600+ to fly with the full suite of amenities or don't fly at all.
 
User avatar
TheRedBaron
Posts: 3276
Joined: Tue Mar 29, 2005 6:17 am

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 6:08 am

Ill keep my thought on the industry to myself since I have enjoyed flying since 1967...... but it saddens me that most people, never think of all those great pilots attendants and ground staff that got the shaft, had no benefits, lost their pensions and so on due to this great idea of consolidation, deregulation and screwing john Doe....enjoy the next AA DL UA computer glitch... and the buying go hundreds of airplanes from a vendor in configurations and densities that even Torquemada would not enjoy or recommend...
Best Regards
TRB
The best seat in a Plane is the Jumpseat.
 
gwrudolph
Posts: 438
Joined: Sat Sep 13, 2008 3:46 pm

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 3:25 pm

IPFreely wrote:
gwrudolph wrote:
In 1980, I remember my parents paying 199.00 RT for PHL-MCO,


That's the equivalent of about $591 in 2017 dollars.

irelayer wrote:
If you want it to be like it was, you must pay for the privilege of J/F. J/F is what you think air travel should be. Sorry to burst everyone's bubble, but that's the truth.


Considering the example gwrudolph provided. I wonder how much people would like it if the only fare between PHL-MCO was regulated today as it was then, and the fare was $591?

Those who say everyone would be okay with it as long as service is the same as it was in 1980 are in luck. Because I looked at PHL-MCO RT fares for one month from today, and you can fly PHL-MCO RT first class on UA or AA for $528. That's slightly less than the equivalent price in 1980. Yes, you can also fly PHL-MCO RT in Basic Economy for fares as low as $58-84 on F9, AA, and NK. But nobody has to endure it when first class is available for less then it used to cost in the "good old days".


Thanks for the additional context IPFreely. I'm guessing 591 per person might significantly impact vacation choices for a family of four. As others have stated, the customer has spoken! If they were willing to pay a higher fare for a better experience, ULCC would not have been so successful and the big guys wouldn't be trying to emulate.

While I'm on my soapbox, I did find the article references to current profitability levels as evidence that the deregulated model doesn't work to be ridiculous. While our carriers are currently making a nice profit, we shouldn't forget all the years since deregulation that they didn't. Moreover, if/when the price of oil recovers, profits won't be quite as rosy. Yes, the carriers will increase prices, but at a certain level, it will impact demand.
 
michman
Posts: 901
Joined: Sat Dec 23, 2006 9:51 am

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 4:15 pm

For the OWS crowd here who are championing the return of the CAB, I'd suggest it could best be described as an instance of "crony capitalism". Be careful what you wish for. Yes, I know, your new and improved CAB would be "different". While planes operating at 50% LF's is great for passenger comfort, it's a pretty inefficient use of a very expense resource. I'm having a hard time reconciling how one can still offer "reasonable" fares while also using these resources so inefficiently. I'd also observe that it's not particularly green.
 
FrequentFlier73
Posts: 6
Joined: Thu Oct 26, 2017 2:30 pm

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 4:18 pm

Wonder if the same ones complaining about de regulation would be the same to complain about the much higher fares that regulation brought.


EDIT: By the way, that magazine is a liberal / left wing / progressive one. They would be the ones complaining the fares are too high and request the government (ie taxpayers), subsidize ticket prices so everyone could fly again at a cheaper rate.
 
IPFreely
Posts: 2630
Joined: Sun Dec 24, 2006 8:26 am

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 5:15 pm

gwrudolph wrote:
Thanks for the additional context IPFreely. I'm guessing 591 per person might significantly impact vacation choices for a family of four. As others have stated, the customer has spoken! If they were willing to pay a higher fare for a better experience, ULCC would not have been so successful and the big guys wouldn't be trying to emulate.


Exactly. The family of four that can’t afford $528 first class tickets today wouldn’t have been able to afford any tickets pre-regulation. Flying wouldn’t have been an option, they would have had two options, drive or stay home.

Today they have three options. Drive, stay home, or fly with low fare tickets that come with less space and service. But it’s an option, not a requirement. Don’t like it, don’t fly. And if you do fly don’t complain when you get what you pay for.
 
jplatts
Posts: 3802
Joined: Sat Mar 18, 2017 6:42 pm

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 5:21 pm

Even though there are many individuals who claim that airline deregulation has led to lower fares in the U.S., there were some cases where airfares on U.S. legacy carriers on some of the domestic routes within the contiguous U.S. were significantly more expensive than was the case back in the 1970's prior to airline deregulation (even earlier in this decade and even when taking into account inflation of pre-deregulation airfares charged back in the mid-1970's).

As an example, a last-minute round-trip plane ticket from DFW to CVG on AA used to cost $1400 dollars 4 years ago, but a last-minute round-trip plane ticket from DFW to CVG on AA is now half what it was 4 years ago. According to an old AA timetable from December 1974 (which can be found at http://www.departedflights.com/AA120174p10.html), a last-minute plane ticket from DFW to CVG used to cost $152.00 back in 1974 (or $763 in 2013 dollars).
 
UltimoTiger777
Posts: 458
Joined: Sun Jul 17, 2016 5:19 pm

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 6:29 pm

AI126 wrote:
we as a country and people will continue to be used and abused and thrown at the wayside with our noses broken in and our faces bleeding like David Dao was. The greatest horror to me for this past year was that the DoJ did not use that instance of absolute tyranny by and for the rich and wealthy to literally DESTROY the average person to break up the entire industry.
.


I'm so glad no one ever gets beaten up like that in countries where they don't use supply side economics.

I mean it must be paradise in those places.

By the way, what does breaking up the entire industry actually achieve? You'll just eventually get down the road and find they all have to merge to survive again.
 
ckfred
Posts: 5188
Joined: Wed Apr 25, 2001 12:50 pm

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 6:46 pm

I remember reading Milton Friedman back in the 1980s, and he ripped on the Interstate Commerce Act which regulated railroads. His argument was that fares and freight tariffs should not be set, solely based on distance. There were plenty of other appropriate factors. For instance, how much passenger and freight traffic is there between two points? How popular is a route? How much manpower is required to load and unload a freight shipment?

It is the same with air travel. Presumably, flying between two large cities with large airport staffs should have some lower costs that a similar distance between two smaller cities. By the same token, flying around the holidays should require a premium, because there will be more passengers want access to the same number of seats as a few weeks beyond the holiday period.

Every business in the travel industry does pricing based on demand. Cruise travel during vacation or holiday times is more expensive than when kids are in school. If you try to book a hotel room in or around Omaha the weekend of the Berkshire Hathaway shareholders meeting, the price could very well be double what it is usually. Twenty to thirty thousand people are traveling to Omaha.

The real question is how are fares today, with extra fees, when compared to 1977, the last year of CAB regulation? I suspect that a plane ticket, with checked bag fees and fees for better seats, is still cheaper today than for a ticket in 1977 that included 2 checked bags and free seat selection.

Let's remember that travel today, in many ways, isn't what it was forty years ago. I still read plenty of posts on Cruise Critic about how this cruise line and that cruise line is adding more charges on top of fares, how food in main dining rooms has gone to (to encourage specialty dining), and other service downgrades. Amtrak isn't anywhere near as nice as it was in the 1970s. It's been probably 20 years since dining car chefs actually cooked food, as opposed to heating or reheating meals that were prepared in a kitchen near a main station.

Somewhat unrelated, but in retail, it's often the case that if one retailer buys another store chain, the product array winds up reflecting what is perceived as the "less-expensive" chain. People have complained for years that the quality of merchandise at what used to be Marshall Field's has gone down, first under Dayton-Hudson/Target, then under Macy's with the rebranding of all chains to the Macy's name.

When a product is deemed a commodity, the main competition will be price. It's only when you get to a product that is deemed as a luxury will competition widen to aspects other than price. The caveat will be reliability, when it comes to manufactured goods, such as automobiles. I know people who swear by Japanese brands and won't buy from the Big Three. But whether they buy Toyota, Nissan, Mazda, or Honda is based pretty much on price.

Let's remember that American's More Room Throughout Coach failed. No other airline bothered to remove rows of coach. American still had to match fares while having 10 fewer seats in their F100s and MD-80s, 12 fewer seats in their 727s and 757s, and 14 fewer seats in their 767s. People felt that having 4 more inches of leg room wasn't worth a premium fare.
 
psa188
Posts: 661
Joined: Sat Aug 19, 2000 11:02 pm

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 7:19 pm

ckfred wrote:
The real question is how are fares today, with extra fees, when compared to 1977, the last year of CAB regulation? I suspect that a plane ticket, with checked bag fees and fees for better seats, is still cheaper today than for a ticket in 1977 that included 2 checked bags and free seat selection.

Let's remember that travel today, in many ways, isn't what it was forty years ago.


Why use 1977 as a baseline? Nobody wants to go back to the CAB, that's a straw man argument.

Let's look at the 1990s/early 2000s. Compared to then, air travel sucks now. I've certainly cut back.
 
flyguy89
Posts: 3129
Joined: Tue Feb 24, 2009 6:43 pm

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 7:24 pm

TheRedBaron wrote:
Ill keep my thought on the industry to myself since I have enjoyed flying since 1967...... but it saddens me that most people, never think of all those great pilots attendants and ground staff that got the shaft, had no benefits, lost their pensions and so on due to this great idea of consolidation, deregulation and screwing john Doe....enjoy the next AA DL UA computer glitch... and the buying go hundreds of airplanes from a vendor in configurations and densities that even Torquemada would not enjoy or recommend...
Best Regards
TRB

How much has actually changed though? Mainline pilots are still among the highest paid fields in the country, and flight attendant compensation hasn't really changed so much as the nature of the job has changed. In the 60s, young woman would be flight attendants for a few years perhaps, until they got married and had to quit...there was a lot of turn-over back then and it wasn't viewed as a long-term career like today. And then, of course, what about the huge savings John Doe now realizes from lower fares, or the economic benefit he receives from now being able to travel. Additionally, more profitable and growing airlines now means they can employ way more pilots and flight attendants than back in the day.
 
User avatar
NYPECO
Posts: 599
Joined: Sun Feb 15, 2015 12:55 am

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 7:49 pm

The very first paragraph of the article isn't even accurate (there was no overbooking).
 
DCA-ROCguy
Posts: 4207
Joined: Fri Apr 21, 2000 5:03 am

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 8:23 pm

The major policy failure since Deregulation has been the Federal refusal to take a strong antitust stance. Neither the late 1980's consolidation nor the 2007-2013 consolidation should have been allowed. Airlines must be forced to compete or they will oligopolize and make serving Wall Street--the ONLY winner of consolidation--above the common good of providing reasonable service at reasonable prices to the broadest number of destinations. Hardly "win, win, win.' It's easy to say passengers have choices--they can fly JetBlue! they can fly Spirit!--when you're in one of the relatively few markets served by these carriers. More like "customers (especially in smaller markets) lose, employees lose, Wall Street wins."

There is probably a policy argument to be made for Federal breakup of the four largest carriers, much like what was done with AT & T in 1984. However, the costs would probably be significant, so for now consumers have to make do. But the current outcome is ideal ONLY for one group: Wall Street. Air travel, whether Wall Street likes it or not, is a social good, and consolidation has had very, very mixed results for the public.

Jim
Need a new airline paint scheme? Better call Saul! (Bass that is)
 
User avatar
CobraKai
Posts: 33
Joined: Wed Oct 05, 2016 3:04 pm

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 8:49 pm

DCA-ROCguy wrote:
The major policy failure since Deregulation has been the Federal refusal to take a strong antitust stance. Neither the late 1980's consolidation nor the 2007-2013 consolidation should have been allowed. Airlines must be forced to compete or they will oligopolize and make serving Wall Street--the ONLY winner of consolidation--above the common good of providing reasonable service at reasonable prices to the broadest number of destinations. Hardly "win, win, win.' It's easy to say passengers have choices--they can fly JetBlue! they can fly Spirit!--when you're in one of the relatively few markets served by these carriers. More like "customers (especially in smaller markets) lose, employees lose, Wall Street wins."

There is probably a policy argument to be made for Federal breakup of the four largest carriers, much like what was done with AT & T in 1984. However, the costs would probably be significant, so for now consumers have to make do. But the current outcome is ideal ONLY for one group: Wall Street. Air travel, whether Wall Street likes it or not, is a social good, and consolidation has had very, very mixed results for the public.

Jim


How many is the right number?

One of the more interesting points AA/US presented during their merger (and is often overlooked in these threads) was that smaller communities actually benefit from consolidation. Having 3 of 7 large carriers serve your local airport still leads you with potentially 1 option depending on your city pair, but 4 mega carriers gives you 3 options since all of them have vast networks (obviously, depends on the cities in question, but there was verifiable hard data behind it).

Also presented and also overlooked, was that for large city pairs, going from 7 to 4 didn't lead to an increase in prices because there was still sufficient competition to keep prices in check, but now schedules were deeper, so instead of 6 flights per airline, you now had 10 to choose from.

Also, Anet loves to rip Wall St, but are airline employees better served working for viable, profit making enterprises, or being trapped in continuing cycles of bankruptcy due to cut throat competition?
 
SRT75
Posts: 242
Joined: Wed Jul 27, 2005 2:42 am

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 8:55 pm

Not sure what breaking up the big 4 would do (or why you would want to do it). The competition that innovates the market and makes it more efficient are the new entrants: Southwest (back in the day before it became what it is today); Alaska; Jet Blue; Virgin America; Spirit; Air Tran; Frontier; Reno Air; etc. If the new entrant doesn't have a product anyone wants it fails. If it gives the consumer something they like, the big 4 notice and it changes their behavior (from something as minor as a short-term fare war on a single route to adopting products pioneered by the upstarts like personal device entertainment, recaro seats, craft beers on offer, etc.). And if the newbie gets eaten up by a major, so be it.
 
Junction
Posts: 559
Joined: Sat Mar 05, 2005 2:50 am

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 9:29 pm

I think the biggest reason the air travel experience seems worse now is because all the flights are usually completely full. The average load factor in the 1970s was less than 60%, meaning you normally did not have anybody in the seat right next to you. Other than that, most of the amenities offered by airlines today are far better then they ever used to be. The most you could do in the 70s on flights was smoke or read a book.
 
DCA-ROCguy
Posts: 4207
Joined: Fri Apr 21, 2000 5:03 am

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 9:48 pm

CobraKai wrote:
How many is the right number?


Neither the industry nor the government has allowed us to actually determine that number, but it's probably 5 legacy carriers, 3 large full-service LCC's, and 3 ULCC's, with assorted one-offs like Alaska. I remain firmly unconvinced that three megacarriers, one full-service mega-LCC, plus 3 ULCC's and one-offs like JetBlue and Alaska, is an optimum arrangement for the flying public. We were moving towards a the third alternative I describe later in the last decade. The likely result would have been fewer and more profitable carriers than in the post 9/11 years, but still enough for suitable competition. But the industry was not forced by Federal antitrust policy to try. They just consolidated, so we'll likely never know. In any event, saying the only options are "financial bloodbath or consolidation" is not sound.

CobraKai wrote:
One of the more interesting points AA/US presented during their merger (and is often overlooked in these threads) was that smaller communities actually benefit from consolidation. Having 3 of 7 large carriers serve your local airport still leads you with potentially 1 option depending on your city pair, but 4 mega carriers gives you 3 options since all of them have vast networks (obviously, depends on the cities in question, but there was verifiable hard data behind it).


That assumes no interlining, or at least limited interlining, so the "verifiable hard data" has at least one faulty assumption.

CobraKai wrote:
Also presented and also overlooked, was that for large city pairs, going from 7 to 4 didn't lead to an increase in prices because there was still sufficient competition to keep prices in check, but now schedules were deeper, so instead of 6 flights per airline, you now had 10 to choose from. Also, Anet loves to rip Wall St, but are airline employees better served working for viable, profit making enterprises, or being trapped in continuing cycles of bankruptcy due to cut throat competition?


Larger markets generally have an easier time of it in a consolidated system. I live in Washington, DC, and generally have suitable competition on the routes I fly. The brunt generally falls on medium- and smaller-size markets.

The assumption that only a consolidated industry can be profitable is unsound, because we've never really had the third model I've proposed. So the assertion that somehow only consolidation gives employees a good situation and not "continuing cycles of bankruptcy" isn't sound.

Jim
Need a new airline paint scheme? Better call Saul! (Bass that is)
 
IPFreely
Posts: 2630
Joined: Sun Dec 24, 2006 8:26 am

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 9:50 pm

psa188 wrote:
Why use 1977 as a baseline? Nobody wants to go back to the CAB, that's a straw ma
Let's look at the 1990s/early 2000s. Compared to then, air travel sucks now. I've certainly cut back.


Ah, the good old days when Eastern, Midway, Pan Am, America West, TWA, US Airways (twice), Sun Country (twice), Frontier, Aloha (twice), United, Northwest, and Delta all went bankrupt.
 
Bricktop
Posts: 1504
Joined: Fri Jan 22, 2016 11:04 am

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 10:06 pm

DCA-ROCguy wrote:
The major policy failure since Deregulation has been the Federal refusal to take a strong antitust stance. Neither the late 1980's consolidation nor the 2007-2013 consolidation should have been allowed. Airlines must be forced to compete or they will oligopolize and make serving Wall Street--the ONLY winner of consolidation--above the common good of providing reasonable service at reasonable prices to the broadest number of destinations. Hardly "win, win, win.' It's easy to say passengers have choices--they can fly JetBlue! they can fly Spirit!--when you're in one of the relatively few markets served by these carriers. More like "customers (especially in smaller markets) lose, employees lose, Wall Street wins."

There is probably a policy argument to be made for Federal breakup of the four largest carriers, much like what was done with AT & T in 1984. However, the costs would probably be significant, so for now consumers have to make do. But the current outcome is ideal ONLY for one group: Wall Street. Air travel, whether Wall Street likes it or not, is a social good, and consolidation has had very, very mixed results for the public.

Jim

Ah, Evil Wall Street (bolding above mine) is the only winner. And who is that? Oh yeah, the shareholders who risk their capital in these companies. Well, my 401k says thanks. I will use that money in my (not near enough) retirement to travel up front so I don't have to listen to whining from the back of the bus, which by the way is not nearly as loud as the Cassandras would have us believe. You get what you pay for. Rational people make rational decisions in evaluating the value proposition presented to them. To each his own, etc. Thanks for attending the Bricktop cliche festival. Don't forget to tip your waiters and waitresses.
 
User avatar
macsog6
Posts: 247
Joined: Wed Jan 27, 2010 6:25 pm

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 10:41 pm

I find it interesting that some people are advocating a return to governmental regulation presumably by the same government that manages certain other institutions that don't seem to very much in favor on this forum, such as TSA. Why do we think that this same set of bureaucrats that gave us TSA will be more effective in managing the "other" side of the security portal. I've flown before, during and after deregulation and candidly don't recall things being so great whist regulated as there were far fewer flights ans they were quite expensive.
Sixty Plus Years of Flying! "I fly because it releases my mind from the tyranny of petty things." - Saint Ex
 
User avatar
CobraKai
Posts: 33
Joined: Wed Oct 05, 2016 3:04 pm

Re: Article: 'Flying the Unfriendly Skies'

Thu Nov 09, 2017 11:20 pm

DCA-ROCguy wrote:
CobraKai wrote:
How many is the right number?


Neither the industry nor the government has allowed us to actually determine that number, but it's probably 5 legacy carriers, 3 large full-service LCC's, and 3 ULCC's, with assorted one-offs like Alaska. I remain firmly unconvinced that three megacarriers, one full-service mega-LCC, plus 3 ULCC's and one-offs like JetBlue and Alaska, is an optimum arrangement for the flying public. We were moving towards a the third alternative I describe later in the last decade. The likely result would have been fewer and more profitable carriers than in the post 9/11 years, but still enough for suitable competition. But the industry was not forced by Federal antitrust policy to try. They just consolidated, so we'll likely never know. In any event, saying the only options are "financial bloodbath or consolidation" is not sound.

CobraKai wrote:
One of the more interesting points AA/US presented during their merger (and is often overlooked in these threads) was that smaller communities actually benefit from consolidation. Having 3 of 7 large carriers serve your local airport still leads you with potentially 1 option depending on your city pair, but 4 mega carriers gives you 3 options since all of them have vast networks (obviously, depends on the cities in question, but there was verifiable hard data behind it).


That assumes no interlining, or at least limited interlining, so the "verifiable hard data" has at least one faulty assumption.

CobraKai wrote:
Also presented and also overlooked, was that for large city pairs, going from 7 to 4 didn't lead to an increase in prices because there was still sufficient competition to keep prices in check, but now schedules were deeper, so instead of 6 flights per airline, you now had 10 to choose from. Also, Anet loves to rip Wall St, but are airline employees better served working for viable, profit making enterprises, or being trapped in continuing cycles of bankruptcy due to cut throat competition?


Larger markets generally have an easier time of it in a consolidated system. I live in Washington, DC, and generally have suitable competition on the routes I fly. The brunt generally falls on medium- and smaller-size markets.

The assumption that only a consolidated industry can be profitable is unsound, because we've never really had the third model I've proposed. So the assertion that somehow only consolidation gives employees a good situation and not "continuing cycles of bankruptcy" isn't sound.

Jim


How can you definitively say that model is better than what we have now?

Think about the mid 2000s, that wasn't far off from your model, except WN was so much larger than any other LCC that you would have to prevent them from buying more aircraft to have 2 others (FL and HP?) get to any form of parity - and HP wasn't financially solvent at the time.

Also, we had arguably 5 legacies at that time - DL, NW, UA, CO, AA (US was a fairly distant 6 if memory serves) and they all were on shaky ground and/or going bankrupt, so how is that optimum?

As to interlining, not all carriers have interline agreements with each other, and it is a somewhat disjointed experience for the passenger. It is rarely a competitive option to a carrier serving the market with its own metal.

Furthermore, I never said the option was consolidation or bankruptcy, I said that Wall St wants viable and profitable businesses, which is better for the employees.

Now if you want to interpolate what I said into a commentary on consolidation, I would say that the financial bloodbaths and continuing cycles of bankruptcy were all part of the cut throat competition from the pre-consolidation years, but the airlines seem to have hit a critical mass allowing them to vigorously compete without losing money hand over fist. More smaller carriers were never able to weather the shocks the way the current group has in the past half decade. I think that this industry is so capital intensive that size can help lead to stability (i.e. bigger ships are more stable in rougher seas), but admittedly, we haven't had many years to go off. That being said, and as previous posters have pointed out, the more diverse markets of years past have seen many bankruptcies, so history doesn't appear to be on the side of those wanting fragmentation.
 
USAOZ
Posts: 443
Joined: Fri Jul 28, 2017 4:34 am

Re: Article: 'Flying the Unfriendly Skies'

Fri Nov 10, 2017 1:51 am

recently booked a LAX/DEN nonstop on Southwest for USD$27 including 2 checked bags, probably the best airline in USA.

Am sure it would have been much cheaper before deregulation.

Seriously, the real problem in USA is not deregulation, but the mergers that have been allowed.

We all know that U.S. politicians are the best you can buy, but how on earth were some of these mergers allowed ? the bribes must have been huge & many.
 
commavia
Posts: 11489
Joined: Mon Apr 25, 2005 2:30 am

Re: Article: 'Flying the Unfriendly Skies'

Fri Nov 10, 2017 3:18 am

DCA-ROCguy wrote:
Neither the late 1980's consolidation nor the 2007-2013 consolidation should have been allowed.


Well, had they not been "allowed," consolidation would have happened by other means. One way or another, the industry was going to rationalize and consolidate - by means either "orderly" (mergers) or disorderly (liquidations). In the decade following 9/11, airline industry investors collectively refused to continue subsidizing economically unsustainable competition. That's just the inescapable reality.

DCA-ROCguy wrote:
make serving Wall Street--the ONLY winner of consolidation--


That is baseless and false. Other "winners" of consolidation include employees who finally have some career stability and are earning better compensation, and passengers who value stable, profitable well capitalized airlines that aren't teetering on the brink of bankruptcy and are able to invest in new and better airplanes, facilities and technology.

DCA-ROCguy wrote:
above the common good of providing reasonable service at reasonable prices to the broadest number of destinations.


First off, for about the thousandth time, not everyone defines "common good" purely based upon "lower airfares." I'm quite sure there are lots of ordinary, middle class, taxpaying American citizens who are either employees of, or investors (directly or indirectly) in, airlines - and I'm quite sure those individuals would define the "common good" of the airline industry as a stable, profitable business generating risk-appropriate returns.

Second, setting aside the laughably subjective definition of "reasonable," I'd say that "reasonable service at reasonable prices to the broadest number of destinations" is pretty much exactly what the U.S. airline industry provides today. Airlines provide countless choices - catering to various different sets of customers' definitions of "reasonable" - to virtually every population center of consequence in the country, not to mention connectivity to every destination of consequence on earth.

DCA-ROCguy wrote:
Hardly "win, win, win.' It's easy to say passengers have choices--they can fly JetBlue! they can fly Spirit!--when you're in one of the relatively few markets served by these carriers.


Again, baseless. Virtually every single city of consequence in the U.S. has service from not one but multiple low fare airlines, along with multiple network carriers, and my personally guess is that city pairs representing >95% of the traffic in the U.S. have multiple competitors.

DCA-ROCguy wrote:
More like "customers (especially in smaller markets) lose, employees lose, Wall Street wins."


Again, customers in small markets enjoyed a level of capacity during regulation that was never economically efficient. It was an inefficient allocation of resources to satisfy political - not economic - objectives. The market doesn't work that way. It allocates resources where economics dictate.

And ... "employees lose" from consolidation? Ha. That's hilarious. Ask virtually any employee who has worked at virtually any airline in the U.S. for over a decade if they're happier with their compensation today vs a decade ago. I'm fairly confident of where the vast majority of opinion will fall. And consolidation isn't the only reason for the better pay, better union contracts and greater certainty - but it's a huge part of it.

DCA-ROCguy wrote:
Air travel, whether Wall Street likes it or not, is a social good, and consolidation has had very, very mixed results for the public.


No. It still isn't.

SRT75 wrote:
Not sure what breaking up the big 4 would do (or why you would want to do it).


One thing it would do is raise costs as economies of scale are diminished. Another thing it would do is reduce competition in lots of small market city pairs that aren't economically viable outside of a massive network.

DCA-ROCguy wrote:
Neither the industry nor the government has allowed us to actually determine that number, but it's probably 5 legacy carriers, 3 large full-service LCC's, and 3 ULCC's, with assorted one-offs like Alaska. I remain firmly unconvinced that three megacarriers, one full-service mega-LCC, plus 3 ULCC's and one-offs like JetBlue and Alaska, is an optimum arrangement for the flying public.


That is all entirely arbitrary and subjective. I, also entirely arbitrarily and subjectively, view the airline industry structure we have now as near-perfect. We all get the same number of votes every other November. So who is right?

DCA-ROCguy wrote:
We were moving towards a the third alternative I describe later in the last decade. The likely result would have been fewer and more profitable carriers than in the post 9/11 years, but still enough for suitable competition.


That is a highly creative, but highly false, rewriting of history. The industry was going to consolidate one way or another. Nothing could stop it. The only question was whether it would consolidate via merger or liquidation. The bank was closed - capital dried up and the providers of that capital simply refused to keep handing money to consumers.

DCA-ROCguy wrote:
Larger markets generally have an easier time of it in a consolidated system. I live in Washington, DC, and generally have suitable competition on the routes I fly. The brunt generally falls on medium- and smaller-size markets.


It should be obvious that choice will be less and fares will be higher in small cities. That's economic reality - it's a feature, not a defect, of the market. Volume drives economies of scale. Economies of scale driver lower costs. Lower costs drive lower fares. Thus why big cities attract lots of flights from lots of airlines, and small cities attract fewer flights from fewer airlines. This is common sense.

DCA-ROCguy wrote:
The assumption that only a consolidated industry can be profitable is unsound, because we've never really had the third model I've proposed. So the assertion that somehow only consolidation gives employees a good situation and not "continuing cycles of bankruptcy" isn't sound.


Well we tried excess competition for thirty years. The result was every single major U.S. airline except two filing for bankruptcy at least once, hundreds of thousands of jobs eliminated and pensions frozen or terminated, billions of dollars of deferred or cancelled capital investment, billions of dollars of investors' money burned, and ... dirt cheap fares for consumers. Notice how one of those isn't like the others?
 
ikramerica
Posts: 15100
Joined: Mon May 23, 2005 9:33 am

Re: Article: 'Flying the Unfriendly Skies'

Fri Nov 10, 2017 4:39 am

A better play on an old slogan is:

"we are the American airline industry, nothing special in the air..."
Of all the things to worry about... the Wookie has no pants.
 
DCA-ROCguy
Posts: 4207
Joined: Fri Apr 21, 2000 5:03 am

Re: Article: 'Flying the Unfriendly Skies'

Fri Nov 10, 2017 7:38 am

commavia wrote:
Well, had they not been "allowed," consolidation would have happened by other means. One way or another, the industry was going to rationalize and consolidate - by means either "orderly" (mergers) or disorderly (liquidations). In the decade following 9/11, airline industry investors collectively refused to continue subsidizing economically unsustainable competition. That's just the inescapable reality.


Which legacy was teetering on Chapter 7 after the bankruptcies? Answer: none. We know what an airline on the brink of chapter 7 looks like---TWA in March 2001. None of the six legacies were at that point after the 00's bankruptcies. So obviously someone was investing. And I'm not arguing for "subsidizing economically unsustainable competition," which you apparently haven't been paying attention to, you just read it in since I'm not agreeing with your narrative.

commavia wrote:
That is baseless and false. Other "winners" of consolidation include employees who finally have some career stability and are earning better compensation, and passengers who value stable, profitable well capitalized airlines that aren't teetering on the brink of bankruptcy and are able to invest in new and better airplanes, facilities and technology.


I'll grant, the employees who have jobs are probably happier. After the bankruptcies, of course, the legacies were no longer "teetering" on its brink. A more competitive but not unsustainably competitive industry presumably could make investments in facilities (though perhaps not Taj Mahal stuff like MWAA's drunken-binge spending at IAD).

commavia wrote:
First off, for about the thousandth time, not everyone defines "common good" purely based upon "lower airfares." I'm quite sure there are lots of ordinary, middle class, taxpaying American citizens who are either employees of, or investors (directly or indirectly) in, airlines - and I'm quite sure those individuals would define the "common good" of the airline industry as a stable, profitable business generating risk-appropriate returns. Second, setting aside the laughably subjective definition of "reasonable," I'd say that "reasonable service at reasonable prices to the broadest number of destinations" is pretty much exactly what the U.S. airline industry provides today. Airlines provide countless choices - catering to various different sets of customers' definitions of "reasonable" - to virtually every population center of consequence in the country, not to mention connectivity to every destination of consequence on earth.


Lower airfares are an *essential element* of the common good aspect of air travel. But I've never said they're the only one, you're just reading that in. And when talking about something that didn't happen, one has to make educated speculation, but I disagree that mine is "laughably subjective."

commavia wrote:
Again, baseless. Virtually every single city of consequence in the U.S. has service from not one but multiple low fare airlines, along with multiple network carriers, and my personally guess is that city pairs representing >95% of the traffic in the U.S. have multiple competitors.


Sorry, but reasonably-priced air travel isn't just for "cities of consequence." Smaller markets need suitable connections, too, at reasonable cost. Allegiant has been a big help, of course, linking smaller markets with sunspots with its innovative model. I'm not sure what the answers are for the rest of the system, but the current system needs improvement, particularly at markets of MSA's below 500,000 or so.

commavia wrote:
Again, customers in small markets enjoyed a level of capacity during regulation that was never economically efficient. It was an inefficient allocation of resources to satisfy political - not economic - objectives. The market doesn't work that way. It allocates resources where economics dictate. And ... "employees lose" from consolidation? Ha. That's hilarious. Ask virtually any employee who has worked at virtually any airline in the U.S. for over a decade if they're happier with their compensation today vs a decade ago. I'm fairly confident of where the vast majority of opinion will fall. And consolidation isn't the only reason for the better pay, better union contracts and greater certainty - but it's a huge part of it.


Efficiency isn't the only good involved with a social good like air travel, sorry. The market should control the majority of how the market functions, because, as history indicates, it will produce reasonable service distribution for a large percentage of the population in bigger markets. But it fails when you get to smaller markets. Again, I don't know exactly *how* to improve service at smaller communities. One approach for now is for local business communities to cooperatively set up their own funding pools for dedicated flights and develop relationships with carriers. That can be a big help to a local community, like what Grand Rapids did.

Again, employees who still have jobs indeed probably like the current situation better than say 2005. But, then again, I'm not calling for a return to 2005; only you seem to think I'm doing that. I'm calling for a third way somewhere in between. History has shown that neither CAB-style regulation (contra the OP's article) nor the laissez-faire approach to consolidation taken by the Reagan, Bush II, and Obama administrations, is good economic policy that serves the common good. Somewhere in the middle--solid antitrust policy, and some sort of legal requirement for certain degrees of air service to smaller communities, probably. I'd have to think about it in more detail.

commavia wrote:
No. It still isn't.


Laissez-faire is bad public policy, just as is government heavy-handedness. Aristotle is right after all these millennia. Virtue is a mean. :)

commavia wrote:
That is all entirely arbitrary and subjective. I, also entirely arbitrarily and subjectively, view the airline industry structure we have now as near-perfect. We all get the same number of votes every other November. So who is right?


I'm talking about something that never actually happened, so the best I can do is make educated speculation. I disagree that my view is "entirely arbitrary and subjective," but it necessarily involves speculation. But, then again, I don't take the status quo or things that have happened as defining the entire range of what's possible.

commavia wrote:
That is a highly creative, but highly false, rewriting of history. The industry was going to consolidate one way or another. Nothing could stop it. The only question was whether it would consolidate via merger or liquidation. The bank was closed - capital dried up and the providers of that capital simply refused to keep handing money to consumers.[


Again, it helps if you respond to what I wrote, rather than trying to limit discussion to your very philosophically debatable narrative. I'm proposing something that didn't actually happen, but could have. And you keep saying "the bank was closed," but the historical fact is that after the 00's Chapter 11 bankruptcies no legacy was teetering on the brink of Chapter 7. Again, we know what that looks like, TWA in March 2001, and that wasn't the case for any legacy by 2010. But, assuming that some benefit of economy of scale could be achieved by one or two smaller legacies selling out, perhaps some sort of transaction where one or two smaller legacies were broken up by a DOJ-approved plan to ensure at least four or five surviving legacies, might have worked. Again, that's speculative.

And, again, I've nowhere called for "banks to hand money to consumers," that's in your own head, but certainly not in anything I actually wrote. The situation in 2005 did need to change, no one disagrees about that.

commavia wrote:
It should be obvious that choice will be less and fares will be higher in small cities. That's economic reality - it's a feature, not a defect, of the market. Volume drives economies of scale. Economies of scale driver lower costs. Lower costs drive lower fares. Thus why big cities attract lots of flights from lots of airlines, and small cities attract fewer flights from fewer airlines. This is common sense.


Maybe some choices will be less and fares somewhat higher, but they're way out of whack as it is. The current situation is only "common sense" in a narrowly laissez-faire mindset, which is not good public policy. The postmodern economy demands air connection, and it's not good enough for many smaller communities.

commavia wrote:
Well we tried excess competition for thirty years. The result was every single major U.S. airline except two filing for bankruptcy at least once, hundreds of thousands of jobs eliminated and pensions frozen or terminated, billions of dollars of deferred or cancelled capital investment, billions of dollars of investors' money burned, and ... dirt cheap fares for consumers. Notice how one of those isn't like the others?
[/quote]

The airline industry going forward from 1978 had unsustainably high costs and it needed market discipline. That happened in the 1980's, and again in the 00's, and both times it was badly needed. Only after the 00's bankruptcies were legacy costs getting to somewhere in keeping with good public policy. None of this was "excess competition." It was exactly what needed to happen. But it neither could nor should have gone on forever, and nowhere have I argued that it should have. A mixture of free market and proper antitrust and minimal regulation would have produced a better exit from the last decade than consolidation: a sustainable industry with proper public policy to ensure reasonable service distribution in medium- and smaller-markets, neither overcapacity nor undercapacity. We can only speculate what it would have looked like, I'm just trying to argue for a general portrait.

Jim
Need a new airline paint scheme? Better call Saul! (Bass that is)
 
ltbewr
Topic Author
Posts: 15349
Joined: Thu Jan 29, 2004 1:24 pm

Re: Article: 'Flying the Unfriendly Skies'

Fri Nov 10, 2017 11:49 am

I like the discussion I started. My point, as the article in parts suggests, is to find a new balance. Sure, Spirit (in the US) and Ryanair (in Europe) can be extremely cheap and fine with some fliers, but with all the fees one could run up total costs to travel to nearly equal a fight on a big 4, or JetBlue.
One factor that caused a lot of changes and never expected from deregulation was the Internet. It allowed one to shop primarily as to price vs. airline and pushed prices down to fill the seats. Now you cannot buy a ticket but online for all but a few flights or willing to pay fees to an agent or phone services of the airlines.
One big change is the ditching of meals that use to used to get customers in the regulated era. Most 'airline food' is an oxymoron, but on long flights (5+Hours) at certain times of the day, they are a necessity as limited as to what one can bring past security or some with health needs (like with diabetes) need a meal or having the time to eat before a flight. Some airports have limited food options post security and can be expensive vs. local 'street' prices. [I am posting this at LRH Terminal 2 waiting pre-check in for a flight later today and know I have food options post-security] Of course, ditching food on all but international flights is major savings of costs, improved profits, cheaper fares and reduced waste.

To me Southwest and JetBlue are the best for US Domestic and adjacent international flights on balance for quality, frequency of service, pricing, limited fees, checked bag policies and snacks vs. food and more like we would like to see with the big US 3.
 
commavia
Posts: 11489
Joined: Mon Apr 25, 2005 2:30 am

Re: Article: 'Flying the Unfriendly Skies'

Fri Nov 10, 2017 12:40 pm

DCA-ROCguy wrote:
Efficiency isn't the only good involved with a social good like air travel, sorry.


Our views are simply not compatible and never will be because I absolutely refuse to accept the premise that air travel is "social good."

That premise rests at the root of all of the statements above I find entirely baseless and, frankly, shockingly detached from economic reality.

It is, with respect, stunning to me that anyone could complain about an industry providing the level of national and global access, and choice, and intense competition, and reinvestment, as the U.S. airline industry, and think that such things being done at net margins of ~10% is unreasonable. Stunning. But, alas, I view airlines as functioning for-profit commercial entities in a marketplace, and not public utilities, and compare their performance accordingly. Thus the disconnect.

Air travel is not a human right - isn't now, never has been, never will be.

DCA-ROCguy wrote:
I disagree that my view is "entirely arbitrary and subjective,"


Pretty much all of the above is, indeed, entirely arbitrary and subjective.

I could counter virtually every argument above, ultimately, by simply saying that I disagree. There is no objective "right" answer.

I, for instance, think the structure of the U.S. airline industry is almost perfectly right, and my evidence is that the U.S. air transportation system is producing exceedingly reasonable returns (again, ~10% on average) while also employing millions of people at better wages and offering significant access and competition to the vast majority of U.S. air travel consumers. And the system continues to get better. I continue to be amazed that people still aren't happy with that.
 
blockski
Posts: 693
Joined: Wed Jun 15, 2016 8:30 pm

Re: Article: 'Flying the Unfriendly Skies'

Fri Nov 10, 2017 2:42 pm

commavia wrote:
DCA-ROCguy wrote:
It is, with respect, stunning to me that anyone could complain about an industry providing the level of national and global access, and choice, and intense competition, and reinvestment, as the U.S. airline industry, and think that such things being done at net margins of ~10% is unreasonable. Stunning. But, alas, I view airlines as functioning for-profit commercial entities in a marketplace, and not public utilities, and compare their performance accordingly. Thus the disconnect.


Despite lots of nits to pick with the article, this is the fundamental issue it raises: at what point of the current economic environment for airlines (consolidation, Wall Street influence, common ownership, oligopoly) does the air travel market cross the line from a competitive marketplace into a 'natural' oligopoly? And when that line is crossed, what is the appropriate regulatory response?

I'm completely persuaded by the view that some degree of consolidation was inevitable as a result of deregulation - the entire economic state of the legacy airlines was based on a regulated business, and it took several decades for that all to shake out. But now that we're in a new equilibrium, it's worth asking if the assumptions about competition from deregulation still apply in a consolidated marketplace, and what kind of measures might be needed to encourage more competition.

It seems to be perfectly plausible that the world before DL/NW merged was both more competitive and yet unsustainable; the current environment sure seems more stable, but still not nearly as competitive.
 
commavia
Posts: 11489
Joined: Mon Apr 25, 2005 2:30 am

Re: Article: 'Flying the Unfriendly Skies'

Fri Nov 10, 2017 4:49 pm

blockski wrote:
it's worth asking if the assumptions about competition from deregulation still apply in a consolidated marketplace, and what kind of measures might be needed to encourage more competition.


First off, again, I'm still not really sure what the basis would be for justifying concerted public policy to "encourage more competition" at this point. I'm still unclear as to why this objective - competition for competition's sake - is really worthwhile. In my opinion, the level of competition we have right now is ideal - the vast majority of air travel consumers enjoy multiple choices, at various price points with various attendant levels of products and services, wherever they want to travel. And airlines are paying their employees prevailing wages while also generating exceedingly reasonable and risk-appropriate returns for shareholders. Again - win, win, win.
 
blockski
Posts: 693
Joined: Wed Jun 15, 2016 8:30 pm

Re: Article: 'Flying the Unfriendly Skies'

Fri Nov 10, 2017 6:36 pm

commavia wrote:
blockski wrote:
it's worth asking if the assumptions about competition from deregulation still apply in a consolidated marketplace, and what kind of measures might be needed to encourage more competition.


First off, again, I'm still not really sure what the basis would be for justifying concerted public policy to "encourage more competition" at this point. I'm still unclear as to why this objective - competition for competition's sake - is really worthwhile. In my opinion, the level of competition we have right now is ideal - the vast majority of air travel consumers enjoy multiple choices, at various price points with various attendant levels of products and services, wherever they want to travel. And airlines are paying their employees prevailing wages while also generating exceedingly reasonable and risk-appropriate returns for shareholders. Again - win, win, win.


Fair point that encouraging competition alone isn't enough. There's a broader critique about the current state of American anti-trust doctrine, noting that the consumer-focused lens is much narrower than it was in the past. I didn't summarize the argument cogently; but what they're saying is that the current doctrine focused solely on competition isn't good enough.

I also don't think anyone is seriously proposing a return to the CAB. But there could be a whole host of regulatory steps to better ensure competition in key markets; to ensure access to those markets for new competitors; to provide limits/structure on executive compensation to put the focus of management on airline operational performance rather than the quarterly stock price; etc.

They've also brought up concerns about absolute size and concentration, and those concerns are worth thinking through. Older antitrust doctrine wasn't just focused on consumer prices, it was focused on size, because it was concerned about power and concentration as a matter of first principles. That's a bigger discussion than just one about airlines, but airlines are a good example to discuss.
 
commavia
Posts: 11489
Joined: Mon Apr 25, 2005 2:30 am

Re: Article: 'Flying the Unfriendly Skies'

Fri Nov 10, 2017 6:45 pm

blockski wrote:
I also don't think anyone is seriously proposing a return to the CAB. But there could be a whole host of regulatory steps to better ensure competition in key markets; to ensure access to those markets for new competitors;


That's fair - and I don't disagree.

Airport facilities are scarce public assets and should be managed as such, and that means that if an airline is not utilizing its access to those scarce assets, others should be given the opportunity. Personally, I'm entirely fine with congestion and peak pricing at congested, oversubscribed airports, and I'm also perfectly fine with use-it-or-lose-it slot requirements. But ultimately, let's be clear - by far the single biggest thing the federal government could ever do to (further) expand competition at busy, congested airports is to build more runways and terminals. That is it. That, alone, would pretty much instantly solve the alleged "problem" of limited competition.

With respect to smaller markets, I think the "solutions" to the alleged "problem" are more nebulous and unclear - most are longer-term, and indirect. Perhaps advanced research into new materials or propulsion technology that would fundamentally alter the economic equation of small airplanes flying in these markets. Relaxing the 1,500 hour rule would also help. But it's not quite as clear.

blockski wrote:
to provide limits/structure on executive compensation to put the focus of management on airline operational performance rather than the quarterly stock price; etc.


I don't follow this line of logic at all. The foremost - I'd say only - explicit fiduciary responsibility of executives at publicly trade corporations is to preserve and grow wealth for owners. Any objective to improve "airline operational performance" is only a secondary consideration to serving that first and foremost, ultimate, goal. And the market already disciplines precisely that. Over the long run, airlines that perform better attract customers and said customers' money. The market works. We should just leave it alone and let it do so.
 
DCA-ROCguy
Posts: 4207
Joined: Fri Apr 21, 2000 5:03 am

Re: Article: 'Flying the Unfriendly Skies'

Fri Nov 10, 2017 7:10 pm

commavia wrote:
It is, with respect, stunning to me that anyone could complain about an industry providing the level of national and global access, and choice, and intense competition, and reinvestment, as the U.S. airline industry, and think that such things being done at net margins of ~10% is unreasonable. Stunning. But, alas, I view airlines as functioning for-profit commercial entities in a marketplace, and not public utilities, and compare their performance accordingly. Thus the disconnect. Air travel is not a human right - isn't now, never has been, never will be.


Unfortunately, because the postmodern tech/ information economy seems to require connection more, rather than less, than did the modern industrial economy, air travel is *all the more* a social good, and a certain amount of access is a requirement to participate. Smaller metro areas need connection all the more, because the tech economy favors large metro areas. It is very bad social and economic policy, not in keeping with good political theory, to allow an economy to bifurcate as badly as ours has. I'm not sure what all the answers are, but the current situation needs improvement. Neither laissez-faire nor democratic socialism are the answers. The hard part is figuring a middle path, which our postmodern culture isn't good at doing. Hence, you get the OP's original article essentially arguing that the government should almost singlehandedly be running civil aviation, and your argument, which is that the market virtually alone should be shaping the industry. Neither seems to me suitable.

That said, I'll agree that there are many benefits to the current situation. Because I'm so concerned to make a case for what I think would be a better situation, I don't always note what is beneficial about the current one. Fewer, larger carriers do make connections smooth, and integrate international and domestic travel smoothly. A higher degree of economic stability than existed in 2005 was needed, for both investors and employees. 2005 was not going to last, you are certainly right about that. Plus, safety just keeps improving, as it did during the last decade. But with current technology, I don't see why a more decentralized approach, still cooperative through alliances, can't maintain the benefits of connectivity, for instance while better protecting competition.

commavia wrote:
I, for instance, think the structure of the U.S. airline industry is almost perfectly right, and my evidence is that the U.S. air transportation system is producing exceedingly reasonable returns (again, ~10% on average) while also employing millions of people at better wages and offering significant access and competition to the vast majority of U.S. air travel consumers. And the system continues to get better. I continue to be amazed that people still aren't happy with that.


From within your assumptions about economics and the common good, yes, the current situation would indeed be ideal. You argue very consistently from premises to conclusion, which makes your posts very helpful to interact with. Certainly, if events do not intervene, the current situation could last a long time. But history has a funny way of proving wrong statements like the 'unsinkability' of the Titanic, to Doug "we're the kings of the world!" Parker saying the industry can be profitable from here on out. We'll see.

Jim
Need a new airline paint scheme? Better call Saul! (Bass that is)
 
User avatar
CobraKai
Posts: 33
Joined: Wed Oct 05, 2016 3:04 pm

Re: Article: 'Flying the Unfriendly Skies'

Fri Nov 10, 2017 10:14 pm

Serious questions for those of you on the more regulation/competition side:

Where is the evidence that more competition, above and beyond what we have today, is better for the consumer? Furthermore, how are we defining "better" for customers? IIRC, during the AA/US merger, slots were taken and given to WN at DCA in order to increase competition. AA cut smaller markets which lost nonstops, and WN added flights to markets that already had service. So some customers made out better, and some made out worse, was this the appropriate action for the government to take? Is this what we want by more competition?

Diving into that further, I understand that on the surface, more competition in a given market is better for consumers, but is there any evidence out there that airlines are acting as an oligopoly and have pricing power? To me, having only ~10% profit margins says that they cannot set prices where they want, and that the system has enough players to be balanced. Is this wrong? If so, what is the appropriate profit margin, or where is the disconnect between these overly high prices and the lower than average margins?

As to the group that thinks Wall St is the driving force behind the airlines (and that it is somehow bad) - DL and WN are the 2 airlines most favored by Wall St based on market cap, but they are arguably the airlines that are most loved by consumers (and Anet), so doesn't that show that delivering for the customers and the stockholders is accomplished at the same time? Furthermore, they have some of the most loyal, engaged, and happy employees, just more proof that this isn't a zero sum game, or am I missing something?

Please understand, these are serious questions I am posing - I'm in the camp that believes the markets are working well, and we have achieved an equilibrium that is working for all stakeholders:
1. Customers have more flight options, to more cities, with more products, at more price points, with the lowest being very affordable on a historical basis
2. Employees have stable employers who can give them long term careers with advancement opportunities and many have been paying out record profit sharing bonuses
3. Stockholders have stable vehicles to invest capital with a positive outlook for growth
 
heysfo
Posts: 65
Joined: Fri Jul 24, 2009 5:31 am

Re: Article: 'Flying the Unfriendly Skies'

Sat Nov 11, 2017 3:22 am

Seems the writer of this article has a huge agenda as with the website it was published : The American Prospect is a quarterly American political magazine dedicated to American liberalism and progressivism. Based in Washington, D.C., The American Prospect says it aims "to advance liberal and progressive goals through reporting, analysis, and debate about today's realities and tomorrow's possibilities."
 
User avatar
DL757NYC
Posts: 309
Joined: Wed Nov 02, 2016 6:07 am

Re: Article: 'Flying the Unfriendly Skies'

Sat Nov 11, 2017 12:55 pm

The workers got the worst end of the deal. The companys are celebrating their raises and bonuses. Really they are just restoring wages that were slashed. If you think working above or below wing for wage rates that were paid 35 years ago.
 
UWPAviation
Posts: 148
Joined: Mon Dec 19, 2016 7:36 pm

Re: Article: 'Flying the Unfriendly Skies'

Sat Nov 11, 2017 1:25 pm

This article fails to miss the big picture. The majority of air travelers today do not care about anything except getting the cheapest ticket possible to where you want to go. And with deregulation you can get to whatever destination you want either directly or at most 1 connection.

And while doing that you have a pleathera of options on how you want to travel. If you want the cheapest way possible there are options. If you want your lie flat first class treatment you can choose that too. Oh not to mention the dozens of different times a day you can choose when you want to leave.

Is air travel perfect? Of course not, just like everything it's about making money. However for the passenger it's the best it's ever been and with the invention of more economic aircraft it's only going to get better.
 
User avatar
AI126
Posts: 83
Joined: Thu Nov 17, 2016 2:03 am

Re: Article: 'Flying the Unfriendly Skies'

Sat Nov 11, 2017 2:28 pm

The notion that equality of choice is the same thing as true equality is blatantly horrid and is the same logic that leads to the calling of the Pinkertons to break up the Homestead strike. We need to realize that true equality does not come from some level of visible "choice" but from truly equal access to goods. And no matter what people say or believe and whether they buy it or not, these days, air travel is no longer just a commodity. It is a public necessity in the economy we live in, and any other statement is just completely misreading the reality on the ground. We no longer live in an era where air travel is a luxury; these days, if an area wants to have any sort of economic well-being, it is imperative to have ample aces to air travel. This is what economists call a market failure, and it requires concrete, tangible government action to address and bring back to a socially optimal equilibrium. The market, by definition, is not interested in providing the socially optimal amount of product in an economy -- one just has to look at the market structure of an oligopoly to realize this, and the American airline industry is the textbook example of an oligopoly. In such a case, it is the duty of the unions and the government to force the oligopoly to provide the socially optimal amount of a good. Basic economics that any freshman in college or senior in high school can tell you: By definition, oligopolies are inefficient. This is not an "opinion" or point of debate, this is an economic fact.

As for any evidence that the American airline industry is a functioning oligopoly... Where do I even begin...

Just for a few things to consider:
When one airline changes price, the others virtually immediately follow.
If you look at virtually any and all city pairs right now, all of the prices provided will be within around 5-7% of each other -- speaks of a supplier's pricing power in the market.
The vast majority of airports in the country do NOT have access to more than two of the Big Three's service.
The airline industry has shed so many jobs since their bankruptcies.
The suppliers refuse to update any of their software of back-end infrastructure because "there is no need to" and the industry is relying on decades-old technology for the modern era.
The airlines together through A4A have come together (acting LITERALLY as the same being) to push/force the government to limit/end ME3 access to the USA in order to keep their own profits higher by driving up prices.

There are so many more things that I could add, but this is just a fundamental economic fact, and one that is not debatable, that some people on here who support laissez-faire economics will never accept.
 
User avatar
DUDEofJETS
Posts: 14
Joined: Tue Aug 08, 2017 2:31 am

Re: Article: 'Flying the Unfriendly Skies'

Sat Nov 11, 2017 7:17 pm

Flying is no longer a luxury, it is a necessity. People have the option to upgrade but don't want to pay the money. That's fine, don't expect the same service. In addition we have to stop pretending that this is only happening here in the U.S.; Joon, anyone? More people are traveling, they want to pay less, and are in fact, paying less. Don't bother comparing to the Middle East carriers, they too are feeling the financial pain.

Who is online

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos