Airlines At A Turning Point

[USA320Pilot]

Airlines at a Turning Point

ARLINGTON (theHub.com) - In a front page story today, the Washington Post said more than 40 percent of the nation’s air service could soon be operated by companies in bankruptcy as the industry “lurches through a historic transformation.â€￾

United has been operating in Chapter 11 for nearly two years; US Airways has warned that it may need to file again if it is unable to lower its costs; and Delta looks increasingly like a candidate for Chapter 11, the newspaper said. The Post said all three carriers are involved in talks with their labor unions in a bid to lower costs. According to the Post, industry observers said the failure to win concessions from workers “not only could hurl the airlines into bankruptcy, it also could precipitate their demise.â€￾

The newspaper said the airline industry is at a turning point. “The growth of low-cost carriers and high fuel prices threaten the survival of the traditional airlines. Even in a strong economy, the major airlines would be unable to raise prices much because the low-fare carriers and the Internet have changed the fare game,â€￾ the Post said.

Robert Crandall, former CEO of American, told the newspaper, “Today, you have an entire industry that has been subjected to a paradigm shift by virtue of the new carriers. The outcome in the end will be that every carrier, in one way or another, is going to have to get their costs down to the point where they are essentially the same as low-cost carriers.â€￾

Respectfully,

USA320Pilot

 

[Rico]

Yeah well,

Same thing has already happened to the trucking industry. Interestingly enough, most of the "legacy" trucking firms were able to lower costs to compete with low cost new entrant companies like JB Hunt, which found their costs rising at the same time...

There is nothing new in the world, it is just a big circle of reoccurance. You just need to know where to look, to see where a given event has happened before.

 

[EyeInTheSky]

Interesting that you should bring up the trucking industry. There's a shortage of competent and qualified drivers. Seems many applicants can't pass the initial drug test screenings. Oh well, this is what happens when you lower wages to neanderthal levels -- you get what you pay for or is that you don't get anything if you don't pay anything. Our country's new motto should be: Keep your expectations low and you'll be a happy camper.

 

[blueoceans]

I guess Neanderthals made good money. According to the American Trucking Association, the average truck driver salary is $41,000 per year, and $55,000 for long haul carriers. I didn't see a comment about drugs keeping the applicant pool down, however.