Airlines Industry 'needs Structural Changes'

[BoeingBoy]

Airlines industry 'needs structural changes'
Posted: Tuesday, March 23, 2004
Dubai

The problems facing the airline industry today are not merely cyclical, they are structural and, as such, demand a structural solution, says a study.

Article

Jim

 

[BoeingBoy]

More reading...pretty much the same ideas but more detail.


Flight for Survival - A New Business Model for the Airline Industry

Booz Allen Report (PDF document)


State of the Airline Industry and the Agenda for 2004

Booz Allen Article (PDF document)


Airlines: A New Operating Model - Providing Service and Coverage Without the Cost Penalty

Booz Allen Article


The Need for New Airline Business Models


Booz Allen Article


Jim

 

[airlineorphan]

Good stuff, Jim,

Confirms what I've been suspecting all along. The structural problems are not rooted in high labor costs, but in the high costs of the rest of the production system, particularly that of the fixed capital expenditures relating to the hub and spoke system.

It is a pretty typical tendency for the weight of fixed capital to drag an industry (or section of an industry down) while the captains of that industry hoot and holler about high labor costs. More to the point, management traditionally wants labor to subsidize their high nonlabor costs. Traaaaaaaaa....Dition!

In solidarity,
Airlineorphan

 

[mweiss]

Another aspect is the US Tax Code and the way it prevents the recovery of capital costs in a timely manner.

How's that? MACRS is mighty generous to capital costs. What more would you ask for?