Airlines Under Siege

[The Drunken Duck]

This story is in the latest version of The Economist. It's one of their free stories, so it does not require a subscription.

Airlines under siege
- Silver linings, darkening clouds
- Don't be fooled by rising travel numbers—airlines, especially big American ones, remain in deep trouble

http://www.economist.com/printedition/disp...tory_ID=2535961

They have a picture of AA planes. My guess is MIA or DFW. Can't tell.

 

[NewHampshire Black Bears]

"The biggest difference between budget carriers, and mainstream airlines, is their radically way of working"

Very true.

IMHO, this is whats in store for AA.
Either (almost) all domestic travel will be flown by AE, or future concessions will bring AA in line with WN.
Wn flies 737's, AA flies 737's
WN and AA pay the same for fuel
Therefore AA has to operate their superior domestic system at the same cost as WN. Internationally it's a different story.

I know that the regular's on this board, hear me "harping" on Crandall consintly, BUT "uncle" Bobby said years ago, that if he had to, he'd fly ONLY transcons, and international only.

I believe AA is "closer" to those reality's, than "further" !!!!!!!!!!!!!!!!!!

Time will tell.

NH/BB's

GO AMFA
GO "THB"

 

[Winglet]

If America wants all it's airlines to operate like SW, then there's going to be a lot of cities that don't get much, if any, air service.

But that's not what Americans want. They want all cities served, luggage transfers, reserved seating, MRTC, first class upgrades, mileage, etc . . . . . . but at SW prices. That means that airline employees will be working for Walmart compensation.

If that happens, the American public can take it's airline industry and shove it where the sun don't shine.

They also want the industry to be able to expand and contract on very short notice, and absorb fuel price increases on the backs of employees, with no impact on pricing.

If AA wants to give me an SW compensation package along with its competent management and leadership, I'll take it.

 

[MCI transplant]

<_< Winglet---- If that's the case, then the only answeer would be some sort of reregulaton! And as you know, that's not going to happen! At least not in the near future!

 

[Wretched Wrench]

So, then, AA wants to run a SW type operation, paying us Walmart pay and benefits with AA management running the whole operation.

Reminds me of a joke about heaven and hell.

 

[L1011Ret]

I think a number of posters have compared legacy carriers pay with that of Southwest. Often not a huge difference. The big difference is in efficieny in use of planes and crews. Point to Point flying is more efficient than the demands of Hubs.

 

[MCI transplant]

I think a number of posters have compared legacy carriers pay with that of Southwest. Often not a huge difference. The big difference is in efficieny in use of planes and crews. Point to Point flying is more efficient than the demands of Hubs.

<_< L1011----There's where the problem lays! a.a. has expended so much of it's resoures in it's "Hubs", that it won't admit to the correctness of anything else!!!!!

 

[Winglet]

I think a number of posters have compared legacy carriers pay with that of Southwest. Often not a huge difference. The big difference is in efficieny in use of planes and crews. Point to Point flying is more efficient than the demands of Hubs.

Precisely the point. SW and JetBlue cherry pick cities. Their model is NOT a comprehensive transportation system. The O&D traffic from Des Moines is not going to support very many direct flight, ego, you have to hub.

Given the depths to which AA and some other majors have sunk in employee compensation and massive layoffs, the major airline managements want to run the same kind of comprehensive system, (which is by necessity a lot more expensive to operate), continue to provide the service that Americans expect . . . . only with the cherry -picked pricing model that SW & JB has. There's only one way to do that . . . and that is to do it make fewer and fewer workers do more and more work at erroded compensation. Legacy carrier workers will make less than so-called LCCs.

Airline employed reservation agents, gate agents, baggage handlers, and a large portion of mechanics are going to become an endangered species. Watch for overseas outsourced res, 1 gate agent probably working two flights, contract baggage handlers, and outsourced maintenance.

They can drive down the compensation so low that no Americans will take the jobs, then Bush will say "Hey, look! We need to import labor from Mexico because there isn't enough American to take the jobs! His buddy, El Presidente Vincene Fox, will be happy too, along with the perpetually failed Mexican government.

Very few mechanics will be needed because the work will be done by unskilled low-wage imported labor and signed off by licensed mechanics. FAA oversight will be the usual . . . . virtually non-existant.

Oh . . . . and CEO compensation will rise to 700 times average worker.

 

[orwell]

If America wants all it's airlines to operate like SW, then there's going to be a lot of cities that don't get much, if any, air service.

But that's not what Americans want. They want all cities served, luggage transfers, reserved seating, MRTC, first class upgrades, mileage, etc . . . . . . but at SW prices. That means that airline employees will be working for Walmart compensation.

If that happens, the American public can take it's airline industry and shove it where the sun don't shine.

They also want the industry to be able to expand and contract on very short notice, and absorb fuel price increases on the backs of employees, with no impact on pricing.

If AA wants to give me an SW compensation package along with its competent management and leadership, I'll take it.

I think the key point you're uncovering is this:

There is a HUGE difference between what customers say they want and what they are willing to pay for.

One big problem, though, is they still - as you pointed out - expect to benefit from the former under the pricing environment of the latter.

Eventually, of course, they will have to pay the piper - exactly how remains to be seen. There are a number of possibilities.