Analysts again say that AA should shrink to help the industry (the competition)

[AdAstraPerAspera]

Considering the just-announced hiring push for more FAs, with initial training classes scheduled through 2016, it doesn't appear like plans to slow growth are in the works.  

 

[WorldTraveler]

until Parker remembers that his pay is now totally in stock, right?

just a couple months ago, AA had practically the same market cap as DL and might have been higher on a few days.

Now, DL's market cap is almost 20% higher than AA's.

Wall Street has "blessed" airline mergers based on the reduction of capacity and the elimination of duplication and underperforming routes; AA has yet to go thru or even acknowledge that exercise needs to take place.

and FWAAA is absolutely right that UA sat on its hands for several years trying to figure out how to operate the merged company; while operational integration was the real issue, UA is just now getting serious about rationalizing and managing its combined network and trying to recover from having the lowest yield of the big 3.

AA cannot afford to allow the same thing to happen; and given the intense competitive pressures that are focused on AA more so than either DL or UA, AA will have to act.

 

[Bob Owens]

Considering the just-announced hiring push for more FAs, with initial training classes scheduled through 2016, it doesn't appear like plans to slow growth are in the works.  

With a mature company you have to hire even if you are staying the same size, Maint has been shrinking rapidly (as the MD80 Fleet retires and the company outsources the Airbus' that are replacing them) and they are still hiring mechanics (or at least trying), the exodus is faster than the reduced demand.
 
Wait another 5 years when the company starts seeing more of those they hired during the mid eighties to early 90s growth spurt start bailing out or simply get to the point where they simply say "40 hours, or in the case of FA's the minimum required hours, is enough', "I can do with less now as my kids are grown and out of the house." They will stay and do the absolute minimum so they can keep their medical.  
 
The biggest problem for growth will be staffing. Why do you think that Parker gave you that money anyway? Because if he didn't he wouldn't be able to find competent people to do the job. 
 
In NY AA's starting rate is higher than its competitors due to what they call a "Flex starting rate", but since the top out rate is less and everything else sucks they cant get qualified experienced mechanics.
 
Think about it, if you were in your 20s would you be interested in this job under these conditions? None of my kids are. 

 

[Bob Owens]

Wall Street has "blessed" airline mergers based on the reduction of capacity and the elimination of duplication and underperforming routes; AA has yet to go thru or even acknowledge that exercise needs to take place.

 

And thats exactly what the airlines promised they would not do and why the Justice Department should have rejected all these mergers. Maybe its time to bring back regulation of the Airline markets. 

 

[WorldTraveler]

no, airlines did not say they would not reduce capacity. They did offer promises in one form or another regarding certain cities.

but given that every one of those promises has some sort of out based on changes to the business environment - DL was the only now big 4 carrier that merged before $3/gal jet fuel became the norm - it is not hard to see how things have changed.

 

[Bob Owens]

no, airlines did not say they would not reduce capacity. They did offer promises in one form or another regarding certain cities.

but given that every one of those promises has some sort of out based on changes to the business environment - DL was the only now big 4 carrier that merged before $3/gal jet fuel became the norm - it is not hard to see how things have changed.

 
They said that allowing the mergers would result in better service and customer experience and not increased prices or reduced service. Well reduced capacity means more crowded planes, less customer choice,  higher prices and reduced service.  They lied, knew they were lying, the Justice Dept knew they were lying and they did nothing about it. They did a disservice to the American people so that what should be a utility is making profits in the billions while passengers are stuffed into smaller and smaller seats on densely spaced full airplanes. Traveling in coach is probably the closest experience we have to being on a slave ship as far as space per person in coach. My guess is the average legacy airline flight in coach is more densely crowded than the average Subway car in NYC. 

 

[WorldTraveler]

thank you for writing "what should be a utility" because it shows that you fundamentally do not understand the airline industry and have unrealistic expectations on multiple levels based on that misunderstanding.

The US domestic airline industry was deregulated 35 years ago. It is not a utility and it is not subsidized as it was before nor does the government have any ability to dictate where carriers can serve and what they can charge. Those characteristics are typical of utilities which often have monopolistic characteristics but Congress agreed airlines should not operate as utilities and the industry was deregulated. What started in the domestic marketplace has spread to many of the largest int'l markets as well.

The airline industry also lost money from the time the airline industry was deregulated - and even before - so any expectations that the US airline industry should continue to operate the way they did before can only be justified if the industry is subsidized which it is not.

Perhaps at some point, space will return to coach cabins when airlines believe they can justify adding that space back. But let me remind you that AA boldly attempted to do it and withdrew the plan because there wasn't pricing support to offer extra space. Given that low fare carriers have as much share in the US market and they pander to the lowest fare purchasers, it is unlikely that legacy carriers will be able to offer extra space.

and it is categorically false that airline cabins are more densely occupied than subway cars unless you exclude many hours of the day from consideration.

Further, there was every expectation that higher prices would result whether the airlines specifically said it would take place or not. Economists and analysts knew it. and it is also worth noting that the largest increase in fares came not from the merger of legacy airlines but from WN's acquisition of FL which was one of the lowest cost operators in the industry - and also a direct competitor to WN in many markets. WN DID heavily appeal to its role as a low fare carrier and yet their track record for eliminating low fare service is far, far worse than any of the legacy carriers.

 

[AdAstraPerAspera]

Bob there is currently no benefits threshold to maintain medical for FAs, it was eliminated with the JCBA. Just FYI.

 

[Bob Owens]

thank you for writing "what should be a utility" because it shows that you fundamentally do not understand the airline industry and have unrealistic expectations on multiple levels based on that misunderstanding.

The US domestic airline industry was deregulated 35 years ago. It is not a utility and it is not subsidized as it was before nor does the government have any ability to dictate where carriers can serve and what they can charge. Those characteristics are typical of utilities which often have monopolistic characteristics but Congress agreed airlines should not operate as utilities and the industry was deregulated. What started in the domestic marketplace has spread to many of the largest int'l markets as well.

The airline industry also lost money from the time the airline industry was deregulated - and even before - so any expectations that the US airline industry should continue to operate the way they did before can only be justified if the industry is subsidized which it is not.

Perhaps at some point, space will return to coach cabins when airlines believe they can justify adding that space back. But let me remind you that AA boldly attempted to do it and withdrew the plan because there wasn't pricing support to offer extra space. Given that low fare carriers have as much share in the US market and they pander to the lowest fare purchasers, it is unlikely that legacy carriers will be able to offer extra space.

and it is categorically false that airline cabins are more densely occupied than subway cars unless you exclude many hours of the day from consideration.
 

I've been in this industry since 1980, 36 years, how long were you in it, in real life not counting cyberspace time? 
 
The industry is still heavily regulated  and just as subsidized now as it was before, they only changed the source of the subsidy, now the government assists the carriers in extracting monies from the employees instead of the passengers. Instead of dictataing what they charge for seats the government assists the carriers in dictating what they pay their employees. They do this through the abuse of both the RLA and C-11. 
 
$4 billion in profits just at AA, another $2 Billion at both Delta and United, they can add more space but they would rather have the extra profits by squeezing more people in than provide good service. When they asked for permission to merge they said service would be better, they lied. 
 

and it is categorically false that airline cabins are more densely occupied than subway cars unless you exclude many hours of the day from consideration.
 
 

 
Wrong, the other way around. Peak Subway travel may be more crowded but the duration is much shorter. When is the last time you got on a Manhattan Subway car at say Midnight? Have you ever even been on the Subway?  During Rush hour, yes a Subway will be more densely packed, and the average duration people are subjected to those crowded conditions is less than 20 minutes, airline passengers are subjected to being in crowded confinement longer than that even before they push off the gate. But at Midnight there would be very few on the Subway, and in between rush hour or Peak periods there would be much more room per person than in an airplane cabin. Compare the 24 hour schedule, including Peak Periods between Subways and air travel and Subway riders have much more room per person on average than Air travelers and Subway riders don't not have to endure that for up to 7 hours either. Never heard of anyone dying from DVT on a Subway. The crowded confined cabins of todays airlines are a major health threat, especially to the elderly. And its all due to the greed of the carriers. 
 
 

Further, there was every expectation that higher prices would result whether the airlines specifically said it would take place or not. Economists and analysts knew it. and it is also worth noting that the largest increase in fares came not from the merger of legacy airlines but from WN's acquisition of FL which was one of the lowest cost operators in the industry - and also a direct competitor to WN in many markets. WN DID heavily appeal to its role as a low fare carrier and yet their track record for eliminating low fare service is far, far worse than any of the legacy carriers.
 

Ok so you admit that they lied. Pointing your finger at SW and saying "they did it too" doesn't excuse Delta and the others from lying. 

 

[Bob Owens]

Bob there is currently no benefits threshold to maintain medical for FAs, it was eliminated with the JCBA. Just FYI.

Thanks

 

[WorldTraveler]

Bob
Paying employees less than you think they should be paid is not a subsidy; it is the free market paying people what they are willing to work. The way the market says it won't accept the salaries being offered is to quit working. As long as you and your peers keep coming to work, you tell your employer you accept the pay they offer. The government can tell you what actions can and cannot do but they cannot make you work if you don't want to

And you can argue about what DL did but a change in fuel prices IS a valid reason to change a business plan even if you want to play the victim card all day long

P.s. If you and labor would quit whining about what has taken place and figure out how to succeed where you are, labor might have influence again. For now management loves seeing labor in the corner wringing it's hands

Every passenger on q commercial flight has a seat. Hopefully you don't have those Expectations on a subway

 

[700UW]

Its not a free market when there are restrictions on labor and restrictions on them striking.
 
How is it fair that my pension was terminated and I was there for 20 years and the CEO who was there less than two and failed the company got six million in his pension?
 
If a company can use Chapter 11 to come after our CBAs, then unions and workers should have the same ability about the executives and any contract the company has with a vendor etc....

 

[Bob Owens]

Bob Paying employees less than you think they should be paid is not a subsidy; it is the free market paying people what they are willing to work. 

Its not "free market" when the government denies one side self help but not the other. Its government interference in the bargaining process that sets the market rate and allows the employer to unilaterally set the rates. 
 
How would you like it if as a shareholder the government interfered and and Nationalized what the company produced and allowed the Consumer to unilaterally set prices without bargaining  and said that you are free to sell you stock if you don't like it. Thats pretty much what you are saying in your Bullshit simplified answer about us quitting our jobs. Even a moron such as yourself knows that the reality is that leaving a job is a lot more difficult than simply selling your shares in a company. Presidents , even Republican Presidents such as Lincoln, Roosevelt and Eisenhower, all greater minds and people than you,  have recognized the complex reality of the employer-employee relationship vs your commodities based Economics 101 theory. 
 
And you are wrong about whether or not the government can force us to work or not, check your history, Truman in fact did just that. Sure rulings came out after the fact but he did it anyway, and until the courts made their ruling the choice was obey or go to jail,  just like we see Judges do now such as when the court ruled against the NWA flight attendants. 

 

[Bob Owens]

 Every passenger on q commercial flight has a seat. Hopefully you don't have those Expectations on a subway

Dont need a seat as it takes longer to get from the entry door to a cramped coach seat than the average Subway ride. 
 

 For now management loves seeing labor in the corner wringing it's hands 
 

I agree, Labor needs to stop wringing their hands, and start raising their fists. 

 

[Kev3188]

There is no such thing as a free market. It simply doesn't exist.

I agree, Labor needs to stop wringing their hands, and start raising their fists.

Amen.