Don't know if I qualify as knowledgeable or experienced...depends on your perspective. Nonetheless, I'm happy to help.
I think we'll see at least one legacy airline failure soon. In part, I say this because every past down economic cycle since deregulation has resulted in at least one legacy carrier ceasing operations. When it happened in the past, there was enough of a lag in capacity replacement to hold the industry until the next economic boom.
This time is a bit different, however. LCCs have a credibility with the public that they haven't had before, aside from a brief period of time in the mid-80s. This group seems to have more staying power than their mid-80s counterparts. The net result
could be a permanent change in the industry. This has been suggested in past cycles as well, but I sense more credibility this time.
Regardless, we're seeing the legacy carriers attempt for the first time some wholesale rearchitecture of their business models. Efficiency, reducing unit costs, is becoming more important than maximizing revenue. Clearly, the LCCs are having an impact here.
Long term, the industry can go one of two ways. One path is true commoditization, where all airlines are truly identical in their offerings, and margins are driven to razor-thin levels. This would be, in my opinion, a real tragedy.
The other path is differentiation, where different airlines cater to different demographics, and price accordingly. People would have several choices, all of which would have different margins reflecting their different service levels. In no case, however, would we see the sorts of margins of the 70-cent-per-mile fares we saw in 1999. This would be, in my opinion, the success that we've been awaiting since 1978.
As for politics, I'd be happy if the government got out of the way in most areas. The RLA hasn't helped at all. I do believe in use taxes to pay for the infrastructure (all of that government money going into ATC, security, better maintenance inspections, and subsidizing airport expansions), but that should be the end of it.
Hope you find that to be useful.
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the writer above has valid points. so i will try to a add to his.
i am not a so called expert. however i am an ex-employee of an recently "departed" airline, so i have been there, done that.
prior to our final demise our company was running better than ever. best in DOT
"on-time" sesults month after month, (do they still keep track of that?), customer serviceawards and so on. too little, too late......the balance sheet was destroyed, the route network was limited and one day at 6AM i found out from a TV report that we were gone.
at the moment USAir is following the exact path we did. personally i do not see
how they will last all of 2005.
United, on the other hand, reminds me of eastern. their mechanics seem
determined to stand their ground against the management and the judge.
if they actually call a strike then it will just take weeks, if not days, for united
to disappear. otherwise they will just wait for their cash to run out. either way
they will be gone by year's end also.
the others will scramble to pick up the pieces: mainly hard to come by gates
(LGA, JFK, LAX) and routes (london, tokyo).
longer term the upheaval will go on. jet blue and southwest will keep expanding
at a relentless pace, taking more and more market share from the
legasy carriers. in turn the legasy carriers will rely more and more on their
international routes, but their problems will not stop, by any means.
it is possible that at some point jetblue and southwest will decide to
"go international".
if/when that happens it will be a new chapter in the history of aviation.
the previous writer states that the LCC's are now stronger than in past
upheavals. i like to mention another factor: the price of oil. in the past the price of oil would go up and then come down, or even crash. it seems that we have
entered a new era of expensive oil that will stay expensive . so the two factors,
strong competition and expensive oil, will move events at a much faster pace than in the past.
as a final thought and speaking from experience......do not get a job in
the airline industry, if you can help it. (well, southwest maybe, jetblue certanly not).