Off Topic... But... The Airlines...???

[AAFO_WSagar]

Since things are a bit slow on the entire forum, I will put this question here.....

I've just been reading a bit about United Airlines problems and seeing talk of higher fares and other means to help out struggling Airlines... which leads me to..

I know there are some Airline Pilots who visit here, as well as, obviously, many of us who are the PAX on those flights. In light of what seems to be a very difficult situation for, at least, one of the carriers we all use... I'd like to ask for opinions on what the solution is?

Some airlines seem to be able to make a profit, at least, last time I read about it, Southwest was doing fairly well. I've flown them several times in the last year and the flights seem to be well run, at least 95% full, close to, if not on time and the tickets are among the cheapest I've found (usually THE cheapest if bought far enough in advance)

So what do you gents and ladies think about this?

What's the solution? Would higher fares be counter productive in keeping many of us from flying? (it certainly would me) If not higher fares, then what? How do the aircrews feel about this? I know that many salaries are in the toilet for current crews (I know of one 757 right seater who makes only slightly more than I do on my meager pension!)

Just throwing out a booger to see if it sticks on the wall here.. if you guys don't like this discussion here in the air race section, I can move it to another.. Lemme know

Wayne Sagar

[Scotty G]

From the Front Office

Wayners,

Very interesting question, and one that is often dsicussed in the cockpit and on overnights over a beer and a steak.

Here are my thoughts, as an "insider" to the industry. Please excuse the verbosity...

First off, the airlines used to be a provider of air travel that was a pleasant and grand experience. People used to get dressed up to travel and there was a cost associated with being able to board a Super Connie or a brand new 707. Not everybody was able to afford a plane ticket.

Fast forward to Eastern, Pan Am, Lorenzo and deregulation. The ****e hit the fan, and we had a slew of new start-ups that wanted a piece of the pie. "Hey! Let's make air travel affordable for everybody!"

Now you introduced a ton of capacity to the industry and the advent of the hub and spoke system. You also had a bunch of guys starting up called Southwest Airlines.

Southwest (SWA) changed the face of airline travel. Compare fares from AA, UA, US and NWA to competitors like AWA, SWA and JBLU. Major differences.

Why? The last two are startups after deregulation and are low FARE airlines. AWA is a low COST airline masquerading as a low fare airline.

Anyway, the long and the short of the gist is that there is too much capacity in the US market right now. There are not enough people to fill the seats *at a price that will allow the airline to remain profitable.*

SWA is also seeing a decline in revenue. They are not totally bulletproof.

So, now we have *every* Tom, Dick and Harry that lives in a trailer park thinking they have a right to travel coast to coast, and get a hot meal, for $149. (And hey, if you live in a trailer park, I mean no offense. We're all doing the best we can, but I am just trying to illustrate a point.)

Do the math. You can't fill a A320 or a 757 for those prices and expect to make a buck.

Folks, it costs money to operate an airline. Ticket prices need to come up. The other side of that coin is that the lowering of demand for air travel in the wake of 911 makes that hard to do. Ask your local economist and his/her answer will be "decrease supply so you can charge a fair rate."

I've been flamed before for speaking my mind before on a similar topic (not here). Hope this falls in line with "good taste," Wayne.

Scotty G

[AAFO_WSagar]

Re: From the Front Office

Originally posted by Scotty G
I've been flamed before for speaking my mind before on a similar topic (not here). Hope this falls in line with "good taste," Wayne.

Scotty... this is exactly the type of input that this discussion begs. How do we do it is the question and your view is much better from up front than most of us have on "how" to do it.

Personally, I'd hate to see "cheap" fares go away but, if they are going to cost us our airline industry... then I guess that'll have to be what happens.

Scuse me.. I gotta go kick the tires on my trailer.. we seem to be listing a bit to port

Wayne

[Race5]

I know it is very expensive to operate any heavy, but I wonder how the cost per hour compares between say a SWA 727 and a United 757 or Airbus or any other "big aircraft". Last year I flew from Texas to Canada, and half of the flight was aboard a Delta 757. Nice aircraft, plenty of room.......especially considering there weren't enough of us on it to fill a SWA flight. I know airlines like to have the biggest and best, but how much could they save by using smaller more cost effective aircraft and still keep the same number of flights?

Jason

[MarkB.]

Great topic,

But my question is how can does the deregulation factor into health and well-being of the airlines so long after the dereg. occured? At was point can the airlines no longer reley on the excuss of deregulation. The business model followed by SWA was significantly different from the other carriers. I seem to recall that after a rocky start, SWA has experienced steady growth and earnings. And yet twenty -five years later none of the other airlines followed the model.

Leaving my home town, I can be one of six or seven people on an AA MD-80 or I can fly a Delta 727 that's as old as I am and pay big bucks for the opportunity or I can subject myself to cattle-call seating on SWA but fly on a new clean 737 at 2/3 the cost of the others. Its really a no-brainer when me and the rest of the trailer crue want to go see NASCAR.

Is the problem institutional close mindedness at the "old "airlines? When do you admit you have a problem? United has known since the quarter after 9/11 they had big problems and they seem to do very little except beg for a government bailout.

I guess the final question is what is the end game? Several small airlines feeding major hubs with 737s and big carriers flying jumbos on long routes only?

Seeking enlightenment.

[SteveB]

My 2 cents....21 years at DAL in the Maintenance side of the house. First, I think an examination of the business end of the problem needs to separate what happened on 9-11 from the economic downturn that was already underway well before that horrible day. From a business model stand point, DAL and most of the majors derive a large part of our revenue and profit from the business traveler. We set our fare structure up to charge the most for last minute "walk up" fares and the least for those who are typically traveling for pleasure and can plan ahead more. When an economic down turn takes place all business cuts back their travel. Typically, it will come back when the economy springs back (maybe not this time though). We just had 8 years of unprecedented growth in the economy. Everyone was making money. Southwest, Jet Blue ect..Low Cost Carriers, utilize a more uniform fair structure (I believe) that may not be as susceptible to the budgetary restraints by the cooperate world. I have a hard time speaking to the strategic advantages vs cost of the typical "Major" hub and spoke system compared to the point to point service of most "LLC's", so I will leave that to others who can.

Employee compensation has to come to the table due to the significant cost factor it plays. I do not intend to poke a stick at flight crews and their pay rates (if I had wanted their job, I would have become a pilot, so I do not resent what they have been able to earn), something has happened to the relationship of compensation and productivity of our flight crews and probably that of most of the majors. When the airlines were making money hand over fist, their stock prices did not rise much, I believe this might have been due to the Dot Com craze of unfettered speculation. Why on earth would you invest in UAL or DAL when you could get wicked rich off of fuzzynavel.com stock? When the UAL Pilots contract came up and the USAIR merger was held hostage, the Management at UAL decided to give in to a very, very large increase in Pilot wages. The previous contract the Pilots took company stock instead of $$ at the bargaining table (employee ownership) and the stock had gone nowhere. The then CEO of UAL stated "I don't care how much I have to pay my Pilots, as A/A will have to pay theirs the same" and sure enough the battle cry of ALPA here at DAL was UNITED +$1. They got it. Then UAL Maintenance got a pretty good raise. Even though we are non-union Maintenance here at DAL ,we followed suit (or the union would potentially have a foot hold). I maybe out of my mind, but I understand that I am going to have to give up something in order for the company to exist (in a healthy state) in the future. That process has begun here for non-contract personnel and will continue until we get to a point where we can compete. When or if the Pilots (ALPA) will participate in that cost reduction process is yet to be seen.

The current over capacity with in the industry simply will not be cured by giving loan guarantees to carriers that are going to go out of business anyway(I am not pointing this at UAL). Honestly, I think the Government either needs to get back in completely and re-regulate the industry (yuk) or let the market work by getting the heck out. Don't think for a minute I am fool enough to think that DAL is immune to going tango uniform either. We may be next. This may be a blessing in disguise for large companies, the market share of the LLC's have been growing steadily, the emergence of WEB based Video Conferencing is real and if the good times had continued to roll it might have been to late for us to change. We are victims of our own success in many ways. Now everyone wants to fly, and the old days of brand loyalty are a thing of the past. People want a low fare to fly to the moon and back and want all the goodies too. I don't think they are wrong to want that, it just requires a change in the entire business model. We (DAL) will either find a way to provide that level of service at that price or we will cease to exist.
Steve Baker

[T. Adams]

The pricing model

One thing that needs to be fixed is the pricing model. Right now the airlines try to offset the low leisure travel fares by charging business people unbelievably high rates to fly to the same destination. Charging someone over $1,000 to fly from Chicago to New York, and then filling the plane out with $200 a fare vacationers won't work. Many companies like mine are not stupid. We book many of our own flights on carriers like ATA out of Midway. It is ridiculous to pay the high rates that business travelers are expected to pay on the big airlines like United, and American.

[Scotty G]

Steve and Mr. Adams make some interesting points. More fuel to the fire:

1. Flight Crew compensation. You could compare us to doctors... For the first eight years of my career, it was financially touch and go, and I DO NOT work for Delta, American or United. I work for AWA... If there is some sort of backlash towards flight crews because of an "industry standard" pay scale, I will invite those whom dissent to discuss with me my profession and what it takes to safely fly a jet with between 100 and 300 living, breathing souls aboard. Education + Paid Dues + Experience + Negotiated Pay Rates = Result.

2. Business Fares. I heard that American Airlines derives 90% of thier revenue from 2% of their travelers. It's called The Business Traveler. Isn't that a remarkable figure if it's true? This speaks back to my comment above about the cost of air travel. Folks, it just doesn't take money to pay for the plane and the pilots - the CEO's and everybody down to the lav cart operator need to be paid, too. Jet fuel costs money, insurance costs, catering, maintenance, etc...

3. The Trailer Park Comment. Several have made reference to it. Like I said above; no offense intended. We all do the best we can, and if you want to compare my house to your, I might not come out so good. Right?

Overall, I think some of the pay rates for flight crews might be coming down a bit. But when you compare the revenue of a flight on a 777 to the captain's pay rate of, let's just say $220 an hour, you have to understand that not all pilots make that rate, and that captain has years of experience under his four stripes. Maybe I'm being a little too defensive, but I just feel that you have got to pay the guys that fly 'em and fix 'em and keep them happy, and their moral high on the job. Their experience and judgement are very, very important.

It's your family up there, too.

On another note, I use the terms "Corporate Rapist" when I refer to the management at AWA. Let's take a look at big-business CEO's and see how ethical and moral their actions are, and what they take home at the end of the day. The things I could tell you would make you cry.

Scotty G

[MattB]

Business Travel

Scotty

I used to fly all the time for business. 98% from 2% is fine with me. This group is really the one that is doing it right. They need the travel and can pass that cost on to customers who need their service. If the rest of the passengers could or would justify their travel to cost they could do the same. If your gonna fly and you want to be both safe and comfortable, you pay more.

I must say that when I fly for business I take the flight that makes the most sense for the business needs. When I travel for personal travel I am more willing to cut back on the comfort. Safty is never cut back. I respect your industry and your skills.

Just my 2cents.

MattB

[SteveB]

Scotty, let me be sure that you understand my point. I am not in anyway doubting the worth of an experienced, professional cockpit crew. My point is SW has a cost advantage when it comes to the flight crew cost per hour, and the number of hours they work a month compared to a carrier like DAL. Also, Management is most assuredly party to all of this. United and all the Majors that follow suit Negotiated with their pilot groups for wage and benifit levels and work rules. No stones thrown.
Steve Baker

[rwflyboy]

US Air, Pilots Reach Deal on Cost Cuts

Just for y'alls info...

http://story.news.yahoo.com/news?tmpl=story&ncid=580&e=2&cid=580&u=/nm/20021211/bs_nm/airlines_usair_dc

[daveflyshi]

Another view from the front office

Good to hear from both flight crews, and maintenance people, as well as pax. I am also from the DAL family, although, officially, Comair. I have a slightly different view, only because I am in a growing segment of the industry.

First off, Comair was the most profitable company that carried people in the industry prior to the purchase by DAL. Now, we do not have any definative numbers, as we are included in the DAL framework. Comair operates only jets. We are still what most would consider a regional carrier, although that is really a misnomer. Most people still consider regional carriers as prop jobs. However, we are operating from coast to coast, which I guess makes our region North America.

Why does SWA do so well? One of the reasons is the productivity of the airframes and air crews. IF you have an airplane which only sees 6-8 hours of service per day, it is not being productive. Our (CMR) airplanes see 10 hours per service a day, and I have heard will see as much as 12 by summer next year. How long are the turns at SWA? 30 minutes maybe a little more. Ours (CMR) are also in the 30 minute range. Having to service planes for longer, or having them idle for longer, and you loose productivity.

Capicity is a major issue. IF you can fill my plane with 50 people vs filling a 737 with 50, which is more likely to be profitable? Comair is now getting 70 seat jets too. Matching Capacity to Demand is a key to the DAL modelling now. Leo said as much when he took over several years ago, and has said it many time since. Is there a need for larger aircraft? Yes, but if the capacity does not match demand, then you loose money.

I am not aware of the current costs of travel. I know the costs are considerably down because of the current economy, but if the economy were to return to the previous levels would they stay as low? No.

I, like Scotty could debate for hours the need for pay at the airlines. But, how many people know that we can only work 1000 hours a year? How many people realize that an airline pilot only gets paid when the door is closed and you start to taxi out? When you go to work for a 12 hour duty day, and only get paid for 5 or 6 hours is that something you would want to do in your job? I know a lot of people operate on salary, and work extra hours because they are responsible for getting the job done one way or another. Do the math, and you will see that most airline pilots are getting paid the same as most other comparable professional jobs. And, like Scotty mentioned before, the highest of the pay rates are only taken by a few. The average is well below what the advertised numbers are.

What is going to save the airline industry? First off, deregulation is working exactly as it was designed. Some airlines are going to go under, others will be bought up. But using tax dollars to provide airline service to every airport in the country is not the answer. WE will not end up with one or two airlines, and competition will always exist. IF SWA was not a competitor, then DAL would not be announcing a LCC to start up next year. JB is starting to pay for airplanes now, and the bottom has fallen out of the stock, but are they going to be around? It certainly looks like it. Secondly, we can have no more incidents which take the confidence of the travelling public. AS a professional, I take pride in my job, and the way I behave affects what other people think of my airline, and others. The little incidents involving alcohol recently have been very bad blows to the industry too. Some people may not believe that what they do may affect the industry, but I take my responsibilities and role very seriously. I will not do anything that may compromise that.

As a kid, I wanted to fly for Branniff very badly. By the time I got to the point of being able to work for an airline, they were long gone. So too have many airlines which were helpful in building the industry we have today. Perhaps we will see others go to, but hopefully, United will be able to survive the reorganization. I personally think the competition will keep the companies some what honest. Yes, We airline employees are not out of the woods yet, but we are still in the game, and it is not over yet.

A last side note. If you are a member of the travelling public, and are not happy with something on your flight, then send the company a note, telling them what happened, and why you are sending the note. Most companies will probably send you a note simply apologizing, but some track those things, and if enough similar complaints are recieved, then they are forced to fix the problems. By the way, you pay for the landings, so don't bother to complain if they are hard!

dave hackett

[Scotty G]

Hi,

I'm not even half as sensitive about the crew pay deal as I may have appeared to be... Maybe I'm sensitive to the fact I got flamed about it elsewhere. At any rate, I didn't want to come off that way.

Mr. Hacket made some really excellent points in his post.

I think there should be a good mix of business and leisure pricing for air travel. X number of seats get sold to Business travelers, X number to normal travelers and another X to leisure. Makes sense to me. The trend in the business is for fares to get cheaper, and that isn't supporting unit costs.

SWA does utilize their crews pretty well. Same with the planes, but the heyday of "Everybody is happy at SWA" is gone. But they have displayed more of a resistance to the current economy that most.

As an interesting side note; a 737 on a given route will be more profitable carrying a number of passengers than an RJ would. The larger aircraft has more ASM (available seat miles) and the ability to generate more RSM's (revenue seat miles). RJ's are more expensive to operate because they have a smaller capacity and limited revenue generating ability.

Here at Amatuer West (America West), we are seeing our routes taken over by Mesa Airlines (ALPA) and the new Freedom Airlines (SCAB based non-union airline startup designed to get around SCOPE agreements).

Nice to see our jobs going to 500 hour kids with zero real world experience "because the industry has changed and we need to drive costs down."

Costs? RJ's COSTS MORE TO OPERATE.

But hey, I'm just a stupid driver, right? LOL.

Everybody is making some good points. This is a great discussion!

Scotty G

[Race5]

Interesting you bring up the 500 hour kids. Our local junior college has started a flight training program. Four years and you get your private , then commercial, then type rated for twins and turbine. At the end of the four you get a guaranteed interview with a regional airline, usually Mesa if I remember correctly. This year is the first graduating year of the program, and I'll be interested to see how many of them get jobs. Kinda scares me.........

Jason

[Race5]

Oh and about the RSM and RJ's, I can see your point, but it just seems like certain flights, especially from small hubs, never fill much more than an RJ's capacity. I regularly fly SWA out of Midland TX (MID) and alot of flights have maybe 15-20 persons on board unless they are partially filled from a connecting flight.