Read this article today, so, is this good for the industry or not?
http://www.time.com/time/magazine/printout/0,8816,1101050110-1013209,00.html
http://www.time.com/time/magazine/printout/0,8816,1101050110-1013209,00.html
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More Price Wars?
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Wow. I guess it could be good for the industry ... for sure a change was needed, so perhaps this will work out. If not, I suspect that they are no worse off than they already are.
Sounds promising in the short run for making travel plans.
Sounds promising in the short run for making travel plans.
petescheu
Registered User
Competition is almost always good for the consumer... I think we as passengers will def benefit from this. Big gamble it seems for Delta though... but the next time one of those Big Six asks for a bailout from the federal gov't, we should tell them that if they don't know how to run a company, then too bad, and welcome to capitalism.
shoo: It is not that simple. Airlines have HUGE economies of scale problems and therefore create a natural oligopoly, and many outside forces have negatively impacted what is otherwise a vital market.
I can't think of many cases where I would say it is acceptable for the government to meddle in an industry, but I think this is one, where (within reason) government assistance would not be completely unacceptable.
I can't think of many cases where I would say it is acceptable for the government to meddle in an industry, but I think this is one, where (within reason) government assistance would not be completely unacceptable.
46Driver
"It's a mother beautiful bridge, and it's gon
There is overcapacity on the market right now which is weakening all of the airlines. Until some go out of business (USAir is in Chapter 11 for the 2nd time in 3 years, United has been in Chapter 11 for the last 25 months, ATA is in Chapter 11, and Aloha is in Chapter 11), all of the airlines will get weaker because they can't raise fares. Its not only the government helping out the failing airlines, but also GE Capital which doesn't want all of the liquidated aircraft suddenly available and driving down the prices of the used aircraft market. However, this can't go on much longer...
There are WAY too many seats on the market, yet the trend is airlines still putting more and more seats out there. American is putting the seats they took off their planes a few years ago back on, meaning the nice legroom you got on them is gone. I am completely at a loss as to why they would do this, they are adding seats they can't fill and taking away one of the biggest incentives their passengers had to fly them. Add on top of this that they are getting rid of all free food on domestic flights (to include Chicago to Honolulu) in coach and ya kinda get the feeling that they don't want to stay in business.
The airlines need to stop focusing on lowering costs and start trying to figure out a way to raise fares. If it takes losing US Air and all of United's domestic services, so be it, better to lose those 60-80K jobs than risk 250-500K jobs disappearing down the road. I know that would be a horrible result for the people who would lose their jobs, but where does the line need to be drawn to stop this madness and the losses associated therewith? IMHO it's time to thin out the market for the long term prosperity and viability of the entire industry.
The airlines need to stop focusing on lowering costs and start trying to figure out a way to raise fares. If it takes losing US Air and all of United's domestic services, so be it, better to lose those 60-80K jobs than risk 250-500K jobs disappearing down the road. I know that would be a horrible result for the people who would lose their jobs, but where does the line need to be drawn to stop this madness and the losses associated therewith? IMHO it's time to thin out the market for the long term prosperity and viability of the entire industry.
They should take a cue from the European airlines.
Lufthansa has Super meals, with fresh rolls, they pass out newspapers after takeoff, a damp towel before landing (on night flights), and the beverage cart goes by every 10 metric minutes.
Lufthansa has Super meals, with fresh rolls, they pass out newspapers after takeoff, a damp towel before landing (on night flights), and the beverage cart goes by every 10 metric minutes.
Cate
Pretty much invincible
The last time I flew Sabena, they had good meals, friendly flight attendants (and not bad to look at, either - there was this one kind of muscley guy who helped me with my carryon... ahem. Anyway), really comfy blankets and pillows, and free booze. Of course, Sabena later went bankrupt.
Frontier, that's all I gotta say.
Full drinks, all the time, whole bags of retail size chips/snacks, DIRECTV (with GPS), new(er) Airbus 318/319's, legroom. Granted they don't fly huge legs or go overseas, but for short flights, they have my vote! (Denver to Midway cheaper than Delta)
Full drinks, all the time, whole bags of retail size chips/snacks, DIRECTV (with GPS), new(er) Airbus 318/319's, legroom. Granted they don't fly huge legs or go overseas, but for short flights, they have my vote! (Denver to Midway cheaper than Delta)
The discussion will go on and on and on ... possibly until there are only two, three, or four airlines left standing. I certainly do not have all the answers; if I did --- I would be running the show. I do have over 25 years' line/management experience, a little inside knowledge, a modest amount of union political acumen, and I even know where a couple of "the bodies are buried".
Having said that:
It's not just about overseas carriers, it's not only about overcapacity, it's not about "competitiveness", it's not about "to meal or not to meal", it's not as simple as airline labor costs --- but it is a very complicated problem that has been developing for decades.
Some "airline food" (spit -- pthooey!!!) for thought:
. Fuel prices have risen dramatically this year, but appear to be easing on recent supply confidence.
. Industry impact of $1/barrel change in fuel equals about $400 - $500 million per year.
. Present fuel prices are killers and have drained the airlines' liquidity.
. Overcapacity, fewer business travelers, and low fares create downward pressure on revenues.
. Traffic is strong. Industry traffic up 8.6 percent year over year during 3Q 2004. Rebound is primarily driven by low fares; traffic is back at pre-9/11 levels, but yields are not recovering.
. Yields are pressured by overcapacity. Low-cost carriers (LCC) are flooding the market with capacity -- LCC management shooting themselves & their employees in the (long-term) foot for short-term gains. LCCs now control about 25% of domestic market as compared to 16% in 1998.
. Domestic yields are down 20% since CY 2000 -- it's not just 9/11 shock anymore.
. Domestic yields are not recovering. Business and leisure fares continue to decline reflecting a lack of pricing power for the airlines.
. Domestic yields continue to disappoint, but international yields show promise.
. Air freight is another bright spot, with approximately half of air freight worldwide moving in bellies of passenger aircraft, the other half in freighters.
. Strong domestic yields and low fuel prices are the key to recovery.
This is only a partial list and is offered for discussion; but consider this as well:
the next time you hear about a "government bail-out" of the airlines, remember that:
as of March 2004, taxes and "fees" (read: more taxes) amount to 45% on a $100 domestic ticket. This predatory activity by the federal taxing authorities has got to CEASE. You simply CANNOT pay for all the politically-driven, unfunded mandates put on the airlines --- expecially in a post-9/11 world --- by the simple expediency of making the airlines pay for them.
Having said that:
It's not just about overseas carriers, it's not only about overcapacity, it's not about "competitiveness", it's not about "to meal or not to meal", it's not as simple as airline labor costs --- but it is a very complicated problem that has been developing for decades.
Some "airline food" (spit -- pthooey!!!) for thought:
. Fuel prices have risen dramatically this year, but appear to be easing on recent supply confidence.
. Industry impact of $1/barrel change in fuel equals about $400 - $500 million per year.
. Present fuel prices are killers and have drained the airlines' liquidity.
. Overcapacity, fewer business travelers, and low fares create downward pressure on revenues.
. Traffic is strong. Industry traffic up 8.6 percent year over year during 3Q 2004. Rebound is primarily driven by low fares; traffic is back at pre-9/11 levels, but yields are not recovering.
. Yields are pressured by overcapacity. Low-cost carriers (LCC) are flooding the market with capacity -- LCC management shooting themselves & their employees in the (long-term) foot for short-term gains. LCCs now control about 25% of domestic market as compared to 16% in 1998.
. Domestic yields are down 20% since CY 2000 -- it's not just 9/11 shock anymore.
. Domestic yields are not recovering. Business and leisure fares continue to decline reflecting a lack of pricing power for the airlines.
. Domestic yields continue to disappoint, but international yields show promise.
. Air freight is another bright spot, with approximately half of air freight worldwide moving in bellies of passenger aircraft, the other half in freighters.
. Strong domestic yields and low fuel prices are the key to recovery.
This is only a partial list and is offered for discussion; but consider this as well:
the next time you hear about a "government bail-out" of the airlines, remember that:
as of March 2004, taxes and "fees" (read: more taxes) amount to 45% on a $100 domestic ticket. This predatory activity by the federal taxing authorities has got to CEASE. You simply CANNOT pay for all the politically-driven, unfunded mandates put on the airlines --- expecially in a post-9/11 world --- by the simple expediency of making the airlines pay for them.
palatinexc
Student
A4s, do you think Delta's plan can work? They way I see it this seems alomost like a last ditch effort for the airline. Does anyone think we will see one of the big three or big six airlines go out of business in the near future? Its such a complicated market that has so many factors (oil, leisure, business, government), its amazing that they all seem to work.
A4s,
What do you think the impact would be of the loss of one of the big carriers? I guess there is no way to definatively say, but what would be your guess? Seems like one way or another the airline industry must survive, but it seems like it needs an overhaul of some sort. Wish I could figure out the magic cure ...
What do you think the impact would be of the loss of one of the big carriers? I guess there is no way to definatively say, but what would be your guess? Seems like one way or another the airline industry must survive, but it seems like it needs an overhaul of some sort. Wish I could figure out the magic cure ...
palatinexc & VarmintShooter:
Educated guesswork on my part, but I have been experiencing the "rush" of the airline fare wars for over 25 years and:
Airlines are highly cash-intensive enterprises. It has been my experience that NO AIRLINE lowers fares unless they are in a cash crunch and need to capture additional "market share" to get more cash. I believe that Delta was/is staring at the abyss and needed cash, NOW. And who could know -- they used to be one of the "gold-plated" airlines -- a real class act, both in terms of operations and viability.
I should have listened to my Mom and been a doctor .....
Educated guesswork on my part, but I have been experiencing the "rush" of the airline fare wars for over 25 years and:
Airlines are highly cash-intensive enterprises. It has been my experience that NO AIRLINE lowers fares unless they are in a cash crunch and need to capture additional "market share" to get more cash. I believe that Delta was/is staring at the abyss and needed cash, NOW. And who could know -- they used to be one of the "gold-plated" airlines -- a real class act, both in terms of operations and viability.
I should have listened to my Mom and been a doctor .....
A4sForever said:
Yeah, someone I know told me that Delta had been slow paying their bills over the last couple of years, so I started to wonder if they were getting low on cash. Oh well, better use my frequent flyer miles soon I guess.
Thanks for the thoughts on it.
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