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.