American Airlines status

[Hoss]

You don't like Wichita on it own merits, huh?

I can see that...

Considering that the Arkansas River that runs through it smells horrible (way worse than anything here) then yes. And then the open concrete river for the length of I-135 that reminds one of either a moat or an open sewer.....

Sent from my Atrix4G with fat fingers

[nathanm]

I fail to see how the airline industry has been hosed by right to work when it's virtually impossible to find an airline job which is not unionized.  If you think the industry isn't already a model of socialism, consider all the federal dollars which pay for air traffic control, airports, the FAA, professional gropers, etc.  The only thing missing is direct ownership of the airlines by the government.  Also consider how strongly organized labor fits into the picture.

You could make essentially the same argument about any industry, FWIW.

This whole competitive bankruptcy thing has got to go, though. If the airlines had done what normal businesses do when they find that they are selling the only product they can make at below cost (raise prices), the wave of bankruptcies wouldn't have happened. (USAir would probably be done for though..) Yeah, it sucks for the rest of us that it actually costs nearly $300 to fly anywhere these days, but that's what it costs the airlines. (yes, I understand the magic of yield management..AA used to be the best at it; apparently it wasn't enough)

grumble, moan, whine, and complain all you want about that price, but it ain't getting any cheaper except on the backs of airline workers. Aircraft are more expensive, parts are more expensive, fuel is more expensive, just about everything is more expensive. Except we somehow expect workers to take a freakin' pay cut. God forbid the ones that make it to a big airline manage to make enough to live a comfortable middle class lifestyle. Instead let's refuse to pay them everything they earned and stiff the creditors because we're collectively too bucking cheap to even pay for the fuel.

This selfish self-destructiveness is rotting our country to the core. The self-same mindset has helped to push us into the worst economy since the Great Depression and driven the financialization of our economy. We're no longer dependent on car companies, airlines, manufacturers, and the like. No, we'd rather go on a gambling binge. Maybe one day we'll actually leave the casino and things will turn around. Nothing will change until we get our donkey up and walk away from the blackjack table. Maybe we could just wander over to the bar for a little while.

[Red Arrow]

If the airlines had done what normal businesses do when they find that they are selling the only product they can make at below cost (raise prices), the wave of bankruptcies wouldn't have happened.

Raising prices would not necessarily prevented bankruptcies.  There may not be enough business at higher prices to sustain the number of airlines and flights we presently have.

[AquaMan]

Whoa. Hold on just a moment.

I never fly. Haven't flown since the late 80's. Somehow, I have managed to make do with cars, trucks, ships, busses, trains and...a bike. And both of us are old enough to remember when flying was something special. Something you dressed up for and paid quite a bit to experience. The problem that besets the country now is that so many things we once saw as luxuries are now considered as basic necessities. Cell phones, computers, TV's, air travel, miracle pharmaceuticals, education, huge homes, and multiple cars. The population is simply indulgent, undisciplined and spoiled.

We have seen the enemy.....and he is us. Now we have to retrench and refigure our options. Adjust to new realities. Remember, all that greatness we admire from "the greatest generation" occurred with a much smaller world population, a much lower education level and a vastly lower standard of living for most folks. I still maintain that the baby boom having passed through its consumer stage is causing most of this disturbance.  

[nathanm]

Raising prices would not necessarily prevented bankruptcies.  There may not be enough business at higher prices to sustain the number of airlines and flights we presently have.

Here's the thing: It doesn't actually matter. The BKs will turn out to be completely pointless in a few years when fuel has doubled again and they're at the point where they've squeezed everything they can out of workers and are again circling the drain. They'll just be back in the same old position because they still refuse to charge (on average) at least what it costs to fly. A serious attitude change is the only thing that will fix the airline industry, and unfortunately, we have seen zero of that in the turmoil of the last decade.

I don't blame people for being pissed at high ticket prices, by the way. The airlines have been cutting service and raising prices for over a decade now. $200 used to get me a flight to California with meals and checked luggage was free. Now it costs $350 and they want to charge me an extra $8 to eat a shitty little sandwich and a bunch of extra money to check a bag, resulting in boarding chaos rivaling the olden days of Southwest. I suspect that if they had gone the route of raising prices before they cut service to the bone, people would grumble and pay rather than be pissed off about it like they generally are today.

At least after deregulation they were cutting service after cutting prices, so yeah, you weren't getting as much, but nor were you paying as much.

[Red Arrow]

I never fly. Haven't flown since the late 80's. Somehow, I have managed to make do with cars, trucks, ships, busses, trains and...a bike. And both of us are old enough to remember when flying was something special. Something you dressed up for and paid quite a bit to experience.

The first time I flew commercial was to Navy Bootcamp, courtesy of Uncle Sam.  I paid to fly home on leave and then to my next duty station (electronics school in Millington, TN; NAS Memphis) in 1972/3.  Since then, I think I have bought maybe a half dozen trips with my own money.  I used to fly on business once or twice a month in the early 80s.  I was glad when the "dress code" for flying was relaxed.  I never went in tattered or dirty clothes but was glad to not need a coat and tie.  I carried a coat and tie for when I got to my destination.  Flying in the 500 mph bus was kind of fun then but I wouldn't say it was special enough to warrant getting dressed up and paying quite a bit of my own money.

[Red Arrow]

Here's the thing: It doesn't actually matter.

Eventually the price will rise to the point where people will choose not to fly because of the price if another option is available.

Airline tickets are not taxes.  You cannot throw people in jail if they choose not to participate.

[nathanm]

Eventually the price will rise to the point where people will choose not to fly because of the price if another option is available.

Airline tickets are not taxes.  You cannot throw people in jail if they choose not to participate.

Nobody said we could. However, I'm pretty sure there's more price elasticity in airline tickets than the airlines think. With only two weeks' vacation, most families can't afford the time involved in driving across the country to see grandma. For my part, it literally doesn't matter what they charge. They could give me a ticket to fly to Florida for free and I wouldn't use it. I have no interest in their service as along as dealing with TSA is a requirement. I only fly when someone else is buying and they're making me.

[Conan71]

There's no secret unions drive up the cost of doing business for a corporation.  Both from a wage and administrative stand-point. 

However, taking a good look at cross-town rival Southwest Airlines, they are heavily unionized as well and continue to turn a profit while offering lower fares.  I seriously doubt their only advantage is a "one type" aircraft policy which keeps maintenance costs lower.  They still operate, I believe, around 550 aircraft compared to AA's 600 or so.  I truly believe Southwest's rapid gate turns have a lot to do with this, as well as (far as I know) not brokering out ticket sales.  You can't buy a SW ticket anywhere but their own web site so they aren't paying travel agent or travel site commissions on ticket sales.

Here's an article from 2008 outlining seven reasons they are successful when others are cutting fleets, cutting service, & flights, as well as filing bankruptcy.

http://www.wired.com/cars/futuretransport/news/2008/07/portfolio_0708

I honestly don't know why every other airline hasn't taken a closer look at Southwest's financial success and tried to model what SW is doing.  One of the things airlines could probably do is eliminate first class on domestic flights anyhow.  It's typically little more than an upgrade option for frequent fliers and I don't believe it adds significantly to the bottom line.  SW has made it for years on customer loyalty without first class and without costly perks programs.

[nathanm]

It's a lot easier to make money when you decide you just aren't going to serve most of the commercial airports in the US and you don't have pension costs going back 70 years. Also, if everyone else decides to act like Southwest, why would I not just go ahead and fly Southwest?

FWIW, the frequent flier programs a profit center for all the majors. They sell miles to credit card companies and whoever for 2c or so per mile. Most of those miles are redeemed (if they're even redeemed at all) for 1.5c or less. Only a few crazy people like me won't use miles unless they can be redeemed at least 5c apiece.

[Ed W]

I fail to see how the airline industry has been hosed by right to work when it's virtually impossible to find an airline job which is not unionized.  If you think the industry isn't already a model of socialism, consider all the federal dollars which pay for air traffic control, airports, the FAA, professional gropers, etc.  The only thing missing is direct ownership of the airlines by the government.  Also consider how strongly organized labor fits into the picture.

Airlines are under the federal Railway Labor Act, and right to work laws do not apply.  The RLA prevents wild cat strikes and company lockouts that would disrupt transportation.  Labor agreements do not expire.  They become amendable.  There's a long process that involves negotiation and mediation before any action can be taken.  Even then, whe a union waits out the cooling off period, there's a good chance the President will order them back to work anyway.  Clinton did that with the pilots.  I think they were on strike for almost 4 minutes.

The problem with the RLA is that it gives the company no incentive to settle.  If they draw out negotiations, the union cannot strike and the company gets the same labor rates they've had all along.  Several AA unions asked to be released from negotiations, but the mediator always said no.  We've 'negotiated' for 4 years.  I was told that the company repudiated positions they had already agreed to, but I don't know if that's true or not.

Gotta go, the power is about to go off....more later

[Conan71]

It's a lot easier to make money when you decide you just aren't going to serve most of the commercial airports in the US and you don't have pension costs going back 70 years. Also, if everyone else decides to act like Southwest, why would I not just go ahead and fly Southwest?

FWIW, the frequent flier programs a profit center for all the majors. They sell miles to credit card companies and whoever for 2c or so per mile. Most of those miles are redeemed (if they're even redeemed at all) for 1.5c or less. Only a few crazy people like me won't use miles unless they can be redeemed at least 5c apiece.

Actually, they are serving more of the main airports. Other than Miami, Houston, Chicago, or Dallas those are the only markets I can find on their web site where they avoid a major international airport.  They serve the main airport in SFO, SAN, PHX, LAX, DEN, LGA, EWK, SEA, BOS, BWI, IAD, ATL, etc.

http://travel.southwest.com/travel/destinationDetails.html?cityName=New+York

If an airline isn't following the Southwest model, then they are following the United/Delta/AA/USAir model.  What incentive is there to choose one of those carriers over another in the same group?  I think other airlines could follow that model and retain their passengers.  If one airline wanted to remain as a more full service and passengers would pay for it then great.  But that model has proven to be a money loser over time.  I don't recall where I read the stat but with the cumulative ups and downs of the airline industry that as a whole, it's been a break even to net loss industry over time.  SW is able to do what they do well, pay their employees well, and make money for 38 consecutive years.  It's just amazing no one seems interested in doing what they are.

And you are right, pension plans are a problem.  I suspect that in another 20 to 30 years, other than government jobs you won't hear the word pension in terms of employee benefits, it will all be IRA or 401K.  Even still, the government may end up going that route as well when you consider that pensions seem to be right in the middle of the USPO's financial issues.

[nathanm]

Even still, the government may end up going that route as well when you consider that pensions seem to be right in the middle of the USPO's financial issues.

You mean their manufactured financial issues? They are being forced to prefund pension obligations in a way that no private company (or actual government agency) is. It was one of the last turds of the outgoing Republican majority in Congress, seemingly designed to destroy universal mail.

[Conan71]

You mean their manufactured financial issues? They are being forced to prefund pension obligations in a way that no private company (or actual government agency) is. It was one of the last turds of the outgoing Republican majority in Congress, seemingly designed to destroy universal mail.

Does it matter the manner in which it happened?  The bottom line is, they got fed a pile and will have to deal with it since no one stepped in to "un-legislate" this.

You don't think another Congress might not do this to other federal agencies?

[patric]

  Now various reports are saying Tulsa may lose from 2,100 to 2,850 jobs

The Tulsa numbers are more like 2,100 union workers, plus roughly 700 non-union members.