Originally Posted by
OscartheGrouch
Here we go again with the same old tired argument.
If one was to average out the legacies pay over the last 25 years you would see that the "high" wage blip in the early 2000's only brings the average up a few percentage points. SWA pilot wages have been steady (the tortoise) and in an upward direction up until now. Legacy pay (the hare) has up and down movements that would make me reluctant to count on the high points being maintained. Call it the lottery if you wish but SWA management used a tool (cash) available to them and were successful overall. The idea that they would use it to take money off the table? Some proof of that being their intent would be nice. Just because other managements have played dirty pool doesn't mean all managements do.
Little 'ol SWA put everyone else into Chapter 11? Really? 9-11, poor management decisions, etc. just might have had something to do with it. Oh yes! Don't forget competition. When a competitor offers a similar product for less money the consumer just might try them. Even SWA is not immune to the competitor who comes into a market and offers their product for less. It is happening right now. How management reacts to that competition is the question. I would say that some managements have reacted poorly, if at all, to the threats.
The Oscar
Little old SW was the largest domestic airline at the time. You can call that little but most would not. We sell a commodity. If you control 20 percent of a commodity you can set pricing. Why do you think that just as bad a economic set of conditions now has such a different outcome on the industry. SW was no longer hedged. They had to allow price increases or they would have lost huge sums of money. Everyone else could also increase revenue. If tomorrow UAL decided to drop all domestic pricing 20 percent the entire industry including Delta and Southwest would lose vast sums of money and be back in Chapter 11 soon. That is what Southwest was able to due with their fuel hedge advantage. Their CEO even stated they were going to use their fuel hedges to drive 1 or 2 legacy airlines out of business. Only the overnight drop in fuel in 05 from 140 a barrel to 40 a barrel prevented them from succeeding.