Originally Posted by ubermich
Airlines need to find some way to compete with Southwest. If they raise the ticket prices, then they lose the market, so it's easy to see where they will go to try and cut costs. As Southwest begins to lose its hedges, they will either need to accept a shrinking profit margin, or raise their prices, the rest of the market will become more competitive and other airlines will not have as much pressure on cutting costs and be able to pay their pilots more.
With all the Legacy carriers now paying $45-$65 less an hour than Southwest pays on comparable equipment (A319-320, MD80 and 737)
Southwest previously had another advantage in that it doesn't have a retirement plan..........Now 2 of the Big legacies don't either........with unfortunately more to follow suit.
Southwest has already lost much of its competive edge that it once held in terms of Labor costs.
Southwest has never strayed to far from their businees plan..................................A single class, no thrills, Point to point short haul carrier offering a simple fare structure. True they are flying Coast to Coast flights and have increased some 3-4hr segments..........but they have never really strayed from their core markets. WN still offers a good product for their niche...........but with them expanding heavy into the Northeast (i.e. Philly, Chicago, Pittsburgh, Baltimore) who knows........time will tell.
When the Legacies figure out what they want to be.................A full service carrier offering both Domestic and iInternational destinations.(Contiental, Northwest, DAL).....or a Mega Low cost airline......................................... (New USAirways)............The Jury is still out on United............Will their Domestic product become soley a TED style operation offering connections to Full service International? Time will tell..........................
My gut says that as soon as NW an DAL emerge from Bankruptcy (as has recently been done with UAL and USAir)......the playing field will be level (to the detriment of Labor)...............you will soon see the Majors making big profits once again.