Originally Posted by
scottm
... For the past decade, independent LCCs grew quickly wherever the market allowed daylight between price and cost. The majors had higher costs, so if they weren't losing money, the LCCs were able to take passengers, the majors were losing steadily. The majors couldn't cut enough costs (primarily labor) to compete, so they contracted with or grew their own LCC divisions. The majors generally didn't make money on their affiliate relationships, I've heard they mostly lost money but justified it. The strategy maintained their networks, which is still the biggest factor in selling airline tickets, even over price. People will still pay a little to stay on the same network, network size remains king. The airline industry is powered by risk-taking egomaniacs who want to be in the airline business. There are always people trying to start up new airlines, or make their airline bigger, even when none are making money. This is why supply doesn't follow demand, and there is no capacity discipline. Cries from the financial sector for capacity discipline have always been ignored. Today the financial sector is fawning over the airline sector, for finally having capacity discipline. Does anyone really think airline executives suddenly found religion? Demand is growing slowly, and the majors can't meet it with affiliate flying or internal growth....
Corporations can't just work for market share or egos with no other objective, they must make money for their stockholders. If not, heads roll on the board. If the business plan makes no sense to stockholders and their representatives, then it does not continue for very long. To claim the regional (affiliate) airline industry is only about market share is ultimately nonsensical. They make money, made money, and will continue contracting out flight capacity as long as it is cheaper than doing it in-house. I think you are correct it was all about lower labor cost though. That's why the ultimate no-no is having higher pilot salaries at contract carriers. And this is precisely the behavior we see now- very strong resistance by regionals to the pink elephant in the room, which is higher pilot salaries. Bonuses, retention pay, flow through promises, anything but a substantial pay raise.
... American and Delta can't move into Cleveland where United pulled their affiliate flying for lack of pilots../
I'm going to toss a flag on this claim. I am not in the airline industry lately, but I seriously doubt this statement is correct. I used to fly in this very market (CLE) and I NEVER heard the withdrawal of United there was due to affiliates having trouble staffing their airplanes. Regional markets come and go, it was not the pilot supply.
... Small markets are losing service all over the country due to lack of pilots to serve them. The independent LCCs are in fact struggling to find pilots fast enough to replace those leaving. Major airlines say the regionals contain a pool of about 6,000 pilots they want, and that is drying up quickly...
Respectfully, this is just nonsense. We are back to that old conundrum of whether failing to pay for a desired service equates to a shortage of that service- it doesn't, yet that is exactly what is going on everywhere. There pilots are there, the money is not. Saying the pilots are not there is nonsense.
... If there are tens of thousands of qualified pilots waiting for things to turn, they are impressively patient or not very qualified...
Impressively patient maybe while they do other lines of work besides fly for a living. Not very qualified? How hard is it to fly a modern automated jet? Maybe there are a lot of non-121 pilots around, if that is the case but you have to PAY to train them which is precisely what they do not wan to do. They want it cheap and they do not want to pay for anything. But a shortage it is not.
...You need to look at this as a resource shortage. When farmers run out of one source of calcium supplements for their fields, they turn to another source, or plant something that doesn't need calcium. Higher prices lead them to find other ways if they can, rather than double or triple their costs. Not just farmers, but all kinds of government and industry experts rush in to find alternatives to calcium supplements. To think ATP pilots will continue to be the only solution if they become scarce, is one-dimensional. There are a lot of other options on the table, and a lot of smart people looking at this as an opportunity. The automation option is growing quickly, will certainly become the preferred option eventually...
The low-hanging fruit of automation is already there in modern airliner cockpits. It is a 2-man system because we cannot make it just one. Single pilot airliners are not safe enough of this operation, and we will not see unmanned airliners in our working lifetime. More automation is not the solution to the alleged pilot labor shortage. The solution is higher pay and reduction of "affiliate" operating capacity.