flight0813

I thought this was an interesting read below my comment from an Airline Executive interview.

My opinion; We are flying people round trip from MSP to ORD for $89.00, US to London for $600.00 ect.. Here is the problem as I see it. Lets say a CEO at X airlines decides to increase the price to break even (or make a profit for god sake); then the exec at Y Airline operating out of the next gate over keeps the price at a loss (stealing business from X) aiming to push X out of the game. It's a viscous cycle of "who can go into dept the longest without going belly up"? What a horrible situation to be in as an employee (the Exects still feel entitled to their pay until the every end). The Exects are stuck in a situation they can't improve or get out of themselves in such an environment.

Unless ALPA takes on an all encompassing attack on all airlines to increase pay and in turn increase ticket prices at one time or the government steps in to regulate, the airline industry in general and our appreciation and QOL as pilots will continue in a graveyard spiral.



Houston Chronicle
March 20, 2009
Headline: COMMENTARY: Continental's Kellner states case for regulation
Byline: Loren Steffy

Larry Kellner served me a cup of coffee with the aplomb of a veteran flight attendant, and then, a few moments later, served up a stunning comment about the airline industry.

“If the government wanted to re-regulate the business, I wouldn’t be opposed to it,” he said.

While he didn’t mean the wholesale regulation of yesteryear, it’s still a surprise coming from the chief executive of Continental Airlines, the nation’s fourth-largest carrier by traffic.

Thirty years ago, airline executives battled fiercely to preserve government control of routes and pricing. Former American Airlines chairman Bob Crandall, then a rising executive, declared profanely that deregulation would ruin the business.

Fast-forward to today, and Kellner, agrees, at least up to a point.
“What we’ve got today doesn’t work,” he said in an exclusive meeting with me and several Chronicle colleagues. “It isn’t creating a stable industry.”

Kellner isn’t calling for a return to the good old days when fares were so high most people took the bus. Airline deregulation has always been about price, and in that sense, it’s been a roaring success.

Where it has failed, though, is on the cost side. Most airlines today have a cost structure that’s changed little since deregulation, which impedes consistent profitability.

Airlines’ profit margins are dictated almost solely by fuel and labor costs, which almost never decline in tandem.
New government rules?

Kellner said he prefer new government rules that would remove some of those cost constraints, allowing airlines to make money, employees to earn decent pay and passengers to feel they’re getting a good deal.

Among the biggest rule changes would be revamping the Railway Labor Act, which has governed labor agreements since the dawn of passenger air travel.

The RLA was designed to keep railroads running during labor disputes at a time when trains were the nation’s lifeblood of commerce and travel. For airlines, it means lengthy contract talks, which often wind up in mediation that leaves both sides unhappy.

“The problem is the structure of the RLA creates a very cumbersome process,” Kellner said. “It hasn’t worked well since deregulation. It creates a tremendous amount of angst on both sides.”Customers’ anger

Previous attempts to alter the RLA, though, have failed in Congress, and few lawmakers have shown an interest in revisiting it.

Over the years, airlines have tried to revamp labor agreements with disastrous results — strikes, bitter negotiations, acrimonious relations between unions and management.

If the current state of the industry doesn’t benefit workers, it also doesn’t benefit investors. Continental’s market share, for example, has fallen to about $1.1 billion from $3.8 billion in 2006, and the airline lost $585 million last year.

Nor are customers happy about the current state of the industry. Passengers angry over flight delays and poor service are pressing Congress to enact minimum standards for the industry.
Equal playing field

I had intended to ask Kellner if he thought the airline industry could ever achieve sustainable profitability, but his comment about regulation made the question moot.

The industry, he said, needs new rules, ones that make the playing field equal for all carriers while still allowing competition to thrive.

Kellner may be right, but I was surprised by his candor. It’s the first time in more than two decades of covering airlines that I’ve heard an executive pine for more regulation.

Then again, it’s also the first time I’ve had an airline executive serve me coffee.

TBucket

All I know is that if the executives thing it's a good idea, it's going to be a disaster.

teamdothis

I dont know much about politics and know even less about the RLA. But at face value it sounds like mgmnt just wants us to keep working while they pay us lousy wages and choke us out while we negotiate. And like the last poster "If mngmnt thinks its a good idea......."

Groundhog

It sounds to me like Kellner is starting to beat the drum for "baseball style" arbitration. He must have been appointed by the ATA to start the discussion. (Reading from the talking points memo, of course.)

And he had the journalists eating out of his hand.
Nothing new here except an attack on pattern bargaining, now that BK and the threat of BK has run its course. (For now.)

Hog

jeeps

Just a quick question. Why is that automatically, whatever management wants is bad? Where does this us (labor) versus them (management) mentality come from. I'm not saying it's a bad or good idea, I'm not very familiar with the RLA other than to know that it currently is at times inefficient and in some cases ineffective for everyone, but why would it be such a bad thing if our union(s) can with airline management come up with a more effective way of contract negotiations, one that benefits both parties mutually? I know there are prolific examples of executives who have screwed airines, there are still some around today, but I can't imagine that all executives want to punish their employees all the time.

I'm not a company man, just providing a differing viewpoint. I do not, I repeat, do not advocate either position at this point, I don't know enough. I honestly am a rube when it comes to negotiations. Take care everyone.

dn_wisconsin

Wasn't this already posted in the "Majors" section?

jeeps

yeah I think so

RadarContact

I sure wouldn't mind getting a chance to be like a pilot in the good old days (Pre deregulation). I have read so many articles about the good old days being gone and how much being a pilot sucks now, and quite frankly I'm kinda sick of hearing it since I will never get to experience it. It costs less to fly now (for the passengers) than it did 20 years ago. Even with every single cost of business going up dramatically. Re regulating the airlines would force people to pay a fair market price for air travel, and the only competition betweeen airlines would be service.

Another thought: What if the FAA just didn't issue any more 121 certificates. The low-cost start ups that were trying to push their way into a niche by under pricing everyone would eventually go away, and ultimately lower competition. The existing carriers have enough competition as it is, do they really need more?

Rant Over

bryris

You hit the nail on the head, it is exactly about who can last the longest. The airlines know they are losing money. Every plane that flies is losing money (on average). So why don't they just shut their doors? United, for example?

The more that turn blue and give up, the more market share is available for those that are still standing. Its brilliant!!! The next best thing is a merger and/or consolidation.

The Juice

Re-Regulating=Less jobs. When the airlines started the deregulation process in 1978 it helped open up many low cost carriers that otherwise would have never gotten their start because of the barriers to entry.

Although I like the idea of regulation are you all ready for the pilot cuts this may bring?