I don’t think so. Southwest continues to be an example of an airline that makes smart business decisions, doesn’t try to be everything to everybody everywhere, and there you have it. We (you and I) shouldn’t have to support companies that make bad business decisions.
If WalMart opened up a store on every streetcorner no one would be surprised when they went belly up. United puts a stand in every airport across America and we’re supposed to back them for 1.8 billion? Why? Their business model fell flat on its face.
Which isn’t to say that United (for example) did make bad business decisions to get where they are, I honestly don’t know. But they do do business differently than a profitable airline, so I have sort of adopted a causal relationship there.
I guess that’s why ice cream is made in all those different flavors. Difference of opinion is what keeps horse racing in business. Maybe the only way to find out is to have Southwest absorb UA, suddenly grow to two or three times its present size, serve a much bigger and more varied market, and see if the managers can still retain the corporate character that works for them now.
The airline assistance was originally proposed because of the restrictions on air travel immediately after the WTC attacks might very well cause a serious cash flow problem even for airlines that were fundamentally sound. In addition is was expected that the need for increased passenger and baggage security would result in added costs putting a further strain on cash.
I do think that maybe a special oversight committee in Congress or some Congressional staff group should track the operation of the airline assistance program to see if changes are in order. After all, that was done in an awfull hurry, with little study and thought, just to make sure that important transportation systems wouldn’t break down.
I heard on NPR when US air applied for bankruptcy that they did not get the guaranteed loans because whoever was approving the loans did not feel that they would be paid back. So they did not get bailed out.
But what you suggest is that Southwest change its business model which is to not do this.
The point of competition is not to be everything to everybody, but to be as much to as most. If “as most” is only a portion of select markets, then that is what the market bears. I don’t think it is clear that there is enough demand for airline services to keep this sort of behemoth alive. Either the price needs to be adjusted, or the type of services offered needs to be curtailed.
I am very much in the dark about how airlines operate, however, with respect to the airports themselves. Which is: are airports a venture in themselves? Do they “rent” or lease to airlines? Three are several different transactions that could take place here.
Well, this is true. But the key phrase there is “added strain”; many of the major airlines have spent years in the red to begin with, just barely teetering from profit to loss.
Airlines are ultimately a service industry, and so of course they want to bring this service to as many people as possible. So growth is to be expected. But I just wonder if perhaps they didn’t overestimate things quite a bit. They can’t dd service to gain funds when they are already overextended WRT physical locations, and adding flights won’t do anything but make more negative income as there isn’t enough demand for these flights (else they would have been running them already, I assume all airlines can handle that!). So what else is left?
What makes them think “just 1.8 billion and we’ll be back on track” when they were never clearly on track in the first place?
Sounds like a wolf-cry to me, and it should fall on deaf ears. I have confidence that all airlines can’t make bad decisions, and so if some that do crumble then what slack is able to be profitably pulled up will be so, more or less.
Will it change the way we fly? Definitely. For the better? Well, what is worse than spending billions on loan guarantees, other than a flat bail-out? We have almost nowhere to go but up here to a consolodation of resources.
Can an argument be made for a sort of “natural oligopoly” here? A few tight airlines which tend to service only their own areas? I feel like we’re running into the same problems with airports as we did with the train system, minus the barons. Money… pit.
Don’t mean to be confrontational, just callin’ it as I sees it.
No one did, David.Ivylass posted the argument, making it clear that it was not her position, and I responded to the argument.
I thought I was allowed to do that.
No one did, David.Ivylass posted the argument, making it clear that it was not her position, and I responded to the argument.
I thought I was allowed to do that.
My main objective was to try to correct this misapprehension. The newsletter that the OP cited was based on the idea that UA and US Air had received a whole bunch of money and are still going bankrupt. That is false.
They have to declare bankruptcy because the loan guarantees haven’t been approved, they can’t get loans and the disruption of the WTC attacks has cost them so that they can’t pay their current bills.
I was following up on this proposed scenario.
SuaSponte quote: "Let’s look at the scenario in which all six of the major airlines declare bankruptcy and shut down tomorrow. The result would be thousands of airplanes the airlines need to sell at fire-sale prices in order to raise money to pay their creditors, and hundreds of thousands of people looking for a flight. Southwest, Jet Blue and AirTrans would scoop up a mess of airplanes and expand their routes within two weeks. "
I guess this will never settle down until we decide, as a society, whether passenger air transportation is a public utility or whether it is not.
I watched the railroads lose money on passenger service for years and finally start making taking a train in areas of low population density so inconvenient that people stopped doing it. The resulting lack of demand gave the railroads justification to cease passenger service.
At the time I predicted that airlines would go the same way and that sooner or later we would be flying only because the government forced the airlines to do it because there was no other intercity common carrier.
We haven’t got there yet, and I probably won’t be around to see it, but write it down as a prediction. As far as I know, we are the only country trying to have a competitive, free market-based passenger air service and that experiment continues. At least for the time being.
Agreed. It does definitely show signs of being so… but hell, people still think passenger rail service doesn’t deserve public funds for running. Remember the Amtrak thread? Sheesh.
So if we start treating it like a public utility, what of cargo-only service like FedEx?
Is this a lot? How many total employees? The company I work for (a technology company) has 100 executives out of a total 16,000 employees. There are another 950 Director level employees.
I worked for another company where the department I worked for was 42 people. There were two Vice President level people in those 42. Another 12 were Directors.
62 seems reasonable to me for a company the size of American Airlines.
David, erislover, airlines and railroads are in no way analogous, except to the extent that they both transport people. The huge difference between airlines and railroads is infrastructure.
A railroad maintaining passenger service to East Nowhere has to maintain the track and the huge amount of land that makes up the right-of-way to East Nowhere, as well as the trains operating on the East Nowhere line. An airline, in contrast, simply has to maintain their airplanes and hangers. The airport itself is owned by the East Nowhere municipal authority and the air traffic control system is owned by the feds.
I’m not sure, but I think that the operating costs of an airplane is also considerably less than that of a train.
An airline can profitably run regular service out of East Nowhere at a considerably lower level of passenger use than the railroad can.
Well, Sua, I think airlines can be run privately, too. But as a medium of transportation, which is a sort of lynchpin to our economy, I’m afraid we can’t just wish the government away here. We have a vested interest in ensuring airlines, even if they do go belly up, don’t damage the overall services available, you know?
Dangerosa Yes, I’d say that is too many executives (Mind you I am not including directors in my numbers, VP or higher only, and I don’t know if you did that.)
Again, using the example of Southwest air, 35000 employees, 3 executives of VP or higher, and they are doing very well. AA, 62 executives for 128,000 employees, and they are doing not so well. And while I do thing with that many employees, SW should up the number of VP’s to about 6, anything more than that is dangerous. To many VP’s is like too many cooks in the kitchen, each with his own method and each able to disturb things to get it his way, and in the end, they just get in each others way.
David I’m sure that the local government decided to give the airline the fee break to encourage them to use that airline as a primary hub, and thereby increase local revenues for the short term. Problem is, this never works in the long run, because its the small businesses that make the real investments. I’ve watched it happen in Dayton over the last 20 years. As for the fees, I’ll ask my mother when I get a chance, considering that she manages a flying testbed (C-135E #372) she has to occasionally deal with commercial airfields instead of military ones if they are flying over an area where the commercial field is better suited to service the plane. So she will probably know the fee structure at least for Fed planes on such fields.
