Fortune's idea on fixing the airline crisis

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I do agree with #2.

[Ophir]

Market Capitalization is a poor standard to measure air carrier performance over time. Well, I guess over this time. When you take into account the gross scale up of the majority of businesses in the euphoric 90's dot.com boom, add to that an inevitable recession, sprinkle on top the first terrorist attacks to occur on home soil, the result is really poor consumer confidence.

If we were to measure air carrier performance in terms of load factor we would certainly see and increase in pax traffic, however, it will be the well run companies that will prevail out this economy.

Measuring performance in terms of Market Cap is really skewed because almost no one is ready to invest in airlines, therefore the stock isn't worth crap. This has almost nothing to do with Asset Capitalization, something the majority of the 21st Century investor doesn't understand. This guy needs to put into perspective the rest of the stock market and show a comparison to what the Market Cap of the DOW and the NASDAQ have been and how far they have plummeted in the same time period.

[Doug Taylor]

So the author wants 'cabotage' and the end to the railway labor act.

Cabotage is bad news because it allows foreign carriers access to point to point markets in the United States. The reasons why cabotage sucks is because US carriers don't have point to point access in European nations where they'd have access to ours.

"Expert" analysts dream glowingly of Singapore Airlines with the beautiful women in pillbox caps serving champagne and fois gras on his business flight from Des Moines to Louisville. Alas, they didn't read the fine print to discover that Sinngapore Airlines' DSM to SDF service was codeshared with Air Nairobi on a TU-154 full of goat urine and lopped off chicken heads from the Lagos to JFK leg.

Actually, the Railway Labor Act protects aviation a lot more than most "experts" care to mention. Strikes are only allowed to occur when there has been an impasse after years of unsuccessful negotiation on an expired contract. The RLA keeps both the company and the pilot negotiators at the table working out their differences with a clear set of rules and NLRB (National Labor Relations Board) oversight. Management AND the pilots have equal footing.

Baseball-style arbitration never truly worked for baseball and it'll work even less in the airline business. In fact, without the rules set forth with the railway labor act, we're free to launch disruptive work actions, wildcat strikes and large scale "sick outs" at will at any time.

Basically, the company can say "Well ASA wants Comair rates to fly the RJ, but if you look at the rates that Mesa and Chautauqua (sp?!) earn, those are industry standard rates and we think 0.5% over that industry standard (read: depressed) rate, although it amounts to a substantial pay cut, is much more in line with what the market will bear".

The arbitrator says, "Sounds like a fair deal to me".

Bam.

Wow, i'm a little long-winded this morning, sorry!

[Ophir]

perhaps the industry and its pax are overcharged, but changing this system rapidly would devistate the GA industry. If you think training to fly is expensive now, what if GA had to shoulder more of the $ burden of airport and ARTCC, FSS, etc costs.

[Doug Taylor]

Actually, the government taxes the HELL out of the consumer.

Let's look at a $81.86 fare on Southwest from Phoenix to Orange County (my way of showing mad props to my SoCal Jetcareers posse);

The base fare is $81.86 which goes to Southwest. But the feds want $9.14 in taxes and another $7.00 for the passenger facility fee and their security fee.

So the resulting fare is $98 which is roughly (no access to a calc) a 20% tax on the airline ticket.

These 20% taxes are on top of federal and state taxes on fuel (which I heard, but haven't found actual data on) that I hear are around 40% of the cost of 1 gallon of Jet-A.

So bums like McCain say that guys like you and I are holding back the financial viability of the airline business with high wages, but if I got 20% of ticket sales and 40% of fuel sales the way him and his croanies in DC are, I'd have retired by now!

This is the only valid point Mr. Tully made with his airline analysis. Subsequently, the only point I agreed with.

[ QUOTE ]
And why should the TSA be funded through the aviation industry? The TSA is part of a broader campaign to bolster national security and should be paid for on a national basis, not an industry one. Shippers are not solely responsible for funding port security. Why should passengers shoulder the burden of paying for safer airports?

[/ QUOTE ]


The TSA was formed under the Homeland Security Act, correct? This is a national administration, correct? Why should air passengers foot the entire bill. His port authority example was excellent. Like Bethune said, we, as air passengers, are being taxed like sinners for flying.

[jtrain609]

It's called an unfunded mandate. It's when the government makes a law but does not provide the funding for it. It happens for a lot of things and is not exclusive to aviation.

Cheers


John Herreshoff