A return to regulation?

[SteveC]

Originally Posted by PCL_128

Doesn't work in this business. The hit to the economy would be astronomical if a company like United went tango uniform.

I don't think it would be as big an impact as you seem to think. Other airlines will pick up the slack and the total economy will see little overall change. The UA employees would take a massive hit, while other employees will see a benefit. Ying / Yang...balances out in the end.

The government is not going to allow legacy carriers to cease to exist. They're too big nowadays and too essential to the economy. If it comes right down to it, the government will just approve massive multi-billion-dollar bailouts. That just exacerbates the problem rather than fixing it, but without regulation, that's really the only choice they have.

The governement might step in, but it will be for political reasons not economic ones.

[OldTownPilot]

Originally Posted by PCL_128

ss. The hit to the economy would be astronomical if a company like United went tango uniform. The government is not going to allow legacy carriers to cease to exist. They're too big nowadays and too essential to the economy. If it comes right down to it, the government will just approve massive multi-billion-dollar bailouts. That just exacerbates the problem rather than fixing it, but without regulation, that's really the only choice they have.

The same thing was said about Pan Am, Eastern and Braniff. Look where they are.

[PCL_128]

Originally Posted by SteveC

I always assumed that prices have been substantially lowered since deregulation, thus the lack of ability to make a profit. In a later post you say "... airlines started massive fare wars...". In a 60 second google search I didn't turn up any usable data to support either your initial claim that prices are only "marginally lower", or my assumption that they are much cheaper, especially when taking inflation into account. Do you have anything to back up your statement that I could look at?

The massive fare wars are usually localized. For instance, when Legend Airlines started service out in Dallas, AMR started an unbelievable fare war with them that drove ticket prices to absurdly low levels, just to kill Legend. This is precisely the reason that AirTran doesn't expand much out of DFW. But when you look at average fares corrected for inflation, the change is there, but it's not a very big change. Everybody focuses on the $200 ticket to MCO and thinks that that's representative of the whole country, but they forget the $900 ticket that a guy buys to go from DTW to DSM on an RJ. The fare wars are taking place, but most airlines have their own niche markets that allow them to rape consumers to make up for the shortfalls on the cheap markets where the fare wars are happening. Some consumers make out better, while some get absolutely raked over the coals.

As for references, I'd have to look around for a while. I don't have anything saved on my computer. I've seen the data published in multiple articles over the past few years, though.

[PCL_128]

Originally Posted by SteveC

I don't think it would be as big an impact as you seem to think. Other airlines will pick up the slack and the total economy will see little overall change. The UA employees would take a massive hit, while other employees will see a benefit. Ying / Yang...balances out in the end.

The other airlines can't afford to pick up the slack. Most are scaling back and are struggling to survive. After EAL went TU, Delta had the money to pick up the market share in Atlanta and expand like gangbusters. No airline can afford that nowadays. If UAL were to go Chapter 7 (a real possibility), then the Illinois economy would be hit very badly.

The governement might step in, but it will be for political reasons not economic ones.

In the end, it doesn't really matter what the reasons are. We all know that the politicians aren't going to allow a company the size of UAL to disappear. Would we rather have a system in place that maintains a stable industry, or a system that bails out failing airlines time after time? That's really the only choices, because the politicians will not let legacy carriers go bust.

Originally Posted by OldTownPilot

The same thing was said about Pan Am, Eastern and Braniff. Look where they are.

Different economy, different airlines. Lorenzo had already shrunk EAL massively and transferred it all over to CAL through his Texas Air shell corporation, so the fall of EAL wasn't but a drop in the bucket. Delta picked up a significant portion of the PanAm operation, but again, PanAm had already scaled way back before they went under. They never had a massive domestic route structure to begin with. Braniff was tiny compared to today's legacy airlines.

[Itchy]

If someone like UA packed it in, it would hurt like hell. Especially for the employees of course. But the Country, not so much.
The other "survivors" of the race to the bottom would cover the hole pretty quickly, and in short time they would be a memory like EAL, BNF, etc.

I can remember when PATCO struck. Everyone thought it would be pandemonium. After a year or two - "Patco who?"

[Chris_Ford]

PCL please tell me how exactly you plan on this regulation going? Status quo for all carriers? Who gets regional routes?

Methinks you have some nice soundbites but not much depth.

[PCL_128]

Originally Posted by Chris_Ford

PCL please tell me how exactly you plan on this regulation going? Status quo for all carriers? Who gets regional routes?

That would all be determined by a new CAB. It would likely be current routes for all existing carriers with new routes requiring approval from the CAB. New carriers would find it very difficult to enter the market, as it should be.

[Chris_Ford]

Originally Posted by PCL_128

That would all be determined by a new CAB. It would likely be current routes for all existing carriers with new routes requiring approval from the CAB. New carriers would find it very difficult to enter the market, as it should be.

I don't see any way in which that would work. Regional feed is too "big" now for that issue to be handled in any sort of "reasonable" manner. And why are you so opposed to "new" carriers. You work for one, don't you?

[PCL_128]

Originally Posted by Chris_Ford

I don't see any way in which that would work. Regional feed is too "big" now for that issue to be handled in any sort of "reasonable" manner.

What does the size of regional carriers have to do with anything? Those regional routes would continue to be served under a regulated system. The demand is still there.

And why are you so opposed to "new" carriers. You work for one, don't you?

Not new anymore, but it was shortly after the fall of EAL. And how did that affect the stability of DAL, or the new carrier for that matter? Not good. Again, a massive fare war broke out on all of the routes that ValuJet served out of Atlanta. Still goes on to this day. AirTran opens a route to a new city at a fare slightly below Delta's, and Delta adjusts their fare down to $10 under ours. We respond by cutting the fare $10 under theirs. And so on, and so on, until neither of us are making much money on the rock-bottom fare that results. We've actually eliminated routes because Delta undercut us to the point where we couldn't make any money, and we knew Delta was taking a massive loss, but they were willing to take the loss to capture market share. It's insane, but that's how it goes. We pull out of those routes if they aren't at least slightly profitable, but the legacies need to retain market share to feed their international business. What happens if SWA snags some gates here in ATL? More fare wars. It only gets worse for everybody. There's no end in sight. The system is broken.

[Chris_Ford]

Originally Posted by PCL_128

What does the size of regional carriers have to do with anything? Those regional routes would continue to be served under a regulated system. The demand is still there.

But does that mean that IAH-SHV will belong to XJT or CAL? Will ORD-DSM belong to UAL or SKW? Can XJT or SKW do that same route for another carrier instead?

Not new anymore,

I disagree.

but it was shortly after the fall of EAL. And how did that affect the stability of DAL, or the new carrier for that matter? Not good. Again, a massive fare war broke out on all of the routes that ValuJet served out of Atlanta. Still goes on to this day. AirTran opens a route to a new city at a fare slightly below Delta's, and Delta adjusts their fare down to $10 under ours. We respond by cutting the fare $10 under theirs. And so on, and so on, until neither of us are making much money on the rock-bottom fare that results. We've actually eliminated routes because Delta undercut us to the point where we couldn't make any money, and we knew Delta was taking a massive loss, but they were willing to take the loss to capture market share. It's insane, but that's how it goes. We pull out of those routes if they aren't at least slightly profitable, but the legacies need to retain market share to feed their international business. What happens if SWA snags some gates here in ATL? More fare wars. It only gets worse for everybody. There's no end in sight. The system is broken.

So if re-regulation meant you would've been stuck at Gulfstream for 8 more years, would you be for it? There's a reason pilots aren't management and methinks shortsightedness is it. Why don't we worry about crewpass instead of re-regulating an industry that's working fine as it is. Passenger bookings are through the roof (even without meals and customer service) and carriers are losing money. Ergo, the system isn't in equilibrium. A few Alohas, Frontiers, Mesas and ExpressJets later, maybe it finds equilibrium. The industry ain't going anywhere in the long run.

[PCL_128]

Originally Posted by Chris_Ford

But does that mean that IAH-SHV will belong to XJT or CAL? Will ORD-DSM belong to UAL or SKW? Can XJT or SKW do that same route for another carrier instead?

The CAB would only recognize XJT as an individual airline on it's own branded flying. The flying that is done for CAL is done under the CO code. That means that CAL would be the one to apply to the CAB with an application for the route by using a code-share partner. If CAL maintained all of it's current routes, then XJT would also maintain all of its current CAL routes, because those routes are operated under CO code.

So if re-regulation meant you would've been stuck at Gulfstream for 8 more years, would you be for it?

If deregulation had never taken place, people would be at the regionals a shorter amount of time because more mainline jobs would be available. Deregulation is the cause for the outsourcing nightmare.

There's a reason pilots aren't management and methinks shortsightedness is it.

Most managements opposed deregulation.

Why don't we worry about crewpass instead of re-regulating an industry that's working fine as it is.

Is that a joke? This industry is far from "fine as it is." We're in a tailspin.

[Chris_Ford]

Originally Posted by PCL_128

Most managements opposed deregulation.

Proof?

Is that a joke? This industry is far from "fine as it is." We're in a tailspin.

Proof?

[PCL_128]

Originally Posted by Chris_Ford

Proof?

Read "Hard Landing" by Thomas Petzinger (not sure on the spelling). Lots of discussion of deregulation including the opinions of many airline CEOs at the time.

Proof?

Look around you. Five airlines have ceased operation in two weeks. AMR and UAL are on the verge of bankruptcy filings, and both will find it much more difficult to exit Chapter 11 under the new BK rules. Airline quality surveys are at their lowest point ever. The industry is a mess. Chairmen on the Hill wouldn't be talking about holding hearings on re-regulation if things weren't a complete mess.

[Itchy]

Originally Posted by PCL_128

New carriers would find it very difficult to enter the market, as it should be.

Yeah that's how it's done.......

..In Korea, Russia, etc.

It is called Capitalism.

We are a free Country here, and if some serious dummy wants to chase the dream, who is anyone to say they can not?

It has been said before, experience is a hard teacher. There has only been 30 years of lessons here, a blink in time really. Darwinism works. A fool and their money are soon parted and all that. Well, I doubt there are many more fools standing around waiting to start up an airline. The last one is Branson, and he has plenty.

[Lee D]

Originally Posted by PanJet

Haven't they already tried that post 9/11?

Sure. But that doesn't mean that if push came to shove it would not happen again. Perhaps it would come in a different form of assistance, program or maybe even greater regulation. If we came to a situation were fuel prices were high enough to drive all or most carriers to shutdown, as a government you can't allow a major part of the US and world's infrastructure to die. I'm certainly not saying govt intervention would solve every problem make it all better either.

Fuel cost is a global issue, it is effecting every country and the greater cost associated with it essentially trickles down to every person on the planet. (Except for the folks living in the Amazon or middle of the Serengeti.) Ultimately I wonder if fuel prices have not already reached a point where something has to give economically. I'm not sure if this level of oil $$$ has long term sustainability in the current economy.

[PCL_128]

Originally Posted by Itchy

Well, I doubt there are many more fools standing around waiting to start up an airline.

How many times have we heard that now over the past 30 years? There will always be idiots trying to start up new airlines, and in the process they rape investors, employees, and passengers, not to mention the damage they do to the other airlines.

[Chris_Ford]

Originally Posted by PCL_128

Look around you. Five airlines have ceased operation in two weeks.

And how exactly would re-regulation help that? Skybus would never have entered the business (no more jobs). Champion wouldn't be part of this regulation as they're charter. ATA the same deal (save 10-15 flights to Hawaii essentially for SWA anyway). Skyway announced they were going Ch 7 way before 2 weeks ago (Back in January, IIRC). Aloha had been flirting with bankruptcy for 10 years...

AMR and UAL are on the verge of bankruptcy filings,

This is news to me. Last I heard they both had $1B in operating profit last year, and all the *inside* information I have on UA is they're in a pretty decent fiscal position.

Chairmen on the Hill wouldn't be talking about holding hearings on re-regulation if things weren't a complete mess.

Chairmen on the hill have also held hearings on: Steroids in MLB. Boycotting the 2008 Summer Olympics, etc.

So now I ask you to name ONE thing the government has done RIGHT in the last thirty years....

Fact of the matter is, the government is going to screw things up more than any private sector would anyway. And why exactly is it the government's job to regulate everything? Should they regulate the mortgage industry? They're doing way worse than airlines now...

[mpenguin1]

Originally Posted by Chris_Ford

Proof?

Proof that management opposed deregulation, here is something from Robert Crandall, Former CEO of American Airlines:

When Crandall was first named president of American in 1980, airline deregulation had just been introduced by the Carter administration. American, under Crandall, was worried, pointing to the tendency of airlines, if unregulated, to compete by cutting price and, thus, continually wiping out all profits. When deregulation came to pass, however, American began to innovate. American, like every other carrier, knew that the way to make money in the airline business is to increase the percentage of seats occupied on any given flight. That's because it costs almost nothing to stuff an extra passenger into a plane. Every added fare is almost pure profit.

Of course, in present time, most management would not want to go back to the regulation days:

PAUL SOLMAN: Deregulation-is that the cause of all this-and if it is, why did you oppose it when the Carter administration was proposing it?

ROBERT CRANDALL: Well, I think it's fair to say that what I said when deregulation was proposed, I said, look, you got to make a choice; this is a choice of social values versus economic values. I think you probably will get economic benefits from deregulation. And, in fact, we have, and I think those economic benefits have been greater than I thought they would be. On the other hand, there will be some social offsets. Some employees will take a hit, and some communities won't get the kind of service they'd like to have. And that's what you're hearing in Congress today, that we'd like it better if all cities had about the same level of service, as was true in the days of regulation. But deregulation has paid big economic dividends at some social cost.

PAUL SOLMAN: Because the smaller communities can't afford to maintain major airline service coming in and out of-

ROBERT CRANDALL: Smaller communities don't have enough people to attract-to attract the service that they would really like to have.

http://www.pbs.org/newshour/bb/trans...dall_5-20.html

[phoenix 23684]

Originally Posted by Fly4Pay

Something IS being done--businesses that don't know how to run their business go out of business! That's the way that capitalism works--do a good job, or you're gone.

As it should be....

You keep thinking that. Now what you will see in the next 10-20 years unless the gov't steps in is nothing but RJ flying CONUS routes at regional poverty salaries while pushing the majors to only fly large jets on the International routes or long haul routes. Demand will double that's a fact but as long as we keep having this cut-throat model, this I'm afraid is our future. Don't think so? Ask anyone in the late 80's early 90's what they thought of the idea of regionals flying mainline routes in little jets? Bet no one would have believed you.

Compare the size and number of jets of those days to what we have today.

[PCL_128]

Chris, you have a laissez faire economic mindset, so you and I will obviously never agree on regulation in any industry. I'm sure you oppose increased regulation in the mortgage and credit businesses, you probably oppose universal healthcare, and many other forms of regulation and government assistance. That's fine, we can agree to disagree, but I'll keep voting for people that support these sorts of ideas. I'm not happy with the direction America has taken over the past three decades. Apparently you are. Suit yourself.

[Chris_Ford]

You're just looking at the fallout of the boom of the 90s as "everything crashing down"...

We'll be okay. I promise.

And you still can't name a thing the government has done in the last 30 years that's ended up working 1) well 2) as planned 3) on budget.

What makes you think regulation is any different?

[PCL_128]

I happen to think that the government does most things well. I could name a bunch of social programs, but I'm sure you'd hate every one of them.

[Chris_Ford]

And my response would be "TSA"

[PCL_128]

Sadly, the TSA is a hell of a lot better than it was under private contractors.

[Chris_Ford]

Maybe so, but at nearly thrice (if not more) the cost... That's what I was talking about. Pork pork pork.