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Old 04-12-2008, 10:25 PM
 
Location: America
6,993 posts, read 17,312,954 times
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better services? Some of these companies are not keeping their airplanes in good repair. This could easily lead to many many deaths. Interesting definition of good service :S
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Old 04-12-2008, 11:03 PM
 
28,107 posts, read 63,436,291 times
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Quote:
Originally Posted by Mike from back east View Post
True: in the mid 1960’s, I was making $1.20 an hour. In 2003 I was making $48.00 an hour when I retired, a 40-fold increase. Your Grandfather experienced the same growth in his rate of pay, thus making the ticket prices look cheaper and in real dollars they probably were as many efficiencies have been achieved in all industries over the past 40 years. All in all, not a truly good measure that airline deregulation is the success that you hint at.
I'm at a loss to explain why it is so much cheaper to fly today, in terms of hours worked to buy a ticket, then it was in the 60's if airline deregulation has not played a large part in bringing down prices.

In the 60's and even in 1970, people still dressed to fly and airlines had a strict dress code requirement for service... since deregulation, just about anything goes...

I just double checked and my Grandfather paid over $700 dollars in 1970 to fly from San Francisco to Germany on Pan Am and I paid $534 last summer for the same route on United...

$700 dollars in 1970 had much more buying power then $534 does today... You could buy several different new Ford Automobiles in 1970-71 for about $2,000 and today, I would guess, an entry level new Ford would be about $12,000... or about 6 times more expensive... which would infer that the same ticket today should cost about 1/3 the price of an entry level car or about $4,000
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Old 04-13-2008, 01:04 AM
 
Location: Los Angeles, Ca
2,883 posts, read 5,871,534 times
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I'm not an expert on airlines, but it seems so many have failed for a few key reasons...

-Brutal costs, maintenence, high oil. Absurd contracts. Overally, ridiculously high costs to stay in business.

-They're an easy target for politicians. They're like big oil. Its easy to attack price hikes. Yet prices have actually gone down over the years (in the above example). The perception doesn't mesh with reality, in terms of price gouging, or the airlines are out to get everyone.

-Very weak marketing/differentiation. All the airlines seem to do the same thing, the same way. Like the decline of department stores, they try to be all things to all people, but they don't excel at anything in particular.

Companies that have been successful in the last 25 years have either had extreme low costs (Walmart). Extreme efficiency (Dell). Brand leadership in the field (Amazon, or Ebay). Or they've redone an old concept (Starbucks for the old coffee shop). Maybe a couple other examples. And there's some exceptions like GE or someone.

How are you going to be successful doing exactly what everyone else is doing, doing it the same way, at the same time. They all target the same classes of travelers. They all have terrible food. The interior of the planes look basically identical from one company to the next. Same leg rest. Same tv screen size. Same service. Same check in lines. The big airlines have zero imagination IMO.

How do the big US companies differ from Singapore airlines, Qantas, or overseas ones? Are they as profitable, less profitable. More enjoyable?
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Old 04-13-2008, 07:49 AM
 
Location: RSM
5,113 posts, read 19,699,943 times
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Quote:
Originally Posted by Wild Style View Post
better services? Some of these companies are not keeping their airplanes in good repair. This could easily lead to many many deaths. Interesting definition of good service :S
air travel in the us is still the safest form of travel from what i understand.. sounds like they're doing okay to me
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Old 04-13-2008, 08:34 AM
 
955 posts, read 2,152,069 times
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Quote:
Originally Posted by AustinGuy View Post
Deregulation may have been bad for the industry, but I'd say it has been nothing but good for consumers. Even though the price of oil has surged in the last 10 years, flight prices have barely budged since 2000. The main part of airline tickets that have gone up are the associated fees that were added on by the government after the 2001 increased security fees.

Think about how much the price of almost everything else transportation related has increased since 2000. It's pretty crazy how cheap the prices of airline tickets have stayed.

That being said, I suspect we are going to see a huge ratcheting up of airline ticket prices in the next several years as airliners go bankrupt and competition is reduced.
Regulation of the airlines certainly will not cause ticket prices to drop by decree. If ticket prices are regulated downward, more carriers will drop out of the market, service will diminish (except between New York, Chicago, Washington, Orlando, LA and a few others), and we will not be any safer.

If the government does step in, they would end up subsidizing the industry (translation = taxpayers) and overall costs will not go down.

I have no horses in the race. I rarely fly anymore and I don't own any airline stocks. But I have a hard time understanding how government regulation will make things better but I can sure see how it has the potential for making things worse.
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Old 04-13-2008, 10:30 AM
 
26,130 posts, read 48,769,814 times
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Quote:
Originally Posted by Niners fan View Post
...You clearly have a socialist agenda. (Just as I'll admit that I am a fan of the free market.) That's fine but socialism is not good for the consumer who benefits from price competition and innovation. In fact, socialism has worked so well in Cuba that they got color TV about 10 years ago and are now allowed to have cell phones and microwaves. Of course, none of those things were invented in a socialist country.
I have no agenda, other than to make sure that our nation is run in an efficient manner, that markets work smoothly and that abuses avoided - the very essence of finely-tuned capitalism. The airline situation has been anything BUT efficient and smooth for the past 30 years.

Any comparison of Cuba to the USA or Europe is a farce. Cuba is a communist country with a dictator. Castro may claim that Cuba is a socialist nation, but no, its a fascist dictatorship.

An example of TOTALLY free markets was the mortgage business a few years ago. When some crooks started writing "liar loans" with no proof of income or even proof of employment, the abuse began. Without any government regulation to prevent liar loans, millions of such loans were written, it was a "free" market without even a minimum of oversight. Once one idiot offered no-doc / no-down / loans, everyone in the totally unregulated mortgage market had to follow suit or else lose business - so they all started writing the destructive loans. The taxpayer is eating these loans now, as at least $250B of these worthless loans have been "swapped" by investment firms and banks to the U.S. Treasury (that means us taxpayers) for Federal guarantees, etc. In this case, the word "swapped" means taxpayer bailout, like the recent $30B swap of worthless Bear Steans paper with the Fed. The abuses in the unregulated mortgage market are abusing we the people, as it is we the taxpayer who will eat this crap, like we ate the S&L scandal when Bush's father was President.

The unregulated mortgage business is totally analogous to fare wars in the airline business, one jerk puts in a terribly low fare to try and corner the market on a high-density route (NY-LA for example) but all he does is start a round of money losing rate wars. Within hours other airlines match absurdly low fares - like the cold war doctrine of Mutually Assured Destruction (MAD). Make no mistake, it is MAD to have fare wars, just like it's MAD to issue mortgages without ANY proof of income.

There WILL be regulation of the mortgage business after this latest walk down the "free market road to economic destruction." I hope our government has the balls to restore solvency to the airlines by stopping destructive fare wars via use of a rate floor to set a minimally profitable level of prices. If not, we will see continued blood letting until we get down to so few carriers that they will become a self-regulating duopoly or oligopily.

Any economics professor will tell you that the MOST efficient provider is a regulated monopoly. Totally 'free' markets descend into chaos with drastic effects on everyone - collateral damage. The role of government is take the ragged edges off these more destructive practices and instincts, usually via some form of regulatory framework that establishes the parameters within which free enterprise and competition may flourish while avoiding economic warfare.

Thirty years ago we had a smooth running well-regulated airline industry, with a group of carriers who competed hard on many characteristics of what equals good service: published prices, direct flights, interlining of baggage, refundable tickets, no charge to change your flight itinerary; no price gouging, legroom, food worth eating, etc.

Today's unregulated airline industry has a fare structure that only provides lousy service: you have no idea what your flight will cost, despite what they claim is their published price; you fly most trips via hub/spoke patterns that treat you like a box handled by FEDEX where everything (and now everyBODY) goes into a "sorting" airport and then out the other end; hit or miss interlining of baggage; tickets that are not refundable; changing your flight costs you a ton in "penalty" fees; exorbitant fares if you need to fly on short notice; cramped cattle car seating; lousy food or no food at all. You get what you pay for.

Deregulation is a total failure, quality of service is way down, low fares are an illusion. We will pay for this in the end and it will come out of taxpayer pockets, not those who wrecked it. Enjoy those 'low' fares while they last.

s/mike
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Old 04-13-2008, 02:11 PM
 
Location: Sacramento
14,044 posts, read 27,127,873 times
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Good points Mike, and thanks for a great summary of the issue of airline deregulation.

I began flying when I began my career in the early 1970's. I just checked the log I used to keep concerning business expenses and found that I paid $225 for a round trip ticket between Philadelphia and Kansas City in 1974, and $180 for a round trip between Philadelphia and Chicago in 1975.

During the past year I have flown from Sacramento to Philadelphia, and Sacramento to Fort Lauderdale. Both trips were about $230, including all fees. Using the Bureau of Labor Statistics Inflation Calculator this equates to fares of about $60 in 1975 dollars. That is a breathtaking difference in prices.

I agree that deregulation has certainly gone too far, and the flight safety (not just crashing, things like cabin air quality too) need to be given full considerations. The lack of oversight on safety inspections is a problems, and applies to multiple things, such as food inspection too.

But, if you go onto the P&OC Forums, where I moderate, you find that many folks want to lessen Government involvement in everyday life. Taxes and fees to support these checks and inspections is frequently resented.
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Old 04-13-2008, 03:12 PM
 
Location: RSM
5,113 posts, read 19,699,943 times
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some companies do it right(southwest, jetblue even with their weather difficulties), some dont(pretty much everyone else). the ones that dont should NOT get a bailout. unfortunately, the government has a penchant for doing that.

the whole point of the free market is finding a point where service works and profit is made, and there ARE airline companies that demonstrate it is possible. Unfortunately, and again noone decided to speak about it, most of them spend so much in overly employee friendly union healthcare, pension, and pay plans that they have nothing they can do but file bankruptcy when they get to a point where raising fares will kill their ridership and rising fuel costs eat away at all their profit. they try to restructure their union contracts and the unions threaten walkouts. its a losing situation thats been demonstrated all over the aging american manufacturing and service industries and the reason that japanese companies have been so successful in the automotive industry, the reason walmart is muscling out grocery chains all over the states, and the reason that the bigname airlines are getting hammered.

deregulation did exactly what it was supposed to and the companies that didnt plan well(no fixed price fuel contracts, exhorbitant union contracts, etc) are suffering. all it shows is that if you do not run a business like a business should be ran you wont last. air travel is not a right, it is a luxury, and luxuries are provided by the freemarket, not by the government
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Old 04-13-2008, 05:20 PM
 
3,555 posts, read 7,826,225 times
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bhcompy wrote:
Quote:
but one of the primary costs has been the absurd contracts the unions(a socialist concept) worked up and their unwillingness to negotiate down in the face of bankruptcy. it's pushing both the domestic airline and autoindustry into deeper financial trouble because when these companies do consider costcutting movies to save money, they cant make layoffs or reduce employee pay or benefits. so instead they cut in other areas, like maintenance
Nice union bashing, but it's just not true. In fact many, if not most of the unions at the "legacy" airlines have negotiated way down. There is not a huge difference in labor/hour costs among the big 7 and Southwest. Granted the legacy airlines do have some very senior drivers making much more than the top drivers at SWA. But overall the cost per revenue seat mile is not far apart.

There are 3 big costs of operating an airline; capital equipment, most of it in the form of aircraft, labor, a big chunk of which is drivers, and FUEL.

As I said above (feel free to research this) just like in building cars, there is no HUGE difference among the players in the cost of pilots.

Fuel; they're all paying the same. Except last year because of its superior (financial) management, SWA was able to buy huge futures contracts for jet fuel with CASH ON HAND. No one else had the cash, nor the good enough credit to borrow to do it. Imagine how much better your life would be today if you were paying $1.75 for gasoline instead of $3.40.

Cost of capital. This is the big killer of idiotic airlines. The biggest capital investment of these guys is their airplanes. Coincidentally it's the only one that earns them money. But, as this is crucial, they spend a large part of thei time sitting at (hub and spoke) gates. A parked airplane earns no money. A "point to point" airline enjoys approximately a 7-8% COST ADVANTAGE over a hub and spoke airline.

Imagine if you enjoyed a 7% cost advantage on your largest expense, over your competitors.

golfgod
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Old 04-13-2008, 08:08 PM
 
Location: WA
5,640 posts, read 24,870,568 times
Reputation: 6573
Deregulation of the airlines has provided the public with plentiful, safe, and cheap transportation. Even though there has been a huge increase in overhead due to security and fuel the airfares are generally as low as they were thirty years ago. The safety record is better and there are more flights to more places. What's the beef?
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