<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Perhaps nothing could do more to help the nation's 10 largest domestic carriers, which as a group have lost $25 billion in the past three years, than to see a carrier representing roughly 7 percent of seats shut down for business.
There would understandably be angst and remorse over the loss of so many jobs -- nearly 28,000 at last count, including some 8,000 locally. But under the laws of supply and demand, if supply shrinks, then the pricing power for the survivors strengthens. And concerns about job losses aside, the industry clearly could use all the pricing power it can get.</font>
<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by jmartin:
http://www.pittsburgpostgazette.com/pg/04011/259860.stm</font>
The whole over capacity thesis is bogus. The supply and demand thing only works like that when there really is a limited supply.
Two things will prevent the loss of US Airways from helping the other legacy carriers shore up their balance sheets:
1) None of them have the discipline to resist piling on capacity to replace that which is lost.
2) The LCC's will be all over the profitable routes.
There is no over capacity in the airline industry. What there is a surfeit of is over-priced and overly restricted fares concentrated in the legacy carriers. Their business model, which depended on a perception of scarcity that they have been articficially maintaining, is broken. Even if some relief were provided by an airline going out of business it would be temporary at best -- in the long run they are doomed unless they change.
gardener
Jan 11, 04, 6:31 pm
My first thought was, "Why is a paper in the Bay Area writing about US Airways?". Then I realized the author meant a Pittsburgh paper and not a Pittsburg paper.
aCavalierInCoach
Jan 11, 04, 7:09 pm
<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by gardener:
My first thought was, "Why is a paper in the Bay Area writing about US Airways?". Then I realized the author meant a Pittsburgh paper and not a Pittsburg paper.</font>
Geography snob... :P
geo1005
Jan 12, 04, 6:50 am
<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by TomBascom:
The whole over capacity thesis is bogus. The supply and demand thing only works like that when there really is a limited supply.</font>
I partially agree. I see the whole US Airways vs. the LCC issue the same way I see the WalMart vs. K-Mart issue. Both of those stores offer lots of products under one roof at approximately the same price. The reason WalMart is still around and snapping up market share left and right is because they deliver the product to the marketplace much more efficiently (internal costs) and with less hassle to the customer (simple ticketing). Compare the fare structure of Southwest to US. Compare the website booking of Southwest to US. Compare the ticketing process of Southwest to US. Compare the labor work rules of Southwest to US. In all of these cases Southwest just does things more efficiently. There are other factors involved but in practice, US is simply an inefficient machine.
AuAAdvantage
Jan 12, 04, 10:25 am
<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by geo1005:
[BCompare the fare structure of Southwest to US. Compare the website booking of Southwest to US. Compare the ticketing process of Southwest to US. Compare the labor work rules of Southwest to US. In all of these cases Southwest just does things more efficiently. There are other factors involved but in practice, US is simply an inefficient machine.
[/B]</font>
It helps that WN's fleet is uniform (Boeing 737), i.e. not a thrown together hodge podge resulting from years of mergers, takeovers, and airplane "deals". WN never paid top dollar for another airline and then proceeded to abandon many of that airline's routes (I'm referring to PSA). Also, WN doesn't operate any hubs, esp several hubs in close geographic proximity. They don't have numerous and redundant rez centers, numerous maintenance bases, crew bases, etc., all the result of the mergers/takeovers. WN tends to operate from out-of-the-way (translation: lower operating costs) airports like ISP instead of EWR/LGA, MDW instead of ORD, BWI instead of DCA, etc. Most importantly, WN never had total incompetents running their airline (like Wolf and Gangwal) who were primarily interested in executive bonuses, stock options, and sprucing the company up for sale, as opposed to profitable day to day operations. Lastly, WN doesn't treat their employees like crap and view them as liabilities, not assets.
And the article could have been written in the PIT suburb of Oakland!
TomBascom
Jan 12, 04, 1:31 pm
<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by AuAAdvantage:
It helps that WN's fleet is uniform (Boeing 737), i.e. not a thrown together hodge podge resulting from years of mergers, takeovers, and airplane "deals".</font>
US' fleet isn't so much ofa hodge-podge as it once was. And WN's fleet has a lot of sub-types in it now. The one fleet type advantage is real but there's more to keeping costs down than a single type of plane.
<font face="Verdana, Arial, Helvetica, sans-serif" size="2">WN never paid top dollar for another airline and then proceeded to abandon many of that airline's routes (I'm referring to PSA).</font>
True enough but not really relevant to today's situation except as a good reason for US' employees to have a beer and commiserate together over "what might have been" after work...
WN doesn't bank hubs. And they don't foolishly and blindly route all traffic through them. But they certainly have hubs. Their East Coast hub, for instance, is BWI.
<font face="Verdana, Arial, Helvetica, sans-serif" size="2"> ... esp several hubs in close geographic proximity. They don't have numerous and redundant rez centers, numerous maintenance bases, crew bases, etc., all the result of the mergers/takeovers.</font>
US doesn't have much of that left anymore either.
<font face="Verdana, Arial, Helvetica, sans-serif" size="2">WN tends to operate from out-of-the-way (translation: lower operating costs) airports like ISP instead of EWR/LGA, MDW instead of ORD, BWI instead of DCA, etc.</font>
They're not afraid to jump into the fire though -- LAX for example.
<font face="Verdana, Arial, Helvetica, sans-serif" size="2"> Most importantly, WN never had total incompetents running their airline (like Wolf and Gangwal)</font>
And a long parade of other ninnies...
<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Lastly, WN doesn't treat their employees like crap and view them as liabilities, not assets.</font>
True.
But you've left out the biggest reason that WN is successful -- they don't treat their customers like something to scrape off of their shoe either.
zedbyers
Jan 13, 04, 12:54 am
<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by HeHateY:
And the article could have been written in the PIT suburb of Oakland!</font>
oakland is part of city of pittsburgh
i too am a geography snob. but not a spelling snob!
BillMorrow
Jan 13, 04, 3:48 am
At least Pittsburg State had a better season than the Steelers. Their football team went 9-3 and won their conference.
Of course, that's Pittsburg, Kansas. http://www.flyertalk.com/forum/smile.gif