Newsstand - How Foreign Airlines Thrive While US Flounders

http://abcnews.go.com/Business/BusinessTravel/Story?id=5502002&page=1

While U.S. airlines -- desperate to stay afloat -- are cutting flights and charging customers to check bags, several foreign airlines are aggressively expanding their routes and making money in the process.

It took them to page 3 to get to the heart of the matter: oil trades in dollars and the value of the dollar is diminishing against foreign currencies. So foreign carriers are paying less per gallon than US companies. No wonder they aren't struggling as much.

Since airlines in the US seem to be floundering why not open US domestic routes to competition from foreign carriers. That way AA, UA and DL can compete with the likes of Singapore, Cathay Pacific, Emirates and yes, even West Jet.

Bear in mind many foreign airlines have been consolidating over the last few years. Also replacing old jets with newer more efficiant models.

Bear in mind many foreign airlines have been consolidating over the last few years. Also replacing old jets with newer more efficiant models.

Competitive advantages overseas:

1) Government-run taxpayer-supported health-care.

2) Government-run pension systems

Imagine if US companies didn't have to pay for these benefits themselves and could just socialize the cost onto the public.

I never understand why so many US corporations are against single-payer healthcare and publicly run pensions supported by individual taxpayers. It would seem that the fiduciary duty would require corporate officers to advocate for both of these in the interest of their corporate profits.

Competitive advantages overseas:

1) Government-run taxpayer-supported health-care.



Oh no! We wouldn't want that! That would be SOCIALISM!!!

America has the best health care system in the world! We spend the most money per capita on health care so that must mean we have best health care. Period.

opening up US routes to foreign carriers would be really cool - not going to happen though. Just think though, EK A380 w/ F-suites JFK-LAX daily - Jet Blue would soil themselves.

opening up US routes to foreign carriers would be really cool - not going to happen though. Just think though, EK A380 w/ F-suites JFK-LAX daily - Jet Blue would soil themselves.

Outsourcing domestic air travel would be amazing.

I think it might be somewhat of a demographic issue - Americans seem to want upgrades, upgrades and more upgrades. In Europe, it seems like there are a lot more paid F/J pax on local flights - and with prices 2-3x that of a regular seat (where the seats are practically the same) I'm sure they can make a lot more money.

As a lowly AA Gold, I was able to upgrade my YYZ-LGA flight for $25. In Europe, my uncle regularly pays $600 to fly ZRH-LHR-ZRH on LX [don't ask why, even I don't know.]

Cheers,

oil trades in dollars and the value of the dollar is diminishing against foreign currencies. So foreign carriers are paying less per gallon than US companies. No wonder they aren't struggling as much.

Umm, not exactly. Foreign carriers pay about the same price for fuel as U.S. carriers. The key is that their revenue is largely denominated in Euros, Pounds, Renminbi, and so has grown relatively faster than U.S. carriers' revenues.

This is, nonetheless, an article with very short shelf life: BA, Iberia and AF-KLM are all reporting sharply lower profits this quarter.

Competitive advantages overseas:

1) Government-run taxpayer-supported health-care.

2) Government-run pension systems

Imagine if US companies didn't have to pay for these benefits themselves and could just socialize the cost onto the public.

I never understand why so many US corporations are against single-payer healthcare and publicly run pensions supported by individual taxpayers. It would seem that the fiduciary duty would require corporate officers to advocate for both of these in the interest of their corporate profits.

You need to brush up your knowledge on how health care and pensions are funded outside the US.

Umm, not exactly. Foreign carriers pay about the same price for fuel as U.S. carriers. The key is that their revenue is largely denominated in Euros, Pounds, Renminbi, and so has grown relatively faster than U.S. carriers' revenues.

Revenues are growing relatively faster and cost are rising relatively slower. A $120bbl or oil costs less using euros that were worth $1.20 a year ago and are now worth $1.40. That discrepancy increases as the cost of the fuel also goes up. Yes, the fuel is still denominated in dollars, but buying USD$30K in fuel costs less now for a European carrier than it did 6 months ago because of the devaluation of the dollar.

Outsourcing domestic air travel would be amazing.

It would be amazing to see how US carriers would compete against companies that use labor, accounting, etc. practices that are illegal in the US. Otherwise Singapore girls might actually become Singapore women.

I have one word for anyone that thinks service would improve: Ryanair.

It would be amazing to see how US carriers would compete against companies that use labor, accounting, etc. practices that are illegal in the US.
Why is the domestic air transport industry so different from nearly every other industry (in which well-managed U.S. companies compete successfully day-in and day-out against foreign competitors operating under different rules)?

I have one word for anyone that thinks service would improve: Ryanair.
I suspect folks are thinking instead of these airlines:
Cathay Pacific
Singapore Airlines
Kingfisher Airlines
Asiana Airlines
Malaysia Airlines
Qatar Airways
Air France
Air New Zealand
Air Nostrum
Air Tahiti Nui
ANA All Nippon Airways
Austrian Airways
Bangkok Airways
British Airways
China Airlines
Dragonair
Emirates
Etihad Airways
EVA Airways
Gulf Air
Japan Airlines
Korean Air
Lufthansa
Luxair
Meridiana
Porter Airlines
Qantas Airways
Silk Air
South African Airways
SriLankan Airlines
Swiss Int'l Air Lines
Thai Airways
Turkish Airlines
Virgin Atlantic and
Virgin Blue

...all of which are SkyTrax 5 or 4 star airlines (the only U.S. domestic carriers that made the cut were Frontier, Midwest, and JetBlue).