Originally Posted by
Flight44
(B)ecause of those low fares from discount airlines, there is not the financial support to operate the industry properly. Frankly, the entire airline industry is bankrupt in terms of honest accounting. Without various subsidies from government, the system would be radically different.
It should be radically different. There are far too many aircraft flying at this point... some startup airline will fly cheap until they burn through their initial cash pile and the realities of the industry catch up to them. Rinse. Repeat.
It is tremendously expensive to own and operate aircraft and airports. The public must be made to see this. If you want to travel between New York and London at a speed of 500+ miles per hour, safely, in a clean, well-staffed aircraft, arrive on-time at a similarly equipped and operated airport, then you must pay what it costs. And the cost must be paid by the traveler in every way.
With great respect, this is an analysis from 25 years ago.
- There are not too many aircraft flying; the legacies have learned capacity discipline, fares are steady/rising, and load factors are 90+%. In the next recession they will park planes and furlough employees, not hold rock-bottom sales.
- There is not significant pressure from PeoplExpress-type upstarts; the barriers to starting a major airline have become virtually insurmountable.
- Fares are not a bazaar of below-cost deals; pricing power is now concentrated among three megacarriers, not the 8 to 10 network airlines we had to choose from in the '90s, and onetime price insurgent Southwest is now often the most expensive choice.
- In the '90s airlines routinely lost billions; today's survivors are in little danger of losing money.
As for Frontier and the price disparity, Frontier had 2.7% of the US airline pie in 2017, while American owned nearly seven times as much, charges more, and was the largest airline in the world based on sales ($43b revenue), so I doubt Doug Parker is pacing the halls at night worrying about Frontier or any other smallball also-ran nipping at his ankles.
(Stat source:
https://www.statista.com/statistics/...g-us-airlines/)
American Airlines is now something like a large, complacent government agency that will never go out of business, never evolve much operationally or culturally, and never be very good. The Veterans Administration of the air. That is partly because in a de facto three-headed, vrtually collusive "competitive environment," there is no penalty for operating this way; they have too many captive customers and too much pricing heft. It's partly because of management choices and unhappy frontline culture -- although complaining, emotional airline employees have been around forever. (United Airlines employees have criticized / undermined / attacked every last CEO and management team they've had since Dick Ferris in the early 1980s. All of them. It's a psychology study waiting to happen. Toxicity runs both ways.)
One of the three-word summations of AA quoted in the linked article is the one I too would use to describe American: "Stressful, cheap, uncaring." But sadly I base my views mostly on my experience of AA service culture, which is shaped mostly by the AA employees doing the complaining in this case.