In the short-run, firms can only reduce their costs by cutting labor. Capital is pretty much fixed in the short-run, and airlines can't do much about it. Fuel prices are going up and US Airways is lowering fares on many of its markets in order to compete with low-cost carriers. Has anyone checked out the latest First Class fares MIA - PHL - MIA? It's only about $520, it shows how desperate US Airways is. Of course, AA is also matching this fare.
At this critical point, cutting labor is not enough to make profits.
Last edited by fly747first; Apr 30, 2005 at 12:56 pm