Take a look at this. It explains very easily why we are seeing the steep fare sales that are needed to get people back on airplanes. The airlines simply cannot afford it. Its a true catch 22. Get people on board and watch you break even load factor fall further, or keep fares high and watch people stay away?

http://www.forbes.com/2001/11/06/110...ahoo&referrer=
Company Break-Even Load Factor (pre-9/11) Break-Even Load Factor (post-9/11)
American Airlines (nyse: AMR - news - people) 74% 85%
United Airlines (nyse: UAL - news - people) 84 96
Delta Air Lines (nyse: DAL - news - people) 75 85
Southwest Airlines (nyse: LUV - news - people) 57 65
US Airways (nyse: U - news - people) 76 88
Northwest Airlines (nasdaq: NWAL - news - people) 81 90
Alaska Airlines (nyse: ALK - news - people) 67 75
Continental Airlines (nyse: CAL - news - people) 67 77
America West Airlines (nyse: AWA - news - people) 79 88

96%!?!?!?!?!? United needs 96% just to break even? No wonder Goodwin thought they'd run out of options by next year...

editied to remove article, please click the link

[This message has been edited by duxfan (edited 11-07-2001).]

I counted noses on my AA international flights this week. Actual loads were 43%.

The above numbers are eye opening.
WSJ interactive had an airlines article yesterday that ended as follows,
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Frequent-flier mileage incentives have provided only small stimulus. Some travelers have cashed in miles out of skepticism, says Mr. Stempler of the Air Travelers Association. "People have said, 'I'm going to use my miles before the airlines go out of business.' "
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Yes, that includes me. I'm using up my 250K miles now while I can.
Trouble is.... I teach seminars (amongst other things) for a living. My seminar next week was cancelled due to low number of sign ups. This means that I won't even use the award ticket that I got and that my budgeted expenses of $400 (parking, taxi, hotel, meals) won't be spent either. This slowdown sure has has a ripple effect throughout the economy.

Look at those southwest figures in comparison...! Now I understand those reductions in service, all big airlines do...

Basically, what all those figures mean is that unless things get better, all airlines other than Southwest are just plain [expletive deleted].

And that would mean the country is screwed, too. I'm sorry, folks, but Southwest isn't going to hack it for all the travel that we need to do in this country. For starters, a lot of large population centers are not on the list of cities they serve.

I see a lot of layoffs coming, and I see a lot of consolidation coming. I also see a lot of unions being told, fine, we can continue to pay your pilots $300K a year, but there will be a hell of a lot less of them employed.

mdtony -

you are missing the point. it's not the pay, it's the productivity. my understanding is that southwest employees are very well compensated (especially pilots and f/a's). but their contracts are structured in a way that makes them much more productive. it's not so much the costs, its what you get in return.

but therein lies the problem. i don't see any of the other majors (and WN is a major), being able to restructure labor contracts in a way that gives them a substantial increase in productivity. Can you see US Airways empoyee groups like to think they should be paid equal to or better than the big 3. yet their productivity lags behind UA, AA, and DL, let alone WN.

i'd be interested to know what the employee/airplane ration is at WN vs the rest of the industry. seems to me that WN does a lot more with less.

Southwest has built a great little business for itself, but it's not the type of business that can be ratcheted up to go from serving about 50 cities to hundreds of cities worldwide. They selected the cities and markets that are the most profitable for them to serve, which is why they're sucessful.

At the same time, they provide little in the way of service/perks. Is that the way people really want to travel in the future? We were getting to a point where travel was slowly getting better and better for the customers. Is it realistic to go to a WN model of all coach, no food, no frills? Are frequent business travelers really going to want to fly 100,000 miles a year like that?

WN's no frills may be acceptable on the short hops they fly, but who is going to fly from LHR or CDG to NYC in an all-coach, no-frills setup? That would just further turn people off to air travel - both business and leisure.

Airlines need to better manage their money, employees, costs, etc. But, it's still a service industry, and if you downgrade the service, you reduce the price you can charge and the number of customers. WN's model is not a magic bullet for major airlines trying to provide worldwide service.

d