Delta and Northwest File Chapter 11

[KSig RC]

Originally posted by madmax
1. Do you expect labor to work for free. Since you blamed union labor for the problems then the real issue is difference in cost of union labor vs. non union labor and does that difference make up for the billions that the airlines are losing.

I do not expect labor to work for free. I expect them to work for market-value wages - not above-market wages. Do you expect airlines to accept being held hostage to union demands, even when not viable financially?

Originally posted by madmax
2. I disagree with your point that low cost tickets are not everywhere. I just checked Travelosity and there are tons of low cost tickets from NY to Orlando. http://www.priceline.com/travel/airl...=pcln&path=bak


3. The airlines used to charge more. That was back in the day when they used to turn a profit.

These points are related. The reality is that airline pricing is the ultimate supply/demand price point experiment - you cannot blame the airlines for lowering prices AND for flying half-full flights. One is a direct result of an attempt to alleviate the other.

Other than business customers (who already get dicked with "no Saturday stay-over" restrictions and the like, and thus pay a premium) very few consumers are required to fly, and thus the airlines have to hustle for every dime. They cannot arbitrarily raise prices without a corresponding backlash in the supply/demand architecture.

ETA: With all that said, I think the true downfall for most modern airlines simply comes from bad business models and being spread too thin. Southwest has shown a productive, viable model, and other companies are emulating only superficial parts of it (a la 'no in-flight snack') and not the larger, important pieces (smaller number of flights, utilizing the internet to lower business costs, maximizing ad dollars, keeping costs low overall).

[Rudey]

I'm not saying work for free. I am saying that the labor costs are the biggest expense for travelers and airlines because unions have allowed employees an unfair bargaining advantage.

NY to Florida is generally a cheap route. I'm not sure why, but you can find tix below $200. I am not sure you can find it on a major airline though (your link didn't open up for me).

And if the airlines all used to be profitable that doesn't make sense why so many went under.

And if labor costs (including the ridiculous pensions) weren't such a concern, then the major airlines wouldn't have opened their own discount airlines that aren't tied up with the same labor costs.

-Rudey

Originally posted by madmax
1. Do you expect labor to work for free. Since you blamed union labor for the problems then the real issue is difference in cost of union labor vs. non union labor and does that difference make up for the billions that the airlines are losing.


2. I disagree with your point that low cost tickets are not everywhere. I just checked Travelosity and there are tons of low cost tickets from NY to Orlando. http://www.priceline.com/travel/airl...=pcln&path=bak


3. The airlines used to charge more. That was back in the day when they used to turn a profit.

[Kevlar281]

I will never understand why the government continues to subsidize companies that cannot compete with the current market. Why is it that some airlines are profitable, while others are not? Sink or swim, this is capitalism get used to it.

[madmax]

Originally posted by KSig RC
I do not expect labor to work for free. I expect them to work for market-value wages - not above-market wages. Do you expect airlines to accept being held hostage to union demands, even when not viable financially?

How is labor not working for fair market value? Did the airlines agree to the compensation packages or not? Isn't fair market value the price that is agreed upon by labor and management?

Originally posted by KSig RC



These points are related. The reality is that airline pricing is the ultimate supply/demand price point experiment - you cannot blame the airlines for lowering prices AND for flying half-full flights. One is a direct result of an attempt to alleviate the other.

You get a D in Econ 101.

Who controls the supply?
Do the baggage handlers, mechanics, and flight crews make the decisions to expand and buy more planes or does management control supply? If supply was increased without an increase in demand then whose fault is it that ticket prices drop?

Originally posted by KSig RC


ETA: With all that said, I think the true downfall for most modern airlines simply comes from bad business models and being spread too thin. Southwest has shown a productive, viable model, and other companies are emulating only superficial parts of it (a la 'no in-flight snack') and not the larger, important pieces (smaller number of flights, utilizing the internet to lower business costs, maximizing ad dollars, keeping costs low overall).

Southwest uses union labor.

[KSig RC]

Originally posted by madmax
How is labor not working for fair market value? Did the airlines agree to the compensation packages or not? Isn't fair market value the price that is agreed upon by labor and management?

No, I will not agree that "fair market value" is the same as "the most that someone will pay."

Again, you've ignored my point about the airlines being held hostage by union pressures, resulting in above-market contracts, and instead focused on the fact that the airlines agreed to the contract.

Sure they did - does that make these prices 'market value'? No. Does this make these bad contracts on the part of the airlines? Obviously. I'm definitely not arguing that the airlines are well-managed - I'm merely arguing against your points.

Originally posted by madmax
You get a D in Econ 101.

Who controls the supply?
Do the baggage handlers, mechanics, and flight crews make the decisions to expand and buy more planes or does management control supply? If supply was increased without an increase in demand then whose fault is it that ticket prices drop?

I pointed out that airlines are spread too thin, so that's an unimpressive addition.

You can't play both sides here, though - you can't argue that the airlines are stupid for lowering prices and stupid for having empty seats. You can argue that they've made terrible decisions to get to these points - and I'll willingly agree - but you're not even arguing economic theory here.

Also, to relate back to your labor point, how well would the unions respond to a roll-back in flights, planes and etc (and the corresponding layoffs of, say, 40% of the union workforce)?

[madmax]

Originally posted by KSig RC


Also, to relate back to your labor point, how well would the unions respond to a roll-back in flights, planes and etc (and the corresponding layoffs of, say, 40% of the union workforce)?

Probably the same way a non union employee would respond to a 40% pay cut or a 40% decuction in workforce.

How much of a pay cut did Delta management take over the last 5 years that they were losing 10 billion dollars. I guess they should get pay raises since it wasn't their fault that they lost 10 billion.

[KSig RC]

Originally posted by madmax
Probably the same way a non union employee would respond to a 40% pay cut or a 40% decuction in workforce.

Non-union labor would strike in a shortsighted attempt to cripple the company to reverse the decision, rather than accepting the superfluous jobs as wasteful?

Originally posted by madmax
How much of a pay cut did Delta management take over the last 5 years that they were losing 10 billion dollars. I guess they should get pay raises since it wasn't their fault that they lost 10 billion.

Dude, you're twisting this argument, against someone who (ostensibly) agrees with you, at least regarding management.

Mismanagement has definitely been a massive problem - I gave examples of what I felt to be management issues above.

You responded to these with "Southwest uses union labor" - I'm not blaming the concept of unionized labor, I'm blaming the implementation (which, if you're playing at home, involves ... management), which is increasingly a destructive meme among these kinds of unions.

[Tom Earp]

If anyone will be honest, Unions have done a Great Job of Putting Companies in dire straits.

Dont tell Me I dont know, I have been screwed by the 3 biggest Unions.

There was a need for Unions, but the wheel has turned and Unions are worried about one thing only, Members who will put Dues $ in their pockets.

How about getting laid off and receiveing 90 % of YOur wages not working=Automobile Industry.

NW has had some of the Highest Maintanence costs of any Airline!
Granted all Airlines are Having Problems, just look and see who they are?

At one time, Delta was the High Flyer of The Industry. Now, between the Unions Contracts and the Management, they are really screwed up.

Oh, Big Timers Gone: Eastern, Braniff, TWA, Pan Am. Why?

So now the unions have strapped some airlines and dont want to give concessions. OKAY. Lose Your Jobs. Welcome top the real; world. Live withing Your Means not what You make.

What does that make You? Figgen Morrons!

"Reasonable Wage" that is the question or no job at all!

[hoosier]

Just as the unions have been responsible for a lot of the airlines' problems, they arer also causing a lot of the problems in elementary and high school education.

Their answer to every problem is spend more, hire more teachers, and no accountability.

It's all going downhill.

[GeekyPenguin]

Northwest dicked the unions over and still is going bankrupt. The union is not the problem there.

[DeltAlum]

Originally posted by GeekyPenguin
Northwest dicked the unions over and still is going bankrupt. The union is not the problem there.

Certainly not all of the problem, but high labor costs are a factor.

As was the case in the 1970's when Doug Frazier, then president of the United Auto Workers, realized that some concessions were necessary to save Chrysler, concessions may be necessary to save the major airlines. Of course those concessions must be a part of numerous sound business decisions and not a single answer to what are obviously highly complicated problems.

Unions are part of the problem and I think they should be part of the solution.

It might be good to point out that a few of the "low cost" airlines who operate with non-union labor have failed as well.