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  #11  
Old 08-20-2005, 08:53 PM
ptmusic ptmusic is offline
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Default Re: Cutting corners

[ QUOTE ]
OK.

Always within regulations, the cut-price airlines (which is what I was referring to by the term "new airlines" because the other "new" ones are just mergers) are shaving costs by getting around proper maintenance and safety precautions. They are "assisted" in this endeavor by cutting down on various supporting jobs and hiring some mechanic and pilot jocks/hot shots, who are then encouraged to engage in cowboy acts.

The Helios Airline tragedy last week was, it appears, the outcome of such practices.

The upshot (for the company) is that the plane leaves on time -- and flies cheaply.

Meantime, stodgy old foggies such as British Airways or Qantas will delay a plane for an hour making sure.

[/ QUOTE ]

Let's at the quintessential cut-price airline: Southwest. I think it's "safe" to say (pun intended) that Southwest's success is due to far more than safety and maintenance cost-cutting.

They came up with a new strategy, which involved cost-cutting across the board (not just maintenance), but which also included different routes and airports. In effect, they created a new segment in the airline industry, and they were therefore "first mover" into that segment, an advantage in and of itself. Other airlines have tried to copy their success, but most have failed: Southwest has been able to sustain its competitive edge.

Also, to speak to your point about on time vs. delayed flights, that is another of Southwest's edges. They streamlined everything, including assigned seating, different "classes", and different meals, all adding to a speedy turnaround at the terminal.

The non-union factor is also not negligable to Southwest's bottom line.

I'm not saying the maintenance factor is negligable, but even with my fear of flying, I know that statistically, flying Southwest is pretty damn safe.

-ptmusic
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  #12  
Old 08-20-2005, 10:48 PM
whiskeytown whiskeytown is offline
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Default Re: Airlines losing money or bankrupt

deregulation had a big chunk to do with it -

RB
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  #13  
Old 08-20-2005, 11:18 PM
mmbt0ne mmbt0ne is offline
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Default Re: Airlines losing money or bankrupt

Among other reasons:

Delta has 50+ vice presidents, all of whom make a pretty hefty salary for doing dick basically. AirTran functions just as well with less than 10% as many.

Gas costs. Even a full plane of passengers with ticket prices where they are now will not pay for the upkeep and maintenance of a plane. Let alone the salaries of those flying/servicing them.

AirTran's deal with Boeing. Only this spring has AirTran started to pay for the brand new planes they got a few years ago. This means, while they were able to charge those ridiculously low fares earlier, it was because they were paying $0 in plane costs other than the minimal upkeep that a new plane requires. As their flights beame more popular, other airlines had to lower their prices. Lower their prices to the point that they weren't making money.

Also, another thing with Boeing. They give airlines $1M discounts to take their old planes out into a desert and cut them in half, rather than sell them. Delta, AA, United, etc. all uesd to sell old airlines to other carriers, but now that portion of income, no matter how small, has been minimized even more.

There's a lot more to it, but that should get you started.
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  #14  
Old 08-21-2005, 04:16 AM
MagicMan08 MagicMan08 is offline
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Default Re: Airlines losing money or bankrupt

bump
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  #15  
Old 08-21-2005, 09:29 AM
PokrLikeItsProse PokrLikeItsProse is offline
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Default Re: Airlines losing money or bankrupt

I suspect that airlines are unwilling to give up market share and would rather not cut flights during unprofitable periods because they want to maximize their share of the profits during boom periods.

My understanding is that the airline business is naturally cyclical and that companies can be expected to go through relative bust and boom periods. Airlines go broke when the bust period lasts too long or when they didn't make enough money during a boom period to absorb the losses of a bust period.
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  #16  
Old 08-21-2005, 10:41 AM
Felix_Nietsche Felix_Nietsche is offline
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Default The REAL Reason........Why Airlines Lose Money.

If you want to know why airlines either make very little money or lose money then come to the Dallas-Ft Worth area and compare and contrast South-West Airlines and American Airlines. South-West Airlines has consistently been profitable while airlines like American have had shaky results.

So why does South-West Airlines do well while American flounders? The ***PRIMARY*** reason are the airports that the airlines use. Dallas's Love Field is a small but HIGHLY efficient airport which South-West flies out of. DFW Airport is a giant and a HIGHLY ineffcient airport which American flies out of. When you fly out of Love Field you board the plane, taxi to the runway, and leave. At DFW you board, wait, then taxi to a line, then wait, taxi some more, then wait, and eventually you leave. ALL THIS TIME ON THE GROUND COST BIG BUCKS and when your profit margins are slim you can easily lose your ass. DFW has been offering a lot of carrots for South-West to move to DFW but South-West has kept telling them to go screw themselves. They need DFW like they need a bullet in the head. As for militant unions and bad management, these are seconadary reasons for poor preformance. South-West makes a point to avoid the major hubs which results in more time on the ground.

The bottom line is urban planning for airports is terrible. It would be much better for a major metropolis to have four smaller airports then one giant MEGA airport. Doing so means less time burning fuel on the ground, quicker trips, and more satisfied customers. The problem is people hate living next to airports, much less four airports spread thoughout the area. Also, the bond holders of the major airports would scream murder if 75% of the gates wear closed so that air traffic could be spread around. At DFW, those morons built a new terminal so DFW is in a huge economic bind to find an airline that will move in to start paying rent.

The solution is for major urban areas; build four smaller airports (25-30 gates) and let the major airports die like the dinosaurs that they are. As for the bond holders, you will get screwed for your bad investment.
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  #17  
Old 08-21-2005, 12:27 PM
mmbt0ne mmbt0ne is offline
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Default Re: The REAL Reason........Why Airlines Lose Money.

</font><blockquote><font class="small">En réponse à:</font><hr />
As for militant unions and bad management, these are seconadary reasons for poor preformance.

[/ QUOTE ]

Militant unions? No pilot's union has gone on strike recently. Meanwhile, they've all taken drastic pay cuts while the executives' bonuses and retirement funds go untouched.
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  #18  
Old 08-21-2005, 12:32 PM
Felix_Nietsche Felix_Nietsche is offline
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Default Re: The REAL Reason........Why Airlines Lose Money.

Hence the word.........SECONDARY.
Look it up in the dictionary if you need to.
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  #19  
Old 08-21-2005, 01:12 PM
mmbt0ne mmbt0ne is offline
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Default Re: The REAL Reason........Why Airlines Lose Money.

The fact you used the word secondary to describe their effect does nothing to lessen your mischaracterization of the pilots' unions as militant.
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  #20  
Old 08-22-2005, 12:36 AM
tek tek is offline
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Default Re: Airlines losing money or bankrupt

Some airlines hedge fuel costs...
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