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American airline companies: They just don't care

American airline companies: They just don't care

May 25th, 2011, 05:21 PM
  #21  
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Thanks, dutyfree. Your post was the one that can be as close to an answer... I can imagine Czech Airline being subsidized by the Czech government. Not sure about KLM, since they're now owned by Air France, but probably Air France is bailed out by the French government.... No, it's not about that precious sandwich that I complained about, to me it's a matter of SERVICE. I feel like the 3 major American carriers have been in cahoots to bring service to a lower level, while creating new opportunities and even excuses to make extra money.... Anybody flying these days knows what I'm referring to....
mamamia2 is offline  
May 25th, 2011, 05:46 PM
  #22  
 
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IME, I disagree with the level of service mamamia between US and Europe. I have recently flown British Airways, BMI Baby and Air France inter-Europe. While the service was acceptable it was in no way laudable.

While I agree with dutyfree's response and trust it, you just dismissed the other responses because you don't agree with them.
soogies is offline  
May 25th, 2011, 07:09 PM
  #23  
 
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<> Which airlines are these?

Maybe you should include US airlines in your statement, as they have received something like US$8 billion in state and Federal payments since 2001.

Here's the link from the Dept of Transport for payments of US$4.6 billion from 2001 to 2003
http://www.dot.gov/affairs/carrierpayments.htm

While we're at it, lets include the US airlines that went into Chapter 11, as a form of obtaining subsidies

To say there is more competition in the US than in Europe is just nonsense. There are more low cost carriers in Europe than you can shake a stick at, each country has at least one full service airline, plus the airlines have to compete against a fast rail system. In the US, the opposite is happening, less competition as airlines merge.

Service on US airlines especially in economy, is recognised throughout the industry as being poor, this is backed up by the numerous poor ratings by frequent travellers on websites such as airlinequality.com
Geordie is online now  
May 25th, 2011, 10:17 PM
  #24  
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Thanks, Geordie... Allow me to take out my calculator... The $200 for RT Frankfurt-Amsterdam-Nice covering a total of 1,668 miles is showing me a 12 cents per mile, much less than the calculation for the FRA-PRG RT flight. Using this rate, the RT ticket ORD-SFO s.b. $440.- and not the over $800 as J62 calculated, based on our other flight.....

So for very comparable airfares, European carriers are offering more, while struggling the same as American carriers --- and I'm not even sure of that, considering us paying DOUBLE for fuel in Europe....

But I'm a bit surprised that some here are so "shocked" reading my post, as if I am the first and only "unpatriotic" to raise the issue of the deterioration in service quality of American air carriers, and the creative ways they find to charge their customers for things they would've never dared before.... The issue is well known and has been discussed everywhere. I brought the "sandwich" story here only to show one more, and for us also a surprising example, while we're all getting used to fly 4-5 hours, being fed some pretzels and a Coke.
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May 26th, 2011, 12:00 AM
  #25  
 
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To say there is more competition in the US than in Europe is just nonsense. There are more low cost carriers in Europe than you can shake a stick at, each country has at least one full service airline, plus the airlines have to compete against a fast rail system. In the US, the opposite is happening, less competition as airlines merge.

This is an inaccurate portrayal of the competitive landscape both in the US and Europe. For starters, there has been as much, or more consolidation in Europe as the US. Europe has 3 major network carriers, AF/KL, the Lufthansa Group, and IAG (BA/IB). The US, by contrast, has 4 such carriers, with the top 3 larger than any of the major European groupings. Europe also has 2 major LCCs (Ryanair and easyJet) and Air Berlin, which is a hybrid carrier. Southwest, alone, carriers roughly as many passengers as Ryanair and easyJet combined. JetBlue also offers capacity roughly half that of easyJet, only about 1/6 less than Air Berlin, and more than double the next largest European LCC (Norwegian).

The rest of the LCC field in Europe is highly fragmented, and dominated by weak carriers (financially) with minimal route networks. GermanWings, which is one of the larger carriers of this class, has a fleet of 30 small planes. For comparison, Allegiant Air, a US carrier specializing in flights between small cities and tourist destinations, has a fleet of 52 planes, most with greater capacity. These smaller European LCC carriers come and go (Cimber Sterling looks to go under this month), and are hardly a threat to the majors on any significant routes. It is more accurate to say that they compete with (and are often allied with or descended from) charter carriers.

As to the question of having a major carrier in every city, this is exactly the point. There is A major carrier in the major cities. LH controls FRA, ZRH, VIE, and MUC. AF/KL controls CDG and AMS. BA/IB control LHR and MAD. SAS (roughly the same size as similarly-profiled Alaska Airlines in the US) controls CPH, ARN, and (to a lesser extent) OSL. The key US markets are much less concentrated, with the biggest markets (LAX, NYC, and Chicago) seeing robust competition, with no carrier dominating. Those hubs that might be called fortress hubs (MSP, for example) are in lesser markets than the major European hubs.

As to the competition from high-speed rail. This overstates the case. For the sort of travel where high-speed rail is competitive, the US carriers see competition from road transport, or even rail in the valuable Northeast corridor. Air travel in the US dominates because of distance between population centers, and similarly spaced cities in Europe would see air travel as the logical choice. For example, the busiest air travel route from MSP airport is Chicago. This is a distance of 334 miles, as the crow flies. A similar journey between major cities in Europe would be Frankfurt to Milan, which is over 7 hours by train, far beyond the 4-hour competitive limit for train travel.

But I'm a bit surprised that some here are so "shocked" reading my post, as if I am the first and only "unpatriotic" to raise the issue of the deterioration in service quality of American air carriers, and the creative ways they find to charge their customers for things they would've never dared before.... The issue is well known and has been discussed everywhere. I brought the "sandwich" story here only to show one more, and for us also a surprising example, while we're all getting used to fly 4-5 hours, being fed some pretzels and a Coke.

I don't think you are being unpatriotic. I think you are overstating the value of a $2 sandwich or $0.50 cookie. Those of us that disagree with you simply prefer buying our own food, either from the airline or in the airport, because this provides both better selection and better quality. Even when traveling in international business class, I often eat at the airport, simply because in-flight catering is so often bad.

You also seem stuck on the notion of the sandwich being the only measure of service quality. I, at least, rate this incredibly low on the scale, well below in-flight entertainment and in-flight internet. For certain travel, I also value the presence of real short-haul premium classes, with larger seats. Heck, I find the extra legroom seats on JetBlue to offer a better overall experience than short-haul business class on ANY of the major European carriers.
travelgourmet is offline  
May 26th, 2011, 06:43 AM
  #26  
 
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Is American going to offer Economy Plus? United and Continental are or will, and Delta is offering it.
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May 26th, 2011, 07:33 AM
  #27  
 
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You make a fairly bald statement, based on your personal experience of 6 recent flights, and then get your shorts in a knot when some of us think what you say is just that - personal and shortsighted. No one said you were unpatriotic, nor are we shocked by what you say. Your premise and the title of this thread are just oversimplifieded. Fine, you had a point, you made a point, and you don't like the answers. But I don't think you can trash an entire industry either.
socaltraveler is offline  
May 26th, 2011, 10:15 AM
  #28  
 
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to me it's a matter of SERVICE.

This is a serious question -- what constitutes the "service" that people think is so awful? So far I've heard 1) free food, 2) WiFi, 3) entertainment system. What else is it that makes some airlines better than others in your opinion? (I'd also like WiFi and a good entertainment system....other than that, I'd like a good pilot and I'd like to get to my destination with "no fuss no muss". I don't care about the quality of the food, I don't want someone tucking me in for my nap, etc.

<<>>

What does this even mean?
sf7307 is offline  
May 26th, 2011, 11:49 AM
  #29  
 
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<<>>

What does this even mean?


It means some people simply don't understand the concept of Chapter 11 bankruptcy. They don't understand what it entails, or how it differs (or doesn't differ) from liquidation. They don't understand that Chapter 11 bankruptcy requires that the firm show that proceeds from continuing as a going concern are likely to exceed proceeds from a liquidation. At the end of the day, the only concessions received by companies in Chapter 11 are concessions from creditors, which would be the same "subsidizers" in a Chapter 7 filing. Frankly, the self-righteousness some show about Chapter 11 is more than a bit silly and uninformed.
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May 26th, 2011, 05:46 PM
  #30  
 
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<>>

What does this even mean?>>

I'm not sure if TG's response to this was him being simplistic or ignorant, but I'll give an example.

Some Airlines used Chapter 11 as a strategic tool, take Northwest, they had $1 billion dollars in cash and enormous lines of credit but at a time when the majority of analysts rated them a buy, they suddenly went into Chapter 11 (on the same day as Delta). Why, because they were able to tear up labour agreements, pension liabilities, and rid themselves of substantial debts, not too mention costing investors millions / billions, while keeping the same management in place.

For those airlines that didn't go into Chapter 11, such as American or overseas operators where this type of law does not exist, they feel that their competitors gained an unfair commercial advantage.
Geordie is online now  
May 26th, 2011, 06:19 PM
  #31  
 
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I still don't know what subsidies you're referring to.
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May 26th, 2011, 09:47 PM
  #32  
 
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<>

Maybe you should get a job a Boeing or Airbus.

I actually referred to it as a 'form of subsidy'.

You can call it what you want but when airlines such as Northwest can make use of Federal Laws, such as Chapter 11, the Pension Protection Act and the Federal Pension Benefit Guaranty Corp to substantially reduce their liabilities, then a 'form of subsidy' springs to mind.

If you were an airline like American that actually paid its bills, what do you think they would call it.
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May 27th, 2011, 12:00 AM
  #33  
 
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May 27th, 2011, 12:26 AM
  #34  
 
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Some Airlines used Chapter 11 as a strategic tool, take Northwest, they had $1 billion dollars in cash

You do realize that one can have cash in the bank and still be bankrupt, no? You do realize that, during 2005, the year NW declared bankruptcy, they used almost half a billion dollars in cash for operating activities? You do realize that, when you are talking about a company with some $13bn in operating expenses, that $1bn is not a lot of money in a period of negative cash flow? You do realize that credit card companies were considering holding back payments of cash to NW?

and enormous lines of credit

In what way does drawing on lines of credit improve your solvency? Isn't bankruptcy a situation where your liabilities exceed your assets? How would adding cash, but adding an offsetting liability improve that situation? The only way that drawing on the lines of credit would improve things, is if a) the new borrowings were at lower rates of interest than current borrowings, b) if one expected the cash flow situation to turn positive, c) if one expected to be able to raise capital in the near future.

at a time when the majority of analysts rated them a buy

Which analysts? Frankly, I suspect that this is simply incorrect.

they suddenly went into Chapter 11 (on the same day as Delta).

Sudden? Perhaps to those that did not open a newspaper, but not to anyone with even a passing knowledge of the situation. It was a matter of when, never if.

Why, because they were able to tear up labour agreements, pension liabilities, and rid themselves of substantial debts, not too mention costing investors millions / billions, while keeping the same management in place.

Are labor contracts not analogous to future liabilities? If the value of future cash inflows will not fund the cash outflows to cover those contracts, aren't you pretty much bankrupt? More importantly, how does this differ from Chapter 7? If they went through liquidation, the creditors would have certainly lost money. The shareholders would have lost everything. Management may have been out of a job, but what would have prevented a new investor group from hiring them and buying up the assets at a discount to run a new NWA? Again, do you have evidence that a Chapter 7 filing would have provided a greater return to creditors than continuing to operate NWA as a going concern? Clearly, the courts disagreed.

For those airlines that didn't go into Chapter 11, such as American

That was hubris on AA's part. I don't see how they can continue to lose money at the rates they are. I think they only forestalled the pain.

such as American or overseas operators where this type of law does not exist

How does this differ from a controlled sale? Did not Alitalia use bankruptcy to shed onerous costs, and then have the potentially valuable assets purchased by other investors? How does this materially differ from what NW did?
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May 27th, 2011, 01:15 AM
  #35  
 
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I found the discussion on sandwiches more interesting.
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May 27th, 2011, 09:32 AM
  #36  
 
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<<>>

I don't, but I still think this is funny
sf7307 is offline  
May 27th, 2011, 04:42 PM
  #37  
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Forget my darn stupid sandwich (though it was fresh and tasty!). This is becoming an interesting, and very intelligent discussion.

And it's all thanks to ME!
mamamia2 is offline  

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