DMBTraveler

Here is another benefit of US airline deregulation and poor airline management. Like United, Us Airways, Northwest and Delta, American Airlines is making its employees pay the price for the poor decisions of its multimillion dollar a year CEO, CFO and hundreds of VP's of “This And That”.

Again, employees in the airline industry through oppressive working conditions will be asked to bear the brunt of the effort to “save the airline”. And no doubt their sacrifices will be rewarded by American CEO and others walking away with millions in bonus like what happened at the now deceased Northwest Airlines.

Some still blame airline woes on 9-11, the high cost of fuel and everything else except poor management. However, the railroad, trucking industry and many other companies are just as sensitive to the price of oil and the economic fallout from 9-11. Amazingly, many of these companies have still managed to turn a nice profit year after year. Ummm... pass your product cost onto the consumers.

This happens not just in the railroad or trucking industry. A 20oz bottle of Coke that cost $0.79 ten years ago now sells at Wal-Mart (The Low Price Leader) for $1.49. By comparison, airlines tickets today are still cheaper than they were twenty years ago. If I travel with a carry-on, I can fly round trip from Florida to New York for less than $300. This is insane when I pay $3.85 per gallon for gasoline.

I am not advocating that airlines make the cost of flying prohibitive for the general public (a good portion of whom seem to have no problem paying $4 at the airport for a 12oz cup of coffee) but the model for airline ticket pricing is broken and needs to be fixed. Had the industry addressed this situation a long time ago I imagine many of them like United, US Airways, Northwest, Delta and American would not have gone bankrupt.

Airline employees and their families would not once again be paying the price for poor management decisions.

Iowa_Redhead

http://www.nytimes.com/2012/09/19/bu...offs.html?_r=0

They sent warnings to 11,000 but expect actual layoffs to be closer to 4,400. That still sucks but it's not near as bad as 11k.


>>

That $3.85 would be split about 1-6 ways, depending on your vehicle and if you have anyone traveling with you. The fuel for the flight is essentially split 50-150 ways.

>> That's not just due to increases in costs, but also a slow jump in prices because people will keep buying the product. They're trying to find the peak of the bell curve... how high can they push the price before purchases drop off enough to stop making more money?

The bell curve for the airlines is very tight (depending on the route)... they have to charge X to meet their minimum bills, but people don't want to pay more than Y per seat, they'd rather drive or not go.

DMBTraveler

Iowa-Redhead

Believe me when it is all said and done it will be closer to 11K as they are looking to get rid off 4,400 mechanics alone

If there were 4 people in a car driving to NYC and back maybe we would save some money. However, at minimum it would be about 42hrs of driving, 2 nights in a hotel and about $340 for fuel plus tolls and meals... Best guess $600.

I would buy your "peak curve" argument except it does not quite explain consumer spending habits. Companies through proper marketing can determine whatever price they want consumers to pay for their products. Iphone5

On the other hand airlines in the past have devalued their product for the sake of a false market share concept.

Continental years ago had "Peanut Fares", your companion flies for "A Penny".

Southwest comes into a market and offers $29 dollar fares when it cost you more than that to park at the airport.

Skybus (Deceased) offered to fly consumers from Ohio to Florida for $10.

IMO, All poor management decisions.

Consumers are not willing to pay more for airline tickets because airline management have trained them to expect to pay less.

On the other hand, Apple has consumers lining up by the hundreds, sleeping on sidewalks to purchase their latest product which after all is still just a phone

kenav

Ah, now I understand why our flight home from Quito (to NY) was cancelled earlier this month and why we had to be rebooked and it took 4 flights to get us home. And what a mess it was at the Quito airport.

Luckily, we were rebooked on Avianca for the Quito to Bogota, Bogota to Cartagena and Cartagena to Miami flights. More leg room, meals on all flights no matter how short. Then on AA again from Miami to NY. What a difference! Squeezed into tiny seats and "food for money".!

julia1

"Consumers are not willing to pay more for airline tickets because airline management have trained them to expect to pay less."

IMO, the crux of the problem. Consumers want more and more for less and less. Airlines struggle and do what they think they must do to attract customers, but what it usually comes down to is lowest price wins. Price is the deciding factor for most, when I poll my friends asking how they determine which airline to choose. Airlines have become the Greyhound buses of the sky.

DMBTraveler

kenav,

Unfortunately, American and United are not the best places to work right now for employees and I think you will see it reflected in their operations and customer service.

I applaud the employees at these airlines that still give 100% and put a smile on for their customers.

Poor management has put both employees and customers in some unfortunate and difficult situations

DMBTraveler

julia1,

So true. But I wonder if your friends will go to the cheapest doctor, mechanic or coffee shop.

At least some airlines are trying a different approach, good service. Besides the cheapest airfare does not end up always being the best deal. Two or three hops to get from point A to B is not always worth the $50 bucks save.

kenav

SO, do you think it would be best not to fly on AA in the next few months until we see what's going on with this airline? I was thinking of going to Switzerland in May using AA miles, but now wondering if the panes will be flying considering all their cancellations.

I really don't want to have to worry (more than usual) about our plane being cancelled. Who's going to fix the planes if so many mechanics get canned? More mechanical failures = more cancellations?

DMBTraveler

kenav,

I do not know how far in advance you have to make your plans but I believe American will have employee and operational issues into early next year.

Also in December AA is expected to announce whether it will merge with US Airways which can also bring it's own issues to the table.

I know the pilots are in the process of seeking a strike vote but this can be a long process that requires government involvement. The pilots and other employees at American are not particularly happy now working under management enforced oppressive work rules.

For must travel situations, I would be cautious and flexible in flying American. The "Catch-22" for them is that this is a time when they need all the customers they can get.

If you do fly them, have patience if things don't go as plan. Don't take your disappointment, if any, out on their employees, direct it to their poor management team.

For the sake of American employees and their loyal customers, I hope they get their act together quickly.

LBloom

Just be thankful if you fly from a competitively priced market. Try flying from CMH or some other small town where there are few options. Your airfare goes up drastically. Fortunately, AA is not a big carrier for us.

kenav

Again - how do they manage to keep general maintenance up and fix their planes if they're laying off 4,000 mechanics?

bettyk

Well, we're flying AA to Hawaii in 2 weeks so I'll let you know how that goes.

We also have tickets on AA next May to Prague. Hope things get worked out by then.

DMBTraveler

LBloom,

Yes, competition is good in any business and usually price is not the only thing that sets one company apart from another.

Airline ticket pricing should be no different than any other product or service. Low demand, low prices. Short supply, high prices. I realize that there are many variables that go into airline ticket pricing but IMO it should be the exception not the norm to fly from Florida to NYC for less than $300RT.

DMBTraveler

kenav,

Like your car, airplanes have various scheduled maintenance items that are addressed outside of the airline normal daily operations. For example, airplane engines can be changed overnight while the airplane has down time at any airport with the personnel and equipment to do so.

Many of these types of issues for many years have been outsourced by many airlines. If American lays off thousands of its mechanics then there would more likey just be more outsourcing.

The problem with this is that although contract mechanics are licensed they often lack the experience and expertise to work on a particular airline type of airplane.

It's is like having a factory trained mechanic work on your Lexus compared to a mechanic that just has general automotive knowledge.

While doing this is legal and not unsafe, you would notice the difference between mechanics if a maintenance issue occurs during regular flight operations. One mechanic may make a repair faster than another because of his/her experience and expertise.

Dayenu

I am the consumer who "expects more for less" - only I call it "free market competition" - and don't blame AA's failures on me alone!

I made my next reservation with AA. I didn't choose cheaper Delta as that schedule is less convenient. Paying for convenience - my choice. And what did I get for this? Additional charges.

$25 per bag - can't go on a cruise with a carry-on only. Food is not served at all! Flying SFO (San Francisco) - SJU (Puerto Rico). So I am forced to spend more on food.

Now if you add to this delays and lost luggage... Are you still blaming us, passengers?

DMBTraveler

Dayneu,

"Free market competition" is great and in my opinion the way to go in any business. Unfortunately, airlines do not operate in a "Free Market" despite being so called deregulated.

Government rules, regulations and so called "consumer protection measures" stifle many airlines ability to operate in a true free market environment.

For the reasons stated you made your choice to fly AA and I hope the circumstances you encountered did not come as a surprise. I would never blame consumers for airline woes as in my opinion most of an airline troubles come from poor management.

However, it can be argued that on some level consumers share some responsibility for all the "extra" fees. Consumers want "low airfares" and airlines have given it to them.

For example, Spirit advertises a $29 one way fare plus fuel surcharge plus government fee and taxes, plus baggage fees, plus charges for on board food and drinks. Despite all these additional fees, Spirit still flies full loads of passengers. Presumably most of them are happy because they got a $29 "low airfare".

BTW, I applaud the way Spirit does business because they lay out all of the airfare charges and extra fees including government taxes so you know exactly how they come up with your ticket pricing. The rental car company approach where a $12 a day car ends up costing you $30 a day after all the other taxes and fees are piled on

dutyfree

As an airline employee with a major US carrier and someone who has been working since before deregulation,all I can say is that it was the worst decision ever made for the traveling public.Our pay is back to what it was 10 years ago;pensions have been totally lost,we have to work with less people yet do the same job-well you get the idea.Very sad indeed!

I laugh when people complain about the service overseas on US carriers because the US carrier uses 11 flight attendants on their B777 flights while a carrier like Emirates (subsidized by the government) has 17 flight attendants? Definitely not like comparing apples and oranges eh?

DMBTraveler

dutyfree,

Only politicians and those that do not know or understand the inside and outside of the industry might disagree with you.

I agree with you that deregulation, "Thanks, Jimmy", has not been good for the airline industry or its passengers.