Stephanie

This is my belief. Delta is trying to make other airlines go out of business by announcing that it is cutting its airfare 60%. The airlines in general can't even survive now financially with a union representative for flight attendants, of United Airlines, who was on C-span stating that the airplanes are full, but with the low cost airfares they make no money. It sure is good for the consumer in the short run but in the long run we are the ones that are going to suffer with super inflated airfares in the future due to lack of competition.




Then only the survivors of this cut will be the major airlines and they will jack up the prices big time because they have eliminated many of the competition.

Intrepid1

I disagree..Delta is simply trying to STAY IN business by cutting airfares.

It probably wouldn't hurt if a couple of companies DID liquidate but as one analyst on Wall Street stated this past weekend, don't hold your breath waiting for USAirways to liquidate as there are many, many creditors, etc., who know it is in their own best interests if that airline continues to operate.

I'll gladly snatch up a "low fare" and take my chances later with the so-called lack of competition.

Ryan

If Delta is cutting fares to force someone out of business, it might very well be Delta they force out. Delta's financial position is precarious and their union contracts are just as expensive and restrictive as the rest of the industry.

While I haven't looked at this in depth, I would suspect what Delta's done is selectively cut fares by 60% which generates some buzz and some nice free press. I can't imagine that Delta can fill enough seats and reduce expenses sufficiently to offset a fare cut that substantially impacts their revenue line.

This is the same consumer psychology move that retailers have used for years. They offer "50% off" without telling you that they bumped up the original ticket price to make the bargain look better.

k_999_9

I always chuckle when someone cites, for instance, Delta and some long-range sinister plan they have for cornering a market.

What, exactly, in an airline's history would make you believe that they're smart enough or crafty enough to develop a profitable long-range plan? These people couldn't develop a long-range plan to run a gas station, let alone an airline.

nancy161

Did anyone purchase tickets from US Airways in the past couple days?

sarah1122

Sorry but I have to vent...does anyone (with any power) care that STephen Wolfe is getting rich off destroying airlines and the lives of their employees? He was formerly with UAL and took it down the tubes. Now the retired pilots are faced with losing all of their medical benefits and their pension...and 70+ is a little old to start looking for a new job because he's taken them to the shitter. Now he is heading USAir in the same direction, and soon I predict (although I hope I am wrong) the USAir retired pilots will be fighting for their hard earned pensions too. MEanwhile, this boob is being paid millions and getting multi-million dollar severance packages. Funny...I'm a director of a company not nearly as big as these airlines...but my responsibilities are the same. I am responsible for the financial success of the company, and if I fail, there is no doubt that I will be fired, and without a severance package. I have a responsibility to the shareholders and the employees to keep the company operating in the black, and I am rewarded for doing so. I will never be rewarded...and most greatly repremanded...for operating in the red and running the company into the ground. Not only that, but on a more personal note, I could never live with myself knowing that I had destroyed the lives and financial security of so many hard working individuals. Why can't the bankruptcy judges see this? I think it is awful what the corporate mindset has become in this country...put bluntly...it is more or less a "hurray for me f you" attitude. How tragic and sad. UAL now aims to terminate immediately the pensions of all retired pilots. These former employees are in their 60's, 70's and 80's and are having to scramble and find jobs and find a way to buy medical benefits. Some are putting their homes on the market. Yet the CEO takes no paycut, and the severances of former CEO's stays intact. I think its sick!

Ryan

Sarah,
You have part of the story on the pensions, but not all. A company doesn't have the right to simply cancel a pension plan.

The process required to do that requires multiple court rulings and a lengthy fight on behalf of the pensioneers by the PBGC, the Pension Benefit Guarantee Corporation.

The PBGC was put in place to protect pensions. It has functioned well to date. However, the airlines threaten to overwhelm the system.

The other part of the story is that a pension, and by that I mean a Defined Benefit Plan, doesn't go to zero, even if cancelled. What is at risk is typically the difference between Plan Assets and Accrued Liabilities. Plan assets are usually safe, accrued liabilities represent the service credit that has been earned, but not yet funded.

In terms of the disparity between the rank and file and the CEO, certainly there are issues. However, I don't think this forum is the right place to discuss the history of labor management relations the relative merits of a CEO.

Dan

Stephen Wolfe left USAirways several years ago. He's responsible for some, but not all, of the mess.

GoTravel

Considering this post is almost 3 years old.......