Airline Industry

bertengineer

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How do you perceive the future of the airline industry for the next few years?
 

TurboS7

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Go Figure

I just did a review of all the airlines. SWA is the only airline that hasn't laid anyone off and is expanding. At this point SWA is the only airline that I would consider. What people and pilot's don't realize is that the airline industry was in a world of hurt prior to 911. If you checked the load factors they had been on a steady decline and quarterly profits had slipped immensly in the two quarters prior to 911. I heard some one say hey there are so many pilots retiring that they will have to hire. Not so, out of a senority list of 11,000 this will be reduced by 20%. The retirements over the next 10 years will be 18%, so you figure the math. I would go look for a good corporate job, the bubble is burst and you guys will have to pay your dues the way we did in the 70's. Enjoy it.
 

habubuaza

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I believe the airline industry will be changed dramatically over the next few years. The majors have blown it. Especially the likes of United and American because they were in serious over expansion modes and now look at them. Unfortunately they were the most affected by 911. American as I understand was in the process of negotiating their insurance premiums for the next fiscal year when 587 happened, so right now they along with other's are in survival mode. The buzz on Wall Street is that America West and Us Airways are the most likely to tank within the next 18 months. I agree with the previous post. SWA is probably the most fit of the passenger major airlines. Also, Jet Blue and Airtran seems to have figured this whole industry out and are doing quite well and will probably do well for at least the forseeable future.

The air cargo industry is where most of the explosive growth is predicted to take place over the next 10 to 15 years. If you are interested in maximizing your income over your career, and minimize your chances of getting furloughed or being a casualty of an airline shutting it's doors then air cargo is probably a safe bet. FYI, Atlas Air last year prior to the death of Michael Chowdry had been in business for about 8 years. They operate 747-200F's and 400F's. Last year they were listed for the third year in a row as the most financially fit airline in the world. So as you can see the potential in air freight is phenomenal. Well good luck to you.
 

TurboS7

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Atlas

Atlas numbers look good but from what I hear the new management are compromising the airline on the maintenance end. In light of that breakdown of QC they may get in trouble with the FAA, or worse yet loose and aircraft due to poor maintenance. Of course this came from a laid off ex-Atlas QC manager so put all that in perspective.
 

habubuaza

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That sure would be a shame, but nevertheless a typical scenario.
h
 

publisher

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State of the Industry

The concept of the majors has been to be all things to all people. Fly everywhere, International aspect, regional partners, etc. In a cyclical world, it is hard to respond to a market that changes dramatically all the time.
The Southwest mentality is serve a niche and do it well. This has served Alaska, JetBlue, AirTran, and others well. Keep it simple. Do it well. Pay reasonably, treat people well, know your customer. Good philosophy in any business.
This does not mean that the majors will go away, just that they need to adjust their thinking and that they need to convince their labor that their model will die if it does not change.
Septembrer 11 will drive more companies to fractionals, more charter, less commercial business travel. More corporate aircraft, more personal aircraft.
The inspection of baggage and freight will drive belly freight into the cargo carriers. They will do fine in this new world.
These things are not a matter of give backs, they are a matter of fundamentally changing the way of business for majors. They cannot fight the niche players the way they are trying.
 

Snapperhead

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I'm not sure I totally agree. The tradegy that happened on 9/11 is a situation that has never happened before in this country, and its impact will be hard to predict for the airline industry. IMO, as consumer confidence grows in the economy and also in the airlines and their security, so will the airlines start to return to their previous levels. They understand that you can't make money by shrinking your business. Eventually passengers will return. The fractionals are taking off;but, where is their security? You just jump out of your car into the a/c. Business travellers, whom are the bread and butter of most airlines, will return soon.
 

itsme

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Turbos7, do more homework before telling someone about the airlines. SWA is not the only airline not layingoff pilots. AirTran is not only keeping it's pilots but also HIRING. I am sure with a little more homework, we could find others doing the same. If SWA is your goal and the ONLY one you would go to, fantastic, and good luck, however keep your options open. you never know.
 

publisher

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Right

The point is that there are so many variables at play now, the return to the past normal is somewhat unlikely. Certainly not impossible, just unlikely...
To draw a parallel picture, think of it like TV. Once there were some majors. They divided up the market. The one with the best market share won and had the best opportunity for profit. Today, that same network may have the same market share against the competitive majors. The problem is that they have all these niche players that have taken a piece of the pie. In short, the basic determination of who is now a major has changed. They are still a major, may have the same market share against the guys they consider majors, but, their share of over all has changed.
Ask United how quickly business travel can go away. This is a consumer business,,, they just do not come back because they do not have any other way, they come back because there are changes. Changes like airline personnel realizing that the customer pays the bills. Seats that have some leg room. Service. Something like SWA found out along time ago.
 

TurboS7

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I was talking about Major airlines, AirTran is still a national airline, along with JetBlue.FYI
 

hawkerjet

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The state of the airline industry currently is confusion and disarray. Many of the major's are suffering because they grew too large to manage effectively. Since Deregulation we have seen the hub & spoke system replace origin & destination (O&D) schedules. While there are a few O&D markets left most flights go through hubs and feed themselves to other destinations. It 's almost like an offshoot of Fred Smith's game plan at Fed Ex. The successful major airline of the future is learning from the past. A great deal of SWA flights serve markets not served through Large hubs. They serve many O&D city pairs. Newcomer Jet Blue is out of the gates fast, but only time will tell. Correct me if I'm wrong, but the key management positions at JB are held by ex-SWA folks. You can see many similarities between SWA and JB from a business profile sense. I believe there will be several new carrier's started in the next decade following this business plan. I hope the growth in the airline industry does not come through merger's creating oligopolies. That would be bad for consumers overall. Some airlines have gotten so large,that they effectively hold the public hostage when there is a threat to strike and the govt. has to step in in the name of national commerce. ( Please no comments about the necessity to strike on certain occassions, I believe the unions do serve their brother/sisterhood much better With than without) The point I am trying to emphasize here is that some airlines have grown too large for their own good. I look forward to new entrants into the industry and hope they have the wisdom and financial wise that the better carriers have.
 

DCitrus9

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Actually Turbo, you never stated "major" airlines in your original post. You said "all airlines." Airtran announced expansion and hiring even before SWA, fyi.
 

publisher

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further details

Hawkerjet,

Actually the Jetblue team were originally Morris Air which was purchased by SWA.

Prior to forming Morris Air, if my senior memory is not too faded, they were a large travel agency catering to the Mormon community. Somewhat like Apple vacations is doing with USA3000 today, they created their own airline after having I believe Ryan fly their routes.

Your example of Fedex is even more interesting than you think. They started as a one hub operation. Everything went to Memphis. As they grew, that became a problem and today they have adapted. Considerable amounts of their packages never see an aircraft and some not even a hub. They adapted. In the airline world, American under Crandal did the absolute best job of adapting after de-regulation. Whether you like it or not, his "B" scale concept was genius from a business standpoint. At the time, some AA people said he was a "blank" but at least he was their "blank"

That is the leadership the industry needs now.
 

TurboS7

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Mr. Citrus since you seem so smug about having a job are you enjoying that 20% pay cut????? Last time I did that the airline was doomed, it can happen to your little one in a hurry. Just ask Joe Lenord.
 

likeitis

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Actually I believe thay took a 15% pay cut which has snapped back to their original pay on Nov. 1st.
 

Ty Webb

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AirTran

Turbo:

We gave up 9%, and it ended 10/31. Not a big sacrifice, in order to keep everyone working. Probably cost a third yr. Capt. less than $900., and a 2d yr F/O about $500.

There will always be some disagreement on this issue, but I would rather work at a company where the senior guys will take a temporary pay cut to keep the junior guys working, instead of carrying on about "upholding the profession" at $275K a year, while a newhire is furloughed for two years, working at Home Depot. Yeah, that's upholding the profession, alright. Ya want fries with that?

I realize some guys think that it ain't worth having if you don't make Senior Widebody Skipper and break $300K/yr but I think we are getting decent pay and job security for what we are doing, and, dammit, I'm having fun doing it!

Things look good here. Hiring started started Nov 5th with a class of 14, and then 24 more started after Thanksgiving, and yet another class has been announced, starting later this month. I've been hearing at least 24 a month for 2002.

We've got a decent contract, new equipment arriving faster than we can staff it, adding pilots below me instead of furloughing, I think we're doing OK.

How're things going for you guys at ATA?
 

TurboS7

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Anybody else with some good insight on the future of all our career's?????
 

TurboS7

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Guess we have beat this one up enough, time to let it go to the back burner.
 
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