US airlines – the good times are already over…

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I’d like a dozen but I don’t want to pay for them….

During my career I learnt within a very short time that when a company did well its bosses liked to say and/or do something, usually a public statement, coupled to some gesture of extraodinary munificence towards the staff, as a personal-corporate boast as much as a thank you. By the third time, I was ready with how to handle it, the fourth time I saw this coming so clearly that I spent months making sure that when – not if – it happened, while the company might loose its shirt, I’d be fine.

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American’s Doug Parker

US Airlines have been promising a great deal lately. Americans Airlines boss Doug Parker said he actually thought the company would never make a loss again.  I doubt such a stupid comment has been made this year to equal it. Someone is going to regret that one sooner or later, and his name is Doug.

 

The last quarter has seen huge profits, though not quite the vast profits the airline were hoping for. Climate change related weather and the trail of hurricanes not with standing, the warning lights in the tertiary and secondary systems are starting to suggest the core business isn’t quite as stable as it should be.

Airlines are splurgers. they spend years cutting costs, then they make a load of money and suddenly, from the days when authorising the use of paperclips required CEO approval, everyone is ordering them by the bucket.

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United’s Hector Munoz

IT systems that have been neglected need upgrades, at the same time billions of dollars of new aircraft need paying for and major airport upgrades to make extracting money from passengers even easier are required. And staff uniforms, and bonus payments, and the training we never bothered with for years and now desperatly need. If not we could face some terrible incindent where staff beat up a dentist, dragging him from his window seat and leave him concussed and bleeding so we can make way for our own staff.

And then the one thing we can’t control – aviation gas – that’s gone up 24% in the last year.

The real costs though have been new contracts, paying for pilots and cabin crew. They don’t seem to want to work for peanuts any more. They seem to think that after nearly a decade of low pay, no pay rises, big profits following Chapter-11 escapes by their airline employers, denuded pension funds and avoidance of comitments, high executive pay and no perks, that they might be due a slice of the cake too.

Airlines don’t like it. Having come up with almost every conceivable way to extract money from you for daring to take luggage, they’re now looking at cost cutting again. American Airlines is introducing Project One Airline – it seems they have a lot of duplicated systems from the merger with US Airways, and they want to save $1 billion before 2021. They only just found that out after how long?

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We want one, we want it not, we want one, we want it not…

The problem is that rising costs = lower profits because of one reason only. Too much capacity = low prices. The capacity issue is spread across the US airline industry, no one airline is at fault, but with seats to fill prices are lower, aircraft are full of low profit ticket holders, and the margin is shrinking.

There is no sign of that pressure going away. People want to travel, but they don’t want to pay more than they need to, they’re getting adept at cutting corners to avoid higher baggage charges, business travellers are being incentivised to travel economy by their employers.

Airlines made their own bed. Like greedy children they grab what they can until they can eat no more. Then they look at everyone else like it’s their fault. Unaffordable aircraft, just refuse delivery. Uniforms that make you sick? It’s all in your head. Customer service that really cares? Have a nice day y’all.

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