Dereuglation of airlines....so that's what we wanted?

[Sara Beverley]

Jimmy Carter's legacy. I think it was a mistake. Remember when planes were on time, service and food was good, host and hostesses were neat and nice? What happened. I know de-regulation was supposed to be a good thing but has it been?

Government seems to deregulate the things it should regulate, like public utilities, airlines, railtransit, and banking. And it seems to regulate the things it should deregulate, consensual sex, libraries, woman's control over her body, to name a few.

Well, for all you lovers of corporate deregulation I think government subsidies should cease for all businesses that can't make it in the not-so-free market. These airlines are going under after huge government bailouts!!! A small business owner couldn't do that. Just ask the Black farmers who haven't received anything to help them hold onto their family farms after food conglomerates have receive huge subsidies to keep food prices at certain levels. I am about to adopt and very sheltered life style of "buy no more and fly no more."

[Sanity Claws]

1. Everyday there is more reason to avoid flying

at least in the US. The patdowns were a real deterrent to flying, then this mess over the holidays.
If I plan overseas travel, I plan to fly out of Canada in the future. I live close enough to Vancouver to have that as an option.

[wormhole]

30. I dunno - let the bad airlines die off, good ones will replace them!

I only fly Southwest Airlines if i can help it, they're cheap, on time, and never have problems.

So what if the big centralized old world airlines cant handle the new economy.

Facts are - airline travel is now a commodity, the old big airlines can't adapt, so they die. that is business.

This is typical of change.

[Silverhair]

2. Deregulation brought greatly brought down the price of airline tickets.

I think that is a good thing. I agree that there should be no bailouts. If an airline is mismanaged and goes bankrupt, well so be it. That is the punishment for bad management.

[CatholicEdHead]

3. Southwest model

is closer to the WalMart model than anything else.

It fits for some people, but that would make the workers even more "serfs" to their bosses.

Even now on commuter airlines, pilots are paid a starting wage of around $10-12K/year. I expect the ground crews to be paid nearly the same or less.

[Silverhair]

4. I have a hard time believing that.

You aren't going to be able to hire a jet pilot, or any pilot that cheaply. Starting truck drivers make more, and the OTR drivers are NOT unionized. LTL drivers are unionized, but that is a different deal.

[ret5hd]

8. american eagle pilots...

(the commuter arm of american airlines) are eligible for food stamps but are disciplined if the company inds out that they actually applied.

[CatholicEdHead]

9. Yep

From Michael Moore's book Stupid White Men

As I'm sitting in a Michigan airport waiting for my American Airlines flight to Chicago, a man in a uniform sits down beside me and strikes up a conversation.
I learn that he is actually a pilot, for American Airlines-or more precisely American Eagle, the commuter airline of American Airlines, which like all commuters these days is now adding jets to its fleets for flights of under two hours. This saves the parent company lots of money, I guess.
The pilot who has approached me is not scheduled to fly the plane I'm on. He's hoping to grab an empty seat for the flight across Lake Michigan.
"Do you have to pay to fly if it's a personal trip?" I asked.
"No," he replied. "It's about the only fringe benefit we have."
He then revealed that the starting pay for a pilot at American Eagle was $16,800 a year.
"What?" I asked, sure that I had misheard the figure. "Sixteen grand per year?"
"That's right," the captain responded. "And that's high. At Delta's commuter airline, starting pay is $15,000 for a pilot; at Continental Express, it's around $13,000."
"Thirteen thousand ? For the captain of a commercial airliner? Are you messing with me?"
"No, I'm not messin' with anyone. It gets worse. That first year as a pilot, you have to pay for your own flight training and your own uniforms. After that's all deducted, you end up with about $9,000."
He paused so that could sink in. Then he added: "Gross. "
"I can't believe what I'm hearing." My voice was now getting to a level where others around us began listening in.
"Believe it," he assured me. "One of our pilots last month went down to the welfare office and applied for food stamps. No kidding. With four kids, at his level of pay as a pilot, he was legally eligible for assistance. The front office at American found out about this and sent out a memo that said no pilot was to apply for food stamps or welfare-even if they were eligible for it! Anyone who did apply would be let go.
"So now my buddy just goes down to the food bank on his way home. They don't ask for anything from you that would get back to American Airlines."
I thought I'd heard everything by now. But t-his story was beyond frightening. I did not want to get on that plane. You see, there's something about us humans and our basic animal instincts for survival-and one of those instincts, probably traceable back to the caveman days, is: Never, ever let someone fly you up in the air who's making less than the kid at Taco Bell.
I got on the plane, but only after I convinced myself the guy must have been feeding me a line. How else could I justify risking my life like that? The following week, though, I made some calls and did some research. Much to my horror, that pilot's figures were right. While captains who had been with these commuter airlines for a number of years were pulling in the big money ($40,000/year!), first-year rookies in many cases were living below the poverty level.
I don't know about you, but I want the people taking me with them to defy nature's most powerful force-gravity-to be happy, content, confident, and well paid. Even on the big jets for the major airlines, the flight attendants-another group of employees whose training may one day be critical to saving your life-start out at somewhere between $15,000 and $17,000 a year.

http://www.thirdworldtraveler.com/Michael_Moore/Dear_George_SWM.html

[punpirate]

5. Not really...

... discount fares today are lower than they were before 1977, but the variability in fares today is far more than it was prior to deregulation. Business travelers flying on short notice are paying premium rates compared to then.

And people flying out of more rural areas with limited service are paying huge sums of money to do so, due to lack of competition--that is, if they have service--since many smaller markets are being closed out of the route structure.

In the meantime, the diversity of American carriers has greatly diminished nationally and internationally. And, quality of service (by most measures--in-flight performance, on-time arrivals and departures, baggage handling and availability of service) has declined over the years.

In general, in this country and elsewhere, deregulation has meant rewriting the rules to favor one business class over another, and has created poorer service and less competition, rather than more, which is the publicly stated aim of deregulation.

Media is a prime example of such. Airlines are another. The S&L scandals (which continue to cost American taxpayers hundreds of billions) are yet one more. Accounting and SEC deregulation (and a corresponding failure to fund oversight bodies) helped create a huge loss to investors and pensioners. Selective energy deregulation has cost consumers huge amounts of money in the last few years, particularly in California, Oregon and Washington.

So-called deregulation in this country and elsewhere has largely been a failure, because deregulation is a sham--it never has been intended to encourage competition, increase value and decrease cost--rather, it has been intended to benefit the most rapacious of the competitors in order to drive out competition. With regard to the airlines, utilities, etc., I've seen it happen in my own region.

Cheers.

[Sara Beverley]

10. You are right on. And yes, it is quite that simple!

Thanks for giving voice to my thoughts.

[Silverhair]

12. It has worked for me. I pay lower prices for tickets than I used to.

I remember the prices when I had to fly before deregulation, and I know what they dropped to.

[Bluebear]

14. Along with people's wages, except for the CEO's

Glad it's working for you personally. It's becoming a mess all around for those employed in the industry.

[punpirate]

28. Bought a round-trip from...

... a Western city outside an airline hub to a major East Coast city three days before a flight, lately?

Try $2400. Ever pay that for continental airfare before deregulation? Never.

[The Velveteen Ocelot]

7. Unfortunately it's not quite that simple.

Although the airlines are no longer subject to regulation as to their routes or their tariffs and rates, it is still one of the most heavily regulated industries in the U.S., and that level of regulation is expensive. The FAA regulates virtually every aspect of an airline's operation -- how to train the pilots, what kind of equipment each airplane must have, how repairs and maintenance are accomplished and documented, how many hours a crew can work, just to name a few things. These regulations are important for safety reasons, but the cost of the level of safety we enjoy is very high. Then there are the taxes. Out of each $100 an airline charges for a ticket, approximately $20 has to be paid back to the government for such things as fuel taxes, airport landing fees, security costs, etc. It costs a lot of money to make an airplane fly. Airline ticket prices, adjusted for inflation, are lower than they have ever been. These days the price of a ticket might not even cover the cost of the fuel needed to fly the airplane to your destination.

If an airline flies international routes its expenses are even higher -- for items like fuel, foreign airport fees and supplemental crews. This is one reason why the so-called low-cost carriers like Southwest and JetBlue are doing better than the "majors" -- they don't have the enormous costs involved in international operations, not to mention the fact that they operate a single type of aircraft, which considerably reduces their maintenance expenses. And they have gotten away with paying their employees less -- at least for now. So to say the airlines "deserve" their problems only because they have been "mismanaged" misperceives the environment they operate in and the many factors over which they have no control. Airline deregulation, as it was accomplished in the late '70s, has not worked well. There will be no benefit to the public if too many airlines go out of business -- the laws of supply and demand will likely cause ticket prices to soar.

[Sara Beverley]

11. Deregulation has meant mismangement by the airlines, not government.

If only the Feds would really enforce the laws they now have.

[The Velveteen Ocelot]

15. No, not exactly.

The existing regulations are stringently enforced (I know this to be true; I work in the industry). The real problem with deregulation is that ONLY the economic aspects of the industry were deregulated, but the airlines still have to bear the huge costs of the enormous amount of safety regulation that still exists and is still enforced by the FAA (as it should be). We should have learned by now that some industries do not operate well under a so-called "free market" system -- Enron was proof of this. The "mismangement" by the airline industry results mainly from the fact that the entire business model developed under a fully regulated system (the CAB regulated rates, tariffs and routes), and only worked, to the extent it did work, when the economy was strong. The profit margin in the airline industry is so slim that, given the current environment, any economic downturn causes tremendous difficulty. Aside from the fact that some of the top executives can't bring themselves to take pay cuts along with the rank and file employees, the reality is that the airlines aren't charging enough for tickets to cover their operating costs, even though everything -- especially labor costs -- has been cut to the bone. The reason service isn't what it used to be is that the airlines can't pay wages and high fuel costs and maintenance costs and horrendous taxes and security fees, and still offer nice meals and lots of leg room. It isn't a simple matter of mismanagement, like a small business owner spending too much on office supplies. The problem is a business model that doesn't work well in an economically deregulated environment.

[OldLeftieLawyer]

19. Not exactly

Far more than the economic aspects of the industry were deregulated.

In fact, the whole structure of the air system was reorganized with deregulation. A lot of cities lost service as the hub-and-spoke pattern evolved, and, if you factor that into the cost benefit to the passenger, it makes flying even more expensive - if not prohibitive - for many people.

When the Civil Aeronautics Board had control of flight subsidies, there was a lot more service to small cities, and the applications and petitions flowed into that place on a daily basis, because the demand for air service, in 1978, was growing so fast, no one could believe it.

Ultimately, the onus of the Airline Deregulation Act of 1978 falls squarely on the shoulders of Alfred Kahn, who had been chairman of the CAB. He, like other economists who work from patterns and not reality, was convinced that deregulation would make for more airlines, more competition, lower prices, and more flights.

Of course, Al Kahn never planned on the entrance of Frank Lorenzo onto the scene, but that's a whole other story. Lorenzo, with the help of Ronald Reagan, did far more to destroy the airline business in the US, than deregulation, in my opinion.

I know all this because I was one of the lawyers who drafted the Deregulation Act while serving as a staff attorney for an airline. Then, I married a CEO of one of America's major carriers. I often wish deregulation had never taken place. The system is still deteriorating, but I remember when airline travel was special and competent.

[The Velveteen Ocelot]

21. You make a very good point, and it's great to hear from someone

who has some real expertise on this subject. I don't disagree with you at all (I guess I wouldn't even have standing to disagree, considering your background and knowledge!). I had considered the hub and spoke arrangement in my analysis (having considered that to be part of the economic deregulation, as opposed to what the FAA does). Maintaining that arrangement is also very expensive, since, for example, they often have to fly nearly empty airplanes back to their hubs to be ready for the next day's flights. And it did result in a loss of service for many communities after the CAB went away. But the big mistake clearly was the assumption that deregulation would result in many new airlines and increased competition -- that's the mistake the free-marketeers often make. As we know, most of the small airlines were taken over by the big ones, which became even bigger, and which are now struggling. I also think deregulation, at least as it turned out, was a mistake, and wouldn't be surprised if someday there is some form of economic re-regulation (though probably not under a Republican administration). I'd sure like to get away from the cattle-car mode of air transport, but passengers will inevitably have to pay more for better service. Even Southwest can't expect to keep making money as fuel and labor costs increase.

[Lydia Leftcoast]

6. As one who flew quite a bit before deregulation

I can state with certainty that the flying experience has been deteriorating steadily since then.

Even the distinguishing features among carriers (good meals on Alaska, good leg room on American) have been or are being phased out. These days, it's cattle car all the way.

I would pay a couple hundred dollars more for better seats and better service, but not the huge amounts it takes to fly first class (which is only as good as coach class used to be).

[Silverhair]

13. So you won't mind pay extra. I would. I am a cheapskate.

I can put up with cramped for a couple of hours to save a couple of hundred. No all of us have the money to spend on "the experience".

[Lydia Leftcoast]

16. Try cramped conditions for 10 hours to Japan

:scared:

[Silverhair]

17. At what price difference? NT

[Bluebear]

18. Do you worry about the airline employees at all?

Or just your bottom line?

[Silverhair]

20. I reject your attempt to use guilt to manipulate me.

During the last election, the RW preachers used guilt to manipulate people to vote for Bush. On this forum we complained that they were being manipulated into voting against their own economic interest. They viewed it as placing their values ahead of their self interest.

Of course, we don't agree with many of their social values, but this forum was pretty much in agreement that they should vote their pocket book. Well, by my purchases, I am voting my pocketbook.

And what makes you think that I would fly at the higher prices that you want? I would probably stay home. That would really help them wouldn't it? Selling fewer tickets would make them more solvent????

As for the airline employees. If they are unhappy there - quit! Find another job. I have done that before when conditions were not to my liking. Then the place I was at had to go to the expense of replacing me. Of course, I usually had another job lined up before I gave notice. Why do I have to look out after the airline employees? Can't they do that for themselves?

[Bluebear]

23. Go ahead and "reject" all you want.

"As for the airline employees. If they are unhappy there - quit! Find another job."

I'm sure you haven't considered the station of, say a flight attendant who is 53, has built a life expecting a certain wage, only to have it halved all of a sudden. Then the airline ends his/her pension with the blessing of a Bush-appointed judge. Or maybe you have, as you suggest they "find another job". And as we all know, the economy is booming and high-paying jobs are plentiful.

Of course, the airline CEO still makes a multi-million dollar salary for his mismanagement.

[Silverhair]

24. I once knew an electronic engineer who lost his job at 58.

He was in a specialty involving missle systems. The Clinton defense cuts eliminated his job. People with his skills were applying to the defense contractors that were still hiring, but there were more people applying than there were jobs.

He turned to driving trucks and was able to hang in there until retirement.

Always keep a second skill ready as a parachute in case something happens to your primary job. Have a hobby that can be turned to a livelyhood if need be.

When I was a truck driver, I used the spare time to develop poker skills. It served as recreation when I had runs that went by poker rooms, and I became good enough that my winnings were sometimes more than my trucker pay. I rarely lost. Then, my health forced me quit trucking. But I lived in a city with casinos so I simply became a full time professional poker player. That's what I am today. I had the foresight to develop an alternate skill. And I have another alternate skill now, if poker should become a problem.

Take some responsibilty for your own life. Don't let your lifestyle live up to your pay so that you don't have any room to take a hit when it happens.

[Solon]

25. You gamble for a living?

That explains a lot.

[Silverhair]

26. Yes, but the way I play poker it isn't "gambling".

I don't cheat. I just make sure that the laws of probability are on my side.

[InvisibleBallots]

27. if I had to pay a couple hundred dollars more, I could never fly

A couple hundred dollars more is basically twice what I pay now.

[itzamirakul]

22. I thought it was Reagan who did most of the deregulation...

for the purpose of "making more millionaires." (His own words if I remember correctly. Reagan was the beginning of "privatization" so that now, many agencies that would be better and more equitably managed by the Federal Govt are in the hands of inept, uncaring, greedy businesspersons.

When we had the big energy burnout on the East coast last year, come to find out, there were so many little electric companies owning the energy sources that it took a couple of days to even locate the trouble spot and THEN, the Ohio Co. that was at fault did not want to accept the blame and i don't think they ever paid up for it.

[DainBramaged]

29. What else has worked under deregulation?

Phone service, nope. Cable, nope. 'Public' utilities like electricity and gas, nope.

The only thing that worked was increasing the profits for the share holders.