Excellent post, Mr. Lanier, you have very valid points. Combine the economic picture with increased security and reduced customer relations skills and the profit picture further deteriorates. Greg -----Original Message----- From: Lanier [mailto:alanie@bellsouth.net] Sent: Sunday, June 23, 2002 7:23 AM To: Skyone@yahoogroups.com Subject: [Sky-1] Wage Cuts "United Air flight attendants reject wage cuts" I don't think the employees or managers in the airline industry have this figured out yet. It used to be that America was the "perfect land" where money flowed and all that was necessary was to demand more of it. I got news for you. That was yesterday. The rest of the world, while not perfect, has been catching up with us in technology, production of basic resources, and manufacturing. While we used to be able to demand, get, and pass on wage and salary increases, the presence of a world economy has overtaken the United States. First, the old traditional method of demanding, getting, and passing on wage increases don't work no more. I spent 16 years in the railroad industry and I saw it go from 800,000 employees in 1980 to 220,000 employees in 1990. The reason was that there was a choice for an alternative transportation (called truck lines) and the industry had to change or die (the railroad industry still isn't in great shape today) so hundreds of thousands of people (including me) got new careers. The railroad industry has continued to lose market share as measured by share of total transportation revenues. The airline industry is right on the edge. People will not -- and cannot -- afford to keep paying higher and higher airline fares for airline transportation. The old idea of elasticity of demand has come to the airlines. People are not going to pay $2000 to fly across the Atlantic Ocean; some might pay $1000, but most people -- including me -- are going to pay $500-700 or not travel. We can not afford what the airline industry has as a product at the price the airlines wish to charge. One of the biggest factors in airline costs is (1) fuel, and (2) labor costs. I can't tell you about fuel except it is going to get more expensive as less of it is around because there are only so many dinosaurs in the ground to be found. But the unions and airlines better get mart about labor costs. While there are a lot of pilots making much less that the "magic salary" $200K a year that a lot of international captains get paid, it is going to come down to the fact that the vast majority can look at $100K a year incomes and paying out all that money has pushed the price of air transport to the edge of the level that the public simply will not buy or cannot afford. What you are seeing is a massive shift in the customer base the airline has and what they will pay for the product the industry produces. It is like the retailing industry before discount stores like K-Mart and Target and Wal-Mart showed up. The new guys cut costs, sold a heck of a lot of product, and sold the stuff for much less than the old traditional downtown retailers. Southwest has a handle on the "new airline industry" although the change is not complete yet and someone will move into Southwest's spot as No.1 discount service airline one day much like Wal-Mart pushed K-Mart aside. It is much better to be making a little less that seeing your company go teats up (bankrupt) and have to go down the street to be the lowest seniority pilot at your competitor. I don't hold airline management blameless either. All of them better get together and get their act together before you repeat the experience of the railroads. I can tell you - it wasn't fun. Alton Lanier Arlington, Tennessee ------------------------ Yahoo! Groups Sponsor ---------------------~--> Free $5 Love Reading Risk Free! http://us.click.yahoo.com/3PCXaC/PfREAA/Ey.GAA/DmVolB/TM ---------------------------------------------------------------------~-> SkyOne--The Airline News Channel To Post message: Skyone@yahoogroups.com To Subscribe: Skyone-subscribe@yahoogroups.com To Unsubscribe: Skyone-unsubscribe@yahoogroups.com List owner: Skyone-owner@yahoogroups.com Skyone URL: http://www.yahoogroups.com/group/Skyone Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/