Re: How does the airline return to profitability?

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At 08:14 PM 7/9/2002 -0700, Greg Newbold wrote:
>Dennis, I am trying to determine how best to restore airlines to
>profitability. If you're suggesting Boeing should lower their prices for
>their goods so that airline labor costs levels can remain the same is
>unrealistic.

Who said anything about Boeing lowering their prices?

How about recalling DC-10s instead of deploying new 757-300s, 767-400s, and
A330s? How about using DC-9 model 30s instead of 717-200s?

And thus you get into the mesh of trade-offs on capital costs and
acquisition costs compared to fuel costs and staffing costs. Taking a DC-10
from the desert is cheap, but it takes a three crew members in the cockpit,
and it drinks a lot of fuel. Can an airline refinance some of their leased
airliners? Can they down-size from 737-800s to 737-700s? Are 737-700s worth
it compared to 737-300s?

Equipment costs are not fixed. As you noted elsewhere, shelving equipment
is an option, although rarely is equipment dedicated to one set of runs.
Fuel costs per gallon might be beyond the airline's control (but some are
using futures contracts to hedge their fuel cost bets), but they can move
to more fuel-efficient planes. Landing fees? Some carriers such as
Southwest and Pan Am III choose airports with lower landing fees as part of
their frugality. It'd be expensive for an airline to move from STL to
Mid-America, for example, but it might be an option.

I don't have the answers; that's why I'm a computer programmer, not an
airline manager. :)  But there are more costs to be managed than just labor.

Nick

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