If you’re planning to travel in the next few months, the chances are you’ll be effected by an airline strike. It’s your fault.
There have never been so many major airlines in strike mode, and it reflects the recovery in only the way the travel industry can.
Yesterday, the Lufthansa strike temporarily ended. Today, air traffic controllers in Paris are striking. British Airways is set to strike within a few weeks. Within the next month or so, American Airlines could be on strike.
The disputes are varied but basically represent the end of the World’s Worst Recession (WWR) as people begin however slowly to travel, again.
Airline’s unique accounting registers profit with forward sales. Airlines and most of the travel industry are one of the few things that you pay for before you get. So that right now things aren’t exactly beautiful clear skies, but down the line, it looks that way.
So while today British Airways can claim it is still losing nearly one million dollars a day, that’s pittance by airline standards and it obviously suggests what the unions already know: a year from now they’ll be waddling in cash.
Airlines are doing well, both in terms of announced earnings and stock prices. Their employees are not doing as well.
I began to write this blog hoping I could quote a lot of figures, but frankly, the airline game is a complicated one. What the United Airlines’ annual report says is much different than CNN or Business Week about the airline’s true operating profit and important to me, workforce numbers. And those are the two issues butting head-to-head in these upcoming strikes.
But I believe I have a grasp of the general state of things.
Nine-Eleven came on the heals of a little recession. It tanked the airlines. It set United Airlines ultimately into bankruptcy. Nine-Eleven marked the end of minimum decent service on the airlines and began to threaten air safety.
But I trace the problem to a much earlier date: 1984, the end of the “CAB” – Civil Aeronautics Board, the government agency which until then heavily regulated the airlines as a strategic national industry.
Prices, sellers, even seat widths at one time, were all government regulated. Thanks mostly to Jimmy Carter, but started by Gerald Ford, the death of the CAB marked the beginning of America’s infatuation with smaller government. We are now discovering the true “benefits.”
The airlines were thrust into a competitive environment the likes of which had never been seen. Here are some interesting numbers:
EWT’s first safari with the Sacramento Zoo was in July, 1983. Under regulation, groups could achieve a slight discount on regulated, government-mandated air fares, and so the zoo’s air fare of roundtrip San Francisco/Nairobi of $1323 represented about a 12% discount over published fares.
Today, that is February 22, 2010, 26 and one half years later, during which I’ve had three cats and one dog die, three homes, two children born, educated and out on their own… the best roundtrip air fare from San Francisco is … $1357.10!
Give or take $20 or $25 depending upon the combination of airlines, and that’s the problem. The American consumer will spend the better part of a weekend lowering his fare by $10. So the pressure on the poor airlines has been almighty to keep fares low.
So weakened by throwing the industry to the ravages of price pressure Nine-Eleven was the nail in the coffin. In and out of bankruptcy, reduce pay and benefits, reduce seat size, charge for bags.. Do anything at all but increase the price!
The last to suffer, of course, are the stock holders and upper management who designed this whole cockamamy system. Believe me, they have not retained the same salaries they had in 1983!
Fares are WAY too low. Imagine buying a new fully loaded Ford Taurus for $18,000!
Or a new home at $75,800 that today costs $215,900!
Coming up: plane crashes. We’ve already begun to see them, and discover they are caused by poorly trained and poorly paid … pilots. See the details on Continental #3407 on February 9, 2009.
The system, like a lot of things lately (read: Congress) is broken. And we notice the cracks in our broken things when we have fewer things and each one of them that remains becomes more important.
Air service to places like Cleveland and Memphis has been drastically reduced; to cities like Dubuque it’s almost gone. We are strangling the infrastructure for growth.
So plan ahead. Beware. And be PATIENT. You’re probably not going to get to where you want to go exactly as you had hoped.
And most importantly, it’s your fault. Realize that. You who reduced the size of government and put hundreds of thousands out of work and jeopardized the safety of air travel and the future of nice cities… all to save $10 on that air fare to New York.