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Thread: More airline woes and where might we be going in the intercity passenger business?

  1. #1
    Cyburbian mgk920's avatar
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    More airline woes and where might we be going in the intercity passenger business?

    As a sort of followup to the thread about smaller airports losing common-carrier passenger airline service and the recently reported troubles at USAirways (the Pilots' Union's financial consultant said last week after an audit of the company's books that without concessions, the airline will be out of money by late September), as well as the ongoing and worsening woes at the other carriers, how close are we to seeing an Amtrak-style Federal takeover of the passenger airline business?

    Also, if we end up with an (for lack of a better name) 'Amair', under the control of the same people (at least the same Congress) who run Amtrak, what changes may we likely see in the intercity common-carrier passenger business? Could we see a major redirection of transportation resources away from airport improvements and towards rail improvements, corridor changes, etc, and if so, how might they affect local transportation facilities and traffic patterns?

    Mike

  2. #2
         
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    Airlines have been losing money since at least the 1980s. They used 9/11 as a convenient political excuse for needing a bailout. Economics says that if the government would stop subsidizing all these unprofitable airlines, then the worst-run airlines would go out of business, leaving whatever the market can support.

    US Airways attempted to hold the state of Pennsylvania hostage for months to get a big payoff to keep the Pittsburgh hub. They threatened to get rid of the Philadelphia hub too if they didn't get what they wanted in Pittsburgh. Now, correct me if I'm wrong but if US Airways goes out of business, I bet the citizens of Pennsylvania will still be able to fly into and out of those airports.

  3. #3
    Cyburbian mgk920's avatar
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    Quote Originally posted by suburbian
    Airlines have been losing money since at least the 1980s. They used 9/11 as a convenient political excuse for needing a bailout. Economics says that if the government would stop subsidizing all these unprofitable airlines, then the worst-run airlines would go out of business, leaving whatever the market can support.

    US Airways attempted to hold the state of Pennsylvania hostage for months to get a big payoff to keep the Pittsburgh hub. They threatened to get rid of the Philadelphia hub too if they didn't get what they wanted in Pittsburgh. Now, correct me if I'm wrong but if US Airways goes out of business, I bet the citizens of Pennsylvania will still be able to fly into and out of those airports.
    The problem with the airlines is that the unions hold all of the cards, basically telling the companys to "give us what we want or you will be out of business". Management has no choice but to cave in to the unions' demands, dramatically increasing their labor costs. However, nobody is willing to pay the higher fares that are needed to cover those increased costs (not even the business crowd that IS historically willing to), resulting in heavy financial losses. Another factor is that flying simply isn't 'fun' anymore - the airport/security experiences, reservations screwups, etc, just make it a chore that many people would rather not mess with if they didn't have to. USAirways is just the farthest down that road right now, but Delta, United and American are not far behind.

    Right now, the only USA-based airlines that are not in real trouble are the deep-discount ones that fly super-popular 'niche' tourist routes and the charter carriers.

    The next few years will be very interesting indeed for the inter-city common-carrier passenger business, and 'Amair™' is, IMHO, a REAL possibility. Should it come to that, look for some heavy, high-level soul-seaching to begin on what routes should be abandoned as air corridors/expanded as rail corridors, etc.

    Mike

  4. #4
    Cyburbian ludes98's avatar
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    Quote Originally posted by mgk920
    Another factor is that flying simply isn't 'fun' anymore - the airport/security experiences, reservations screwups, etc, just make it a chore that many people would rather not mess with if they didn't have to.
    I can't remember a time when flying was fun unless it was charter. The high altitude flight we enjoy today provides no scenery, hence many airlines are adding satellite tv to thier aircraft so TV can expand its viewed hours.

    Right now, the only USA-based airlines that are not in real trouble are the deep-discount ones that fly super-popular 'niche' tourist routes and the charter carriers.
    True. Until 9/11, Southwest had posted a profit in every quater since its inception. I think that people have a applied a sense of logic not applied to many choices, or perhaps it is the large disparity between fares on different carriers. Why pay $1000 to fly Continental when Southwest costs $600? (Costs taken from recent booking of a flight for my wife from PHX o JAX) Is Continental offereing something so much better in a trip from point A to point B to justify the $400? Unless you fly first class (I have never done it, but would consider it for flight over 6 hours) the trips are largely the same. Same soda, same crappy snacks, same level of comfort and service.

    The next few years will be very interesting indeed for the inter-city common-carrier passenger business, and 'Amair™' is, IMHO, a REAL possibility. Should it come to that, look for some heavy, high-level soul-seaching to begin on what routes should be abandoned as air corridors/expanded as rail corridors, etc.
    I agree that it will be interesting, though I don't see Amair in the very near future. I think there are too many competitors in a market which doesn't seem to be growing at a rate capable of supporting their growing costs. I would expect some attrition. In the event of Amair, do you see rail replacing many routes? On the west coast I don't really see many trains replacing routes currently serviced by car or by air.

  5. #5
    Cyburbian mgk920's avatar
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    Quote Originally posted by ludes98
    I agree that it will be interesting, though I don't see Amair in the very near future. I think there are too many competitors in a market which doesn't seem to be growing at a rate capable of supporting their growing costs. I would expect some attrition. In the event of Amair, do you see rail replacing many routes? On the west coast I don't really see many trains replacing routes currently serviced by car or by air.
    I agree that it will be a change that is difficult to envision, but should it come to an 'Amair™' takeover of the major common-carrier airline biz, I can easily envision many of the short to mid-range routes being dropped or severely scaled back as air routes in favor of upgraded rail. I'm thinking on the lines such shorter haul corridors as the east-coast 'shuttles'/Eastern Corridor, San Francisco-Los Angeles, the 'connect the dots' metros between Chicago and the East Coast, DFW-Houston-San Antonio-Austin-New Orleans-etc, etc. Closer to my home, the routes between ATW/GRB/MKE/MSN/ORD have air connections, the farthest pair of which can be driven in about 3.5 hours (GRB <-> ORD) and have freight railroads in either excellent condition or which can be readily upgraded between them all (part of the 'Midwest Rail Initiative'). Amtrak has also reported strong ridership growth on their Hiawatha service (Chicago-Milwaukee) in recent years. Such short-to-medium rail route upgrades and subsidies could likely be far more cost-effective than upgrading and subsidizing air facilities for an identical kind of service.

    This could have interesting planning and land-use consequences for the communities along the ways, just like with development of the interstate highway system 30-50 years ago, and these potential major rail upgrades could well generate a healthy amount of trackside NIMBY resistance, among other local impacts (thus the reason for my posting of this subject in the Cyburbia Forums). Stay tuned.

    The long-haul domestic routes (LAX <-> ORD, SFO <-> EWR, DFW <-> BOS, etc) would be the domain of 'Amair'.

    BTW, USAToday reported in its Monday, 2004-08-23 editions that discount carrier ATA is also in deep financial trouble and could well be out of cash by 1Q 2005.

    Mike

  6. #6
    Cyburbian Plus JNA's avatar
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    US Air is shifting their flights from my fair city from Pittsburgh, PA to Charlotte, NC.

    US AIRWAYS TO DISCONTINUE NONSTOP SERVICE TO 20 DESTINATIONS FROM PITTSBURGH IN NOVEMBER

    ARLINGTON, Va., August 12, 2004 -- US Airways announced today that, as part of its Transformation Plan, it will discontinue nonstop service from Pittsburgh on 20 routes operated either by US Airways or US Airways’ wholly owned and affiliate Express carriers, beginning in November. Nonetheless, the company will keep nonstop service to more than 50 markets, in particular 28 of the top 30 markets, and will remain the airport’s largest carrier.

    The full details of the fall schedule, which still are being developed, will be available in early September. However, the following routes will be discontinued from Pittsburgh beginning Nov. 7, 2004. Additionally, further cuts are possible on the US Airways Express network since the independently-owned affiliate carriers still are finalizing their schedules.

    List of cities at: http://www.usairways.com/about/press/nw_04_0812.htm
    Oddball
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    Cyburbian jordanb's avatar
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    Amtrak was formed because railroads wanted to get out of the passenger carrying business. The railroads wanted to dump the service because they thought they could make more profit without it, so the government stepped in and picked it up. In the case of passenger air, the airlines do not carry cargo. The only way for them to dump passenger service is for them to dissolve completely. They're not going to do that.

    I imagine you're going to see more and more subsides flowing into the existing companies, and the subsidies will get more direct. Probably you'll going to end up with situations where the government puts a route up for bidding, and the airliners bid for the lowest subsidy, and then the lowest bidder pledges to provide service on that route for the bidded subsidy.

  8. #8
    Cyburbian biscuit's avatar
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    Quote Originally posted by JNA
    US Air is shifting their flights from my fair city from Pittsburgh, PA to Charlotte, NC.

    US AIRWAYS TO DISCONTINUE NONSTOP SERVICE TO 20 DESTINATIONS FROM PITTSBURGH IN NOVEMBER

    ARLINGTON, Va., August 12, 2004 -- US Airways announced today that, as part of its Transformation Plan, it will discontinue nonstop service from Pittsburgh on 20 routes operated either by US Airways or US Airways’ wholly owned and affiliate Express carriers, beginning in November. Nonetheless, the company will keep nonstop service to more than 50 markets, in particular 28 of the top 30 markets, and will remain the airport’s largest carrier.

    The full details of the fall schedule, which still are being developed, will be available in early September. However, the following routes will be discontinued from Pittsburgh beginning Nov. 7, 2004. Additionally, further cuts are possible on the US Airways Express network since the independently-owned affiliate carriers still are finalizing their schedules.

    List of cities at: http://www.usairways.com/about/press/nw_04_0812.htm
    I suppose that means no more direct flights to see the 'rents anymore. Not that it really matters because Independence Air, a new discount carrier, is picking up a good bit of the slack in small and mid-market cities along the east coast. Sure, it means a layover in Dulles but for around $50.00 one way I can learn to live with that.

    As far as USAirways is concerned, except for the fact that they still employ a LOT of people in the region, I think most people around here aren't going to cry too hard when they finally go under. They have made it expensive to fly in and out of Pittsburgh. They have held the county and the state over a barrel, threatening to remove their hub unless cost were cut and major renovations were done at the airport that was built to their specifications to begin with. Oh, the list of reasons why USAirways blows could go on and on. I feel little pity for them, and other carriers like them, and do not feel that the government should be in the business of bailing them out every six months. Their demise is one of their own making.

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