For or against re-regulation?

[seagull]

No one has gained access, there are merely more flights to the larger markets that were already served. This is part of the problem; you don't think those smaller markets deserve service, while I believe every market of a reasonable size deserves service, because the airlines should be viewed as public utilities, essential to the economy. They should not be viewed as just any other business.

First, the argument is that the reduced fares allowed more access to air travel for more people. The loss of service to smaller cities is totally unrelated to deregulation, but instead an issue related to Essential Air Service.

You seem to have a reading comprehension problem. I never stated that fares didn't fall, I stated that deregulation wasn't the cause, and I pointed out that the biggest drop in fares took place before deregulation, not after.

That is really a misrepresentation. The fares dropped during that era as a direct result of the onset of the "jet age", which hugely changed the dynamics. There was no similar facet after deregulation. The drop in airfare after deregulation was related directly to deregulation, while the drop previously was due to a major change to the platform used for operating.

Not at all. My argument is based upon Occam's Razor: the simplest answer tends to be correct. When you see that overall economic growth has increased at exactly the same rate that RPMs have increased, what is the simplest answer? I think it's pretty clear.

Absent deregulation, if there had been an increase it would be been with fewer pilots on larger aircraft. The advent of the regional model was not possible prior to deregulation.

Of course I'm aware of that, but I don't find it anything to be bragging about. Are you aware that, corrected for inflation, Continental pilots were making nearly that much as far back as 1940, when they were little more than a regional airline? Are you aware that, corrected for inflation, Pan Am captains could earn nearly $700k in '78? Are you aware that as recently as the '80s, 19-seat turboprop FOs could earn $30k first year? I can't believe someone is even trying to defend current compensation, or trying to claim that it used to be worse. We all know it to be false.

Are you aware that is a totally inane way of looking at inflation? That wages, particularly over the median, NEVER keep up with the market basket of goods that are used to determine inflation? Makes sense too, because those items represent a very small percentage of a higher wage earners salary. Pilots, even Capts at most regionals, fall above 87% of the population in terms of wages. Further, inflation itself is a very debatable number as the value of certain things has changed, for example, a typical automobile today has a lot more value than one that was sold in the 1960s.

I hate to break it to you, but you're clearly in the minority on this thread.

Actually, not.

 

[RightSeatGirl]

I'd like to see some re-regulation on some counts. Honestly I think something as simple as the Govt. requiring airlines to prove the profitability in any fare based on seat cost per mile and standardizing advance purchase fare structures for all carriers would help a lot. This would stop carriers from dropping fares below profitable rates just to price out competition. In my opinion it would require them to become more efficient to gain profit vs. eliminating said competition. I also think this in turn would bring back the need to provide a better product in order to return to a system where brand loyalty is a more significant factor in an air carrier's success than fare loyalty.

That would mean airlines would have to start considering the human factor in their management tactics in how much job quality and quality of life contributes to the performance of employees and how that performance effects customer satisfaction. Presently, airline managers could care less about any of that. It's about cutting costs to lower fares and price out the competition. If they couldn't do that anymore we'd see improvements on many level for both employees and passengers.

I don't think we need to see total re-regulation. But I think we should take what worked from regulation and modify it for the current times.

 

[meritflyer]

I'd like to see some re-regulation on some counts. Honestly I think something as simple as the Govt. requiring airlines to prove the profitability in any fare based on seat cost per mile and standardizing advance purchase fare structures for all carriers would help a lot. This would stop carriers from dropping fares below profitable rates just to price out competition. In my opinion it would require them to become more efficient to gain profit vs. eliminating said competition.

Oh please. The government requires to prove profitability on route segments? Shareholders already do this on a short term basis. Might I suggest you listen to an earnings call. If a company wants to operate at a loss then they wont be around long in addition to being in violation of fidicuary responsbilities.

Also, it is well within an organizations' rights to put loss leaders in place. The idea of trading profits for market share isn't new nor a poor idea in many circumstances.

Thank God you're not a business leader.

 

[RightSeatGirl]

Oh please. The government requires to prove profitability on route segments? Shareholders already do this on a short term basis. Might I suggest you listen to an earnings call. If a company wants to operate at a loss then they wont be around long in addition to being in violation of fidicuary responsbilities.

Also, it is well within an organizations' rights to put loss leaders in place. The idea of trading profits for market share isn't new nor a poor idea in many circumstances.

Thank God you're not a business leader.

When I saw that you posted and were on my ignore list I asked myself, I wonder why I had this guy on my ignore list. So I took you off to see your post. Then bang! I remembered how smug, full of superiority complex, egotistical and belittling your posts are nearly 100% of the time and I said to myself...wow, I won't make that mistake again.

 

[JOEFRIDAY2]

What exactly do you mean by "Congress is on "poverty wages""? Are they considering various solutions or just admitting that it's something that probably needs a solution?

If you watched some of the 3407 hearings in congress, you will see that they zeroed in on the low pay issue. So yes they are aware of it and do not find it acceptable. Will they do anything about it? Who knows?

Joe

 

[FL900]

I cannot fathom why anyone would want re-regulation of the airlines.

All pilots can think is that the mandate of charging higher ticket prices would mean more stable companies and, thus, higher pay.

Why is it that nobody seems to see the immense risk of regulating pilot pay and work rules under this scenario??

Inviting the government in to decide who can do what, when, and for how much is a terrible idea for business, regardless of what that business is.

:yup:
Let the market work! The only thing that will lead to sustainable higher pay is a smaller pilot work force (less supply), combined with a market free of government-caused distortions in airline supply and pricing. You think it's hard to find a job now, just wait until the government says "Yeah, sorry we just don't need these four airlines anymore. See ya!"

 

[seagull]

The part that many here miss is that I would fully support re-regulation if I thought for one second that it would lead to more stability, higher pay and more pilot jobs. I am, of course, in favor of all those things. However, I have been around long enough, studied the issue long enough and seen enough to know that it won't work.

 

[FL900]

This statement makes no sense particularly since you are the labor and not the one benefiting from the "free market". You are not management either. Reregulation= good for pilots. Deregulation = good for management. Notice how you're the only pilot here against being paid well, I just don't understand your mentality.

I would love to see someone defend this idea that "labor" doesn't benefit from the evil free market. I'll tell you the logic that doesn't make sense to me, the one that says "I don't mind the federal government overstepping its constitutional limits and screwing things up as long as I personally benefit from it."

 

[cmill]

I would love to see someone defend this idea that "labor" doesn't benefit from the evil free market. I'll tell you the logic that doesn't make sense to me, the one that says "I don't mind the federal government overstepping its constitutional limits and screwing things up as long as I personally benefit from it."

If labor truly benefited from the free market then there wouldnt be a need for unions. The "free market" without intervention works about as well as communism. They both look great on paper, but once human nature and greed take over, they both fail spectacularly.

 

[Firebird2XC]

If labor truly benefited from the free market then there wouldnt be a need for unions. The "free market" without intervention works about as well as communism. They both look great on paper, but once human nature and greed take over, they both fail spectacularly.

Agreed. Truly free markets are akin to anarchy in the financial world.

The stability and relative peace of a civilized economy require that all participating are bound by and willing to abide by certain rules of conduct.

Failing to honor them shows the true nature of some of the people doing business in the modern world.

 

[drunkenbeagle]

If labor truly benefited from the free market then there wouldnt be a need for unions. The "free market" without intervention works about as well as communism. They both look great on paper, but once human nature and greed take over, they both fail spectacularly.

Well, it generally does benefit labor. "Less Unemployment" is hard to quantify, but making it easier to hire and fire employees does tend to decrease the unemployment rate. Having a job is generally a good thing (as opposed to not having a higher paid Union one).

 

[seaav8tor]

Reregulation to control markets and seats will not happen. Waste of time to debate who is for or against it.

Regardless of the health of the industry and their ability to make a profit, Pilot pay will always be driven by supply of pilots vs demand. The airlines would be just fine paying 300% higher pay to the pool of pilot labor IF........ all of their competition had to pay the same. The only way that would happen is if PILOTS did not undercut each other in the job market by accepting lower pay. For several reasons there is by an economic definition, a surplus of pilots and there always will be.

AIRCON, ATA, RAA, ERAU, UND, puppy mills and the devil himself, Kit Darby will continue to seed the media with false "looming pilot shortage" propaganda to feed their own self-serving agendas. Thus a "shortage" will never happen and wages, adjusted for inflation will never go up.

 

[Mariano]

Completely against. Funny to see how some people who whine about "Big Government", will go against their "ideals" if it involves a futuristic fantasy world where they'll work 40 hours a month making 300K a year.

Wake up!! those times are gone. We live in a free market. As Kiltron said (amazingly I agree with him, and Meritflyer for once) "the transportation industry is not about the pilots" Have you ever thought of the city bus as a service that revolves above the drivers? it sounds silly, right?

 

[400A]

Completely against. Funny to see how some people who whine about "Big Government", will go against their "ideals" if it involves a futuristic fantasy world where they'll work 40 hours a month making 300K a year.

Wake up!! those times are gone. We live in a free market. As Kiltron said (amazingly I agree with him, and Meritflyer for once) "the transportation industry is not about the pilots" Have you ever thought of the city bus as a service that revolves above the drivers? it sounds silly, right?

But, but, we're pilots. We are above TSA scrutiny, those silly rules in the FARs are for rookies, closed runways don't apply because we are SAVING LIVES, start both engines before takeoff, nah I'm more concerned with fuel over/unders, take responsibility for mistakes and learn from them, nope find any and all things to blame it on....

phew, out of breath.

 

[meritflyer]

When I saw that you posted and were on my ignore list I asked myself, I wonder why I had this guy on my ignore list. So I took you off to see your post. Then bang! I remembered how smug, full of superiority complex, egotistical and belittling your posts are nearly 100% of the time and I said to myself...wow, I won't make that mistake again.

Happy to remind you while shedding light on reality.

PM me if you need more information.

 

[SlumTodd_Millionaire]

First, the argument is that the reduced fares allowed more access to air travel for more people. The loss of service to smaller cities is totally unrelated to deregulation, but instead an issue related to Essential Air Service.

Your argument is not proveable. There is no way to determine whether air travel was opened to a wider range of the population as a result of deregulation. Again, I think the facts support the theory that overall economic growth was the true catalyst, not deregulation.

That is really a misrepresentation. The fares dropped during that era as a direct result of the onset of the "jet age", which hugely changed the dynamics. There was no similar facet after deregulation. The drop in airfare after deregulation was related directly to deregulation, while the drop previously was due to a major change to the platform used for operating.

Actually, far more likely of an explanation is a change in the mentality of the CAB, which started increasing competition on routes during that timeframe. In the early days, the CAB allowed for monopoly control on many routes. As time progressed into the '60s and '70s, the CAB started pushing for competition on routes. Controlled competition, rather than the free-for-all that we have now, is the key to industry stability while still providing competitive fares to the consumer.

Absent deregulation, if there had been an increase it would be been with fewer pilots on larger aircraft. The advent of the regional model was not possible prior to deregulation.

There is absolutely nothing to support this theory. To the contrary, productivity differences indicate that far more pilots would have been required had we stayed under a regulated system.

Are you aware that is a totally inane way of looking at inflation? That wages, particularly over the median, NEVER keep up with the market basket of goods that are used to determine inflation? Makes sense too, because those items represent a very small percentage of a higher wage earners salary. Pilots, even Capts at most regionals, fall above 87% of the population in terms of wages. Further, inflation itself is a very debatable number as the value of certain things has changed, for example, a typical automobile today has a lot more value than one that was sold in the 1960s.

I actually agree with you on most of the above. Pilots argue with me about it all of the time when I tell them that guys making $180k per year don't need 3% raises to keep up with their cost of living, but it's true. However, it's not the median that is the cutoff. Somewhere in the $50k-$60k range in most parts of the country is a more accurate cutoff, which places most regional pilots, and some junior mainline FOs in that range. Using the CPI to figure the increase in the cost of living for regional FOs is absolutely an accurate way to look at it. Not for the guys at the top of the scale, though, although everyone likes to use those numbers.

However, I have been around long enough, studied the issue long enough and seen enough to know that it won't work.

Many people far smarter than you and I that have not only worked in this industry longer, but managed airlines most of their lives, disagree with you. Many people hate Bob Crandall for his labor relations practices, but the guy knew how to run an airline, and he has always been against deregulation, and speaks openly of reregulating. I think he knows a bit more about industry stability than we do. You should check out some of his op-ed pieces on the issue.

I'll tell you the logic that doesn't make sense to me, the one that says "I don't mind the federal government overstepping its constitutional limits and screwing things up as long as I personally benefit from it."

Regulating interstate commerce is not "overstepping the constitutional limits" of the federal government. It's a right specifically granted to Congress in the Constitution.

 

[drunkenbeagle]

Regulating interstate commerce is not "overstepping the constitutional limits" of the federal government. It's a right specifically granted to Congress in the Constitution.

Let's just remember what "Regulation" was - it was the CAB setting fares and routes for interstate travel. Airlines were essentially treated like public utilities - just like the cable company or electric company.

Pay was never regulated, I can't imagine that ever happening.

I personally don't think traditional airline regulation would change much these days.

 

[germb747]

I cannot fathom why anyone would want re-regulation of the airlines.

All pilots can think is that the mandate of charging higher ticket prices would mean more stable companies and, thus, higher pay.

Why is it that nobody seems to see the immense risk of regulating pilot pay and work rules under this scenario??

Inviting the government in to decide who can do what, when, and for how much is a terrible idea for business, regardless of what that business is.

First off, there is no "proposed" re-regulation. It's just talk.

Second, just because pay was not regulated prior to deregulation doesn't mean that it won't be if such regulation was re-imposed now.

When you open the door to the Federal Government to come in and tell an industry "how it's going to be", they can pretty much do whatever they want. Remember that the lawmakers who would decide what re-regulation would look and smell like have grown up largely in a post deregulation world, with the access and cost that grew from that.

IF regulation were proposed, it would likely be mostly for the purpose of benefiting the CONSUMER, rather than any other member of the equation (like, for instance, the income of the pilots, FAs, mechanics, etc). Just look to the goals of the financial industry "reform" being proposed as an indicator of that. Look at the fact that many lawmakers want to limit how much money oil companies can make -- as if cheap gas were a right, and making money by selling a product was some kind of crime.

No lawmaker would get behind a bill that would double or triple the cost of airline tickets for their constituents. They will make decisions primarily based on how it will impact the people who will vote for them on election day, and that would mean handcuffing the companies to make sure they provide a service that the passengers like.

Again, I can't fathom why pilots think this would benefit them. It's not going to be a magic return to the glory days of 1970s pilot pay with everything else remaining the same. I imagine that re-regulation would probably benefit pilot work rules, and potentially eliminate some of the idiotic management-vs-labor reindeer games by specifically regulating what companies could make labor do. On the other hand, I also envision that it will limit how much profit can be made with those regulated routes, regulated schedules, and regulated ticket prices.

:yeahthat:

 

[seagull]

Your argument is not proveable. There is no way to determine whether air travel was opened to a wider range of the population as a result of deregulation. Again, I think the facts support the theory that overall economic growth was the true catalyst, not deregulation.

Your argument is no more provable, based on the information we have presented here, anyway.

Actually, far more likely of an explanation is a change in the mentality of the CAB, which started increasing competition on routes during that timeframe. In the early days, the CAB allowed for monopoly control on many routes. As time progressed into the '60s and '70s, the CAB started pushing for competition on routes. Controlled competition, rather than the free-for-all that we have now, is the key to industry stability while still providing competitive fares to the consumer.

No, that is, in no way " far more likely". In fact, as the CAB limited the fares in the first place, the addition of competition just showed that a competitive model was better than their arbitrary (USSR like) method that they had used before! However, the advent of large jets made it possible.

There is absolutely nothing to support this theory. To the contrary, productivity differences indicate that far more pilots would have been required had we stayed under a regulated system.

The productivity was only lower due to lower flight frequencies. We saw the same thing at my company, well after deregulation. We have pilots that complain that we no longer have 3 day Sydney layovers (well, not all the time, anyway). The bulk of those went away when we increased from twice/week service to SYD to daily. Same thing happened with the airlines. Huge increases in frequencies, so pilots get utilized more. Look at the contracts and work rules from that era. Might surprise you!

I actually agree with you on most of the above. Pilots argue with me about it all of the time when I tell them that guys making $180k per year don't need 3% raises to keep up with their cost of living, but it's true. However, it's not the median that is the cutoff. Somewhere in the $50k-$60k range in most parts of the country is a more accurate cutoff, which places most regional pilots, and some junior mainline FOs in that range. Using the CPI to figure the increase in the cost of living for regional FOs is absolutely an accurate way to look at it. Not for the guys at the top of the scale, though, although everyone likes to use those numbers.

I agree with you here also, but our argument centered around the top tier, did it not?

Many people far smarter than you and I that have not only worked in this industry longer, but managed airlines most of their lives, disagree with you. Many people hate Bob Crandall for his labor relations practices, but the guy knew how to run an airline, and he has always been against deregulation, and speaks openly of reregulating. I think he knows a bit more about industry stability than we do. You should check out some of his op-ed pieces on the issue.

People that have a vested interest often argue well for a certain path. I actually have no vested interest, I just don't think that regulation would work!

 

[Realms09]

I skimmed through this paper I found some of the diagrams interesting. The author explores models of airline profitability in a mathematical fashion. Airline profitability varies in an 11 year cycle both before and after deregulation (maybe it has something to do with sunspots). However, after deregulation the amplitude of profit and loss variations grows substantially. The behavior mimics taking the damper off of the shock absorbers on your car.

http://dspace.mit.edu/bitstream/handle/1721.1/34988/AIAA-2006-7732-942 Profit Cycle.pdf?sequence=1