Are we on the precipice of another lost decade?

ZapBrannigan

ZapBrannigan

If it ain’t a Boeing, I’m not going. No choice.
A possible war in the Middle East with associated increases in fuel prices, and softening of domestic non-premium travel - the same thing that's hurting Spirit, Frontier, and JetBlue right now. All this has happened before and all this will happen again.

The airlines were doing pretty great right up to 9/11. At USAir we were still hiring 100 pilots a month. The fear of terrorism followed by the Iraq war slammed on the brakes and resulted in a breathtaking number of furloughs that lasted throughout the lost decade.

Regionals exploded for the first several years as mainline management took advantage of force majeur language to park older airplanes - DC9, F100, MD80, 737-200... and replace those good mainline jobs with thousands of poverty wage commuter jobs.... and then the commuter guys experienced their OWN lost decade as there was no hiring and no place to go at the majors who were not only inundated by furloughs, but who had just given away a sizable fraction of their flying to those very same regionals. And just when it looked like things might be getting better, they raised the retirement age to 65 resulting in even more stagnation.

Now to be fair, those mainline contracts would have been torn apart in bankruptcy whether they had force majeur language or not. But it was that language that USAir president Rakesh Gangwal said "opened certain doors to us that were unavailable before" allowing them to abrogate sections of the contract including, minimum fleet count, minimum Captain positions, minimum block hours, and the no furlough clause.

This all seems so eerily similar to 9/11 you can hopefully understand why I'm nervous that we are going down that road again, My career has been littered with these multi year speed bumps and I am admittedly Chicken Little about the events that could potentially be leading us towards another one.

So what do you think? Are we teetering on the precipice of another lost decade?
 
I'd stop hoovering up the news your coworkers put out, which comes from, on a good day, Fox, and on a bad day, um, what are the other alt-news outlets. Because despite certain risks and the like, the broader U.S. economy itself is doing fine, if not better than fine. It has its problems, but the macroeconomic picture is still remarkably good.

Specific to the industry: I view the pandemic as having accelerated certain trends - some of them fortunate, some of them unfortunate - and I think that the "crunch" that the market segment you specifically pointed to was actually already in the offing as early as, say, 2017 or 2018. (U)LCCs and whatever jetBlue think they are this week (it's really a function of which court or regulator they're in front of if you haven't noticed) depend on a favorable labor environment and they've had one for twenty-plus years. And now they incredibly don't. Fuel's outrageous right now, too. And I think interest rates being where they are will be a problem for airlines and governments alike.

In fairness, the industry as a whole has lost money as long as there has been an industry, too.

I do think there is always the risk of a "something" happening. I'd actually put certain domestic political risks pretty high up, which is not a sentence or thought I want to have nor should I reasonably expect to have, but there it is.

This is a macro take and the short version is "probably not, but always be prepared."
 
are spirit jetblue and frontier experiencing demand side problems? I am admittedly out of the loop on their finances but my understanding was there were some other factors
 
Well that sounds like a pretty long list of things outside my sphere of control.

Or better yet, do what I did, yknow get a C-17 seat so I can always make sure I can involuntarily go spend time in the air crew dorms in the desert somewhere when the other side is down.

both sides.jpg
 
bimmerphile said:
are spirit jetblue and frontier experiencing demand side problems? I am admittedly out of the loop on their finances but my understanding was there were some other factors
Click to expand...
Spirit specifically cite poor yields as a part of their financial condition. Oddly enough, the yields tanked early on in the pandemic and don’t seem to have come back at all.
 
bimmerphile said:
seems more like a management problem than a demand issue, then
Click to expand...
The picture certainly has changed.

But yeah, and none of this is secret squirrel stuff, I’m amazed that they still haven’t had a profitable quarter, corporate intrigue aside. The training costs have got to be killing them too.
 
I think the ULCCs are being hurt because the big guys have been discounting seats to take advantage of revenge travel. The ULCCs get whatever business is left over after the cheap seats at the big guys are all sold.

Let’s face it. Nobody is flying on Frontier if they can get a seat on Delta for close to the same price.

My shop is experiencing it too. Bad juju.
 
I’m at an interesting spot in my career with about 30 years left, currently as a top 35% pilot at a ULCC, but with a CJO in hand from a legacy airline. Its been excruciating lately trying to make some tough long-term decisions, so it can be safely said that my mind has been at almost full capacity with this very same question lately.

It seems as if, for someone who is not themselves an expert, there are myriad sources and expert opinions out there that can support all sides of the problems and the potential future courses that may be embarked upon by our world.

I am pretty sure, however, that the paradigm has shifted, albeit, I don’t know to what degree. Consequently, I’m not certain that the past is going to be a fully reliable predictor for the future, at least on the medium/long term (+/- 20 years or so). Some of the external factors have parallels, as you’ve stated, yet the internal factors are significantly different than they have been in the history of the industry. The level of market power possessed by today’s behemoth airlines, combined with a laundry list of other factors/constraints such as retirement numbers, ATC staffing issues, previous consolidation, loyalty programs, more sustainably-offered basic economy products (just to name a few) makes me think that it is less likely to be such a dramatically turbulent time from the pilot’s perspective, even in an economic down-cycle. In the dot-com burst/September 11/Great Recession eras, the industry as a whole was composed of much weaker pieces, and was in many ways still finding its solid ground after deregulation.

In other words, I suspect that there won’t be as much of a “Lost Decade”-style career stagnation for most of the industry. That said, I’m no expert, and no one ever really knows, so it’s anyone’s guess.
 
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As a 121 part timer, who just does it a few times a month for some extra cash due to having a type and isn’t really affected by much, it’s interesting seeing how the industry climbs and descends in varying ways. For me, since 121 is just a p/t gig, if I lost it tomorrow it would be an “oh well” moment, rather than a life changing event. So I basically watch the industry as more of an interested observer.
 
ZapBrannigan said:
A possible war in the Middle East with associated increases in fuel prices, and softening of domestic non-premium travel - the same thing that's hurting Spirit, Frontier, and JetBlue right now. All this has happened before and all this will happen again.

The airlines were doing pretty great right up to 9/11. At USAir we were still hiring 100 pilots a month. The fear of terrorism followed by the Iraq war slammed on the brakes and resulted in a breathtaking number of furloughs that lasted throughout the lost decade.

Regionals exploded for the first several years as mainline management took advantage of force majeur language to park older airplanes - DC9, F100, MD80, 737-200... and replace those good mainline jobs with thousands of poverty wage commuter jobs.... and then the commuter guys experienced their OWN lost decade as there was no hiring and no place to go at the majors who were not only inundated by furloughs, but who had just given away a sizable fraction of their flying to those very same regionals. And just when it looked like things might be getting better, they raised the retirement age to 65 resulting in even more stagnation.

Now to be fair, those mainline contracts would have been torn apart in bankruptcy whether they had force majeur language or not. But it was that language that USAir president Rakesh Gangwal said "opened certain doors to us that were unavailable before" allowing them to abrogate sections of the contract including, minimum fleet count, minimum Captain positions, minimum block hours, and the no furlough clause.

This all seems so eerily similar to 9/11 you can hopefully understand why I'm nervous that we are going down that road again, My career has been littered with these multi year speed bumps and I am admittedly Chicken Little about the events that could potentially be leading us towards another one.

So what do you think? Are we teetering on the precipice of another lost decade?
Click to expand...
No one could predict another 9-11, but I don't think we're in for another lost decade.
 
I also don't think I'd equate the current situation in the world, with the aftermath of 9/11.....or I guess more appropriately, with the prospect of 9/11. I think there are definitely certain factors that could produce, as the CEOs love to say, "headwinds" in the industry. I haven't been in the business very long so certainly haven't "lived" it in the way some of you all did, however I did live through all those events as a younger adult. I do think that the industry won't forever keep cranking along like it has been for the last decade though. Anyone that isn't waiting for the next big event, and preparing a backup plan, is going to eventually be left with their pants down. Or maybe they will be lucky to be senior enough by then for it not to affect them as much, who knows?

I do fully expect the next watershed event to be completely unexpected though
 
Also, if we look at unrest in the middle east as a predictor of an industry meltdown, we'd be in perpetual meltdown. Also, with airline consolidation, the industry it probably more resilient to transient issues and at a minimum there would be greater warning prior to a major slowdown.
 
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