Delta in Deep

[Dago]

Originally posted by Nashwan
It's partly down to subsidies.

Ryanair flies to a lot of small regional airports, and gets support from regional governments for doing so.

As an example, they've recently been ordered to repay some of the £10 million they've recieved since 2001 for flying to Charleroi airport in Belgium.

Bingo

[Thrawn]

Originally posted by Dago
You are either kidding, or very short sighted.

dago

What's short sighted about it?

[Dago]

Without anti-monopoly laws, in any industry you would risk one company controlling everything, something Microsoft has already come close to doing.

In aviation, it would be very easy for one airline to get big enough to bury competitors, and after doing so raise rates to astronomical rates.   That has happened too often on a minor scale already, but given time and the laws the situation has normally self-corrected.  If not for anti-monopoly laws, it would not correct and the public, wishing to fly would be paying through the nose.  An airline can make just as much or more money flying less passengers at higher fares.

dago

[Rolex]

Originally posted by Dago
Without anti-monopoly laws, in any industry you would risk one company controlling everything, something Microsoft has already come close to doing.

I think they already 'do' and are not 'close' -- but that's another topic.

Anti-monopoly laws spawned out of different time for specific reasons against specific conditions. Think about this for a minute:

The reason we have anti-monopoly laws today is because deregulation hasn't worked.

A provocative statement and I can see eyebrows being raised already, but hear me out and don't anyone go blowing a gasket just yet.

The lofty goal of deregulation is to foster competition to benefit the consumer and an industry by allowing marketforce efficiencies to bring about natural selection and a natural balance in an industry.

But are we deregulating growth-potential industries? Or are we trying to deregulate industries that might better be classified as 'infrastructure imperatives?' Look at the track record of the 3 major deregulation efforts in the U.S. and consider the result

The telecom deregulation and 'breakup' was actually a sham and the U.S. consumer has not benefitted from it. Telephone costs are unreasonably high and unscrupulously calculated for such a low-tech, mature technology. We're talking about telephones here, not rocket ships. Who exactly is the competition to your local Bell provider?

It extends to broadband service also. Americans are not receiving reasonably priced, reliably delivered, reasonable state-of-the-art  Adsl service.

Trucking deregulation has not reduced the costs of moving goods across the country. It only transferred wealth from all the owner/operators to a few company executives while forcing drivers to a lower standard of living on top of driving longer hours.

Look at airline deregulation. The industry is the fastest way for a multi-millionaire investor to become a millionaire. It's an industry littered with debt across the landscape. It's subject to too many wild swings that benefit no one.

Advanced societies and economies need communication and reliable transportation to move goods that sell and people that work to produce and sell products and services. These are infrastructure needed to advance high-growth (read potential for jobs) industries. Market forces work most efficiently and benefit an economy more in the long run by being applied to growth industries and not to infrastructure. You don't consider your sewer and water to be growth industries. They are just 'there.' Thay are just basic infrastructure that employs some people and supports the system.

If you had the chance to start from scratch, you would probably eliminate all the special interest lobbying and regulatory trickery being done to the detriment of the consumer and the economy for the benefit of a few.

If you started from scratch, you'd want a transportation system that is safe, reliable, moves goods and people efficiently between points at greater than 80% capacity.

If you started from scratch, you would not want the convoluted web of quasi-deregulation existing now that is inefficiently distributing investment.

I'm not talking about socialism, there already is the worst of socialism now - the 3 industries are for the most part, providing lousy service, or on the brink of insolvency, or sucking investment, or being manipulated nationally or locally by lobbyists and thieves and the consumer is no better off in any 3 of these industries since 'deregulation.' The average employee in these industries is certainly no better off (except for the Bells).

Just maybe deregulation (in the way it was executed) didn't work.

I'm not sure myself... just a thought.

[Toad]

Delta is generally credited with "inventing" the hub and spoke concept in the late '70's early '80's. Initially, the industry know-it-alls scoffed and said it couldn't possibly work.

I got hired during the boom DAL experienced from hub and spoke. It was a huge money making success. It was a "new" idea and it solved some problems. Eventually, the other majors implemented hub and spoke. They had to in order to compete.

However, the market is not static. Times change and so do people's desires in travel as well as the "economics" of the industry.

Right now, the pendulum has swung away from hub and spoke and those carriers heavily invested in it are paying a huge price. They'll either transition back to point-to-point or a hybrid hub-point sytems or else they won't survive.

As for DAL's bankruptcy prospects, I'm enough of a tin-foil guy to think that they still WANT bankruptcy. It's sooooo much easier to totally remove ALL the workers bennies and work rules if you first get the workers to agree to cut their contract and THEN go to the judge for bankruptcy where you can get all the rest by judicial fiat. Doubt that? See the history of US Air.

So, now that they got the easy major concessions from the work group, you drive the company into bankruptcy and get the rest of the contract annulled.

I mentioned earlier that American Airlines runs SIX flights per day from London to New York using B767. It's likely they could save money by consolidating these into three flights by operating A380s on that route.

I'd say it's unlikely. Six flights gives the passenger a choice of six departure/arrival times. Those can be absolutely key in fililng an aircraft's seats.

Further, no one has yet to determine the effect of the 380 on the infrastructure. It's quite conceiveable that JFK will have a hard time handling an aircraft that big. Lots to consider... passenger waiting lounges, baggage facilities, ramp space, taxiway clearances.

It's a bit early to predict the success/failure of the 380 in the passenger market. I would predict it a huge success as a freighter though.

[Dago]

Originally posted by Toad
Delta is generally credited with "inventing" the hub and spoke concept in the late '70's early '80's. Initially, the industry know-it-alls scoffed and said it couldn't possibly work.

Actually, most industry experts credit Bob Crandall of American as having invented the hub and spoke concept, with UAL and Delta quickly adopting it.

dago

[beet1e]

Originally posted by Toad
I'd say it's unlikely. Six flights gives the passenger a choice of six departure/arrival times. Those can be absolutely key in fililng an aircraft's seats.

Further, no one has yet to determine the effect of the 380 on the infrastructure. It's quite conceiveable that JFK will have a hard time handling an aircraft that big. Lots to consider... passenger waiting lounges, baggage facilities, ramp space, taxiway clearances.

Good points. I'd thought of some of those. The AA example is not the best. If we consider British Airways for a moment, operating SEVEN flights a day just from LHR to JFK alone (with a further two flights to Newark/EWR). As you can see from the sample itinerary below, the largest interval between any two flights is between the last two - an interval of 1h45m. In some cases, as with the first two flights of the day, the interval is only 20 minutes. (The first flight is a 747, the second is a 777) Passengers need to check in at LHR at least 2 hours before flight departure (sometimes 3 hours if there's been a terrorist alert), so some of the problems you mentioned, such as airport lounge capacity, already exist. At LHR, that problem is already in hand with a fifth terminal under construction. (We won't talk about the increased road traffic near LHR - the M25 in that area is already the busiest motorway in Europe) But the really crucial thing at LHR these days is the number of runway slots - we're running out of them. But is it really going to be important to a business traveller heading to New York whether he/she gets the 8:20 or the 8:40?

I agree - the internal flight structure of the US is not where A380 is destined to succeed - with so many different destinations, and so many route permutations.

But consider Singapore Airlines (SIA), which will become the first passenger carrying operator of A380. Singapore is one of only about two popular stopping off points between Europe and Australia/NZ. (The other route is via LAX) But SIA doesn't then operate short hops to dozens of other cities in the surrounding area. They operate services to 59 cities in 32 countries, but only about 8 of those cities are within 1000 miles of Singapore. One of SIA's destinations is Brisbane, Australia - a distance of more than 3800 miles from Singapore. Their capacity to that one destination has tripled in four years.

For all of the above reasons, it's not surprising that the smallest aircraft in the SIA fleet is the A340! (The only others are B747-400 and B777 - especially the extended range variants) The key factors for SIA's choice of fleet are size, and range. They have 18 B777-300ER on order with an option for 13 more, and firm orders for 10 A380, with an option for 15 more.

I agree that if the A380 were to be deployed  for point to point operations in the US, it would be financial suicide. But the business model for airlines like SIA is completely different owing to the geography and demography of SE Asia, and the destintions which they serve.
PS - bolshevik!

Thrawn - eek, I find myself agreeing with Dago! I think the anti-monopoly legislation IS needed, and should even be more strict. Here's an example. In the 1990s, a Greek gentleman called Stelios started an airline called easyJet. It's a damned good airline too, and serves useful destinations with low cost fares by cutting out frills, and by operating out of low cost airports such as London Luton (LTN). Well guess what? British Airways got pissed off with competition from easyJet, so they started their own subsidiary airline with the same business model as easyJet, but with even lower fares which were made possible by illegal subsidies from the BA parent airline. The new airline was called "Go". I resolutely refused to fly on Go because I thought BA were being so unfair to easyJet. Stelios was able to prove that Go was operating at below cost (apprently, that's the part that's illegal) and ran a competition for passengers to estimate the size of the loss in Go's first year: They lost £22m. So you can see what's going on here - big airline launches little squib to drive a company like easyJet out of business. Once achieved, it is then free to crank up its fares. I don't know how this debacle ended up, but easyJet is going from strength to strength.

BA also had a campaign of "dirty tricks" against Virgin Atlantic, who rented time on a British Airways IBM mainframe computer. Virgin's business would have been in a separate LPAR (logical partition) of the IBM mainframe computer, but the IT wizards at BA were apparently spying on Virgin's business. BA were then calling prospective Virgin customers, offering them cheaper seats on BA.

BA schedule from London to New York

Hmmm, with those fares, it might be time for another trip!

[Toad]

Dago,

You can find "credits" for the hub and spoke going to both Crandall and DAL. The Atlanta Journal credits DAL.. what a suprise.

There isn't any doubt, however, that DAL did EXTREMELY well with it.

Times change though; hub/spoke has to evolve. When every airline is required to report the number of passengers it carries between each city pair, it gets real easy for a point2point airline to "sharpshoot" the best markets.

Beet, we'll see. I think the 380 implementation is going to severely tax the infrastructures. The aircraft is ahead of its support facilities IMO.

If passenger delays due to it's size and impact on the infrastructure become common, businessmen will book away from it. We'll see though.

[fd ski]

Originally posted by Dago
You dont have a country.  None showing below your name, I guess you are embarrassed or ashamed, and I am not bothering to guess.  Your airline probably is losing money faster than a drunk sailor in a brothel, but they are just lieing to the public about it.

dago

Jeez dago, if you were nearly as good in airline industry as you make out yourself to be you'd know that CSA is a Czech airline

[Dago]

I know I could have easily looked up CSA, I didn't want to bother.   I do not understand why posters won't bother putting at least their country in the location box.  I try to challenge them, if even through embarrassment or anger to have the nads to admit where they are from.  

dago

[beet1e]

Originally posted by Toad

Beet, we'll see. I think the 380 implementation is going to severely tax the infrastructures. The aircraft is ahead of its support facilities IMO.

Indeed. But it's not as if A380 is going to need to operate from vast numbers of different airports. As I understand it, SIA plans to deploy the A380 initially to London, and Australia, with Sydney as the first Australian destination. Second will probably be Melbourne, which expects to be A380-ready by May, with Sydney becoming A380-ready seven months later - way ahead of SIA A380 operations which are expected to begin in June 2006. Read this.

A380 preparation at LHR is to include wider taxiways and double decker loading ramps.

[cpxxx]

It's partly down to subsidies.

Ryanair flies to a lot of small regional airports, and gets support from regional governments for doing so.

As an example, they've recently been ordered to repay some of the £10 million they've recieved since 2001 for flying to Charleroi airport in Belgium.

It simply isn't true Ryanair's profits are down to subsidies.  Their profits are down to ruthless business strategies which includes special deals with Boeing for new aircraft.  No fat whatsoever. Even the pilots have to pay for their own uniforms and medicals. They don't even get free water not to mention coffee on board.        It even costs 50 pounds sterling to apply for a pilot job. Then they only pay half flight pay for six months. No salary. It goes right through the company.

 They negotiate the lowest possible landing fees and are ruthless about it. If airports want business they need to attract and keep Ryanair and other low fares airlines. It's as simple as that.  Airports are another example of cosy little operations. They now need to attract airlines.

[OneWordAnswer]

Originally posted by fd ski
Jeez dago, if you were nearly as good in airline industry as you make out yourself to be you'd know that CSA is a Czech airline  

Originally posted by Dago
I dont pretend to be an industry expert, but I do have a bit of an inside view.

dago

[Nashwan]

If airports want business they need to attract and keep Ryanair and other low fares airlines. It's as simple as that. Airports are another example of cosy little operations. They now need to attract airlines.

It's not the airports that want the business, it's the local regions.

It wasn't Charleroi airport that was subsidising Ryanair, it was the regional government that owned Charleroi, that believed bringing more tourists and businessmen to the area would be beneficial.

It's not just Charleroi either, I believe a similar deal with Pau in France is currently being investigated, and half a dozen more are under suspicion.

It wasn't just discounts Ryanair was getting from Charleroi. They were paid large cash sums for each new route they opened, cash for every passenger they landed, subsidised crew training, etc.

Whilst it's obviously not responsible for all of Ryanair's profits, the subsidies do help lower the cost of the ticket substantially on the really cheap routes.

[Thrawn]

Originally posted by Dago
Without anti-monopoly laws, in any industry you would risk one company controlling everything, something Microsoft has already come close to doing.

I think that threat become less and less with the globalisation of industry.  But people always have a choice to buy the product or not.  Take Microsoft, people can chose to use Linex, heck it's free.

If not for anti-monopoly laws, it would not correct and the public, wishing to fly would be paying through the nose. An airline can make just as much or more money flying less passengers at higher fares.

Why wouldn't it correct?  After all, if there is a domestic monopoly in airlines, people can choose to use another mode of transporation.  If anything I think the airline industry is showing how competition works.

Originally posted by Rolex
But are we deregulating growth-potential industries?

Does it matter if they are growth-potential or not?  By regulating an industry the government tries to meddle with market forces and anytime a government does that it naturally introduces misallocations of resources.  By trying to out guess supply and demand the government may in the short term help the special interest, but it hurts the overall economy.

Or are we trying to deregulate industries that might better be classified as 'infrastructure imperatives?'

Socialists will always come up with reasons, and terms for, why thier special interest is the one that just has to be paid for out of the publics pocket, whether it be airlines, space exploration or yes, even health care.

But in the end what they are saying is, "I believe in this, therefore a law should be passed forcing you to pay for it".  In my books, that's immoral, and it sure as hell isn't freedom.

Look at the track record of the 3 major deregulation efforts in the U.S. and consider the result

Right, but was the problem caused by deregualtion or regulating it in the first place?!

Who exactly is the competition to your local Bell provider?

Why is Bell such a monolithe, could it be because it was granted a socialist monopoly by the government?  As far as a "fair" price who is to decide that if not the market?  If you fix the price to low then you will less investment and thus less growth in the infrastructure.  That is unless you want to steal more money from the taxpayer, misalocate more resources and hurt the economy even further.  

As far as who is competion for Bell, cell phones.

Trucking deregulation has not reduced the costs of moving goods across the country. It only transferred wealth from all the owner/operators to a few company executives while forcing drivers to a lower standard of living on top of driving longer hours.

It doesn't force the drivers to do anything.  They choose to continue working in that field, you know that freedom thing again.  If they feel like they aren't getting proper wages considering thier time and resources they invested into the trade then they can leave it.  Younger people that once considered trucking don't get into it.  I imagine because of regulation there was an over supply of labour in the field, as it was more profitable for the trucker.  So truckers leave or don't enter the field, supply drops, demand goes up, wages go up.


And if the owners/operators are making greater profits then great!  That means that these people that have proven thier success in making investments have more wealth to invest and increase the growth of the economy.

Look at airline deregulation. The industry is the fastest way for a multi-millionaire investor to become a millionaire. It's an industry littered with debt across the landscape. It's subject to too many wild swings that benefit no one.

One wonders how the newer airlines are being successful then.  But once again, is the problems that the majors going through due to deregulation or the misalocation of thier resources and stagnation do to regulation in the first place?

Advanced societies and economies need communication and reliable transportation to move goods that sell and people that work to produce and sell products and services.

Since degrulation of the sectors mentioned are goods still flowing?  Are people still being transported.  Are people still communicating?  

Market forces work most efficiently and benefit an economy more in the long run by being applied to growth industries and not to infrastructure. You don't consider your sewer and water to be growth industries. They are just 'there.' Thay are just basic infrastructure that employs some people and supports the system.

Why?  The amount of housing in Ottawa is skyrocketing.  But I can see your point, I would even deem somethings "essential services".  But I have my special interests to.  

But I what I'm seeing is more and more sectors deemed "essential services" by special interest lobbies who all want a piece of my tax dollar.

Just maybe deregulation (in the way it was executed) didn't work.

I'm not sure myself... just a thought.

Maybe there could have been a less painless way to institute it.  But anyway you cut there was going to be a degree of turmoil as resource got properly allocated where the demand actual was.  And no society shouldn't ignore the individual that is actually going to suffer because of it.



beet1e, I think you have just shown why a socialist monoploy created by a government is a bad thing.  How many market created monopolies can you think of?  How many socialist government ones can you think of?