Cut Price Airlines: How DO they do it?

[beet1e]

Bad business about United Airlines. Bad business indeed.  I can only think that with the impending war in Iraq, things are going to get tougher for the airlines just like last time during the 1991 Gulf War. Sept. 11th 2001 might have been a turning point for the "cheapo" airlines. Lots of people were frightened of flying after that dreadful day, but we got seduced back by cheap fares. The thing is, the cheapo airlines are making big profits!  But how?

In March 2001, my best friend and I decided to go to Dublin for the weekend. It's a 50 minute flight on http://www.ryanair.com from Luton (40 miles N of London). The return fare for each of us? £1. Yep, I thought it was a mistake too, but no mistake. The catch was that the airport taxes were added to that separately, and that took the figure to £26. But even so, two people going to Dublin for £52 return is still a steal. That same friend took his girlfriend to Salzburg (Austria! - home of Mozart), and the fare was 20p, plus govt. taxes. The thing is, Ryan Air posted a £20m profit last year. How the hell do they do it? OK, there's no meal service, no business or first class. Drinks & snacks are available, but pricey. I prefer to take my own.

Airlines like RyanAir seem to be gaining popularity as a model of what the flying public actually wants, as opposed to what is forced on them by the majors. Are there any cut price lines in the US?

[Curval]

Originally posted by beet1e
The thing is, the cheapo airlines are making big profits!  But how?

1.  A lack of union involvement.
2.  A lack of union involvement.
3.  A lack of union involvement.

[Toad]

Well thought out answer, Curval.

Wrong, however.

[funkedup]

SWA is a union shop, no?

[Creamo]

Yes Funked.

You’ve been a self appointed foolish expert and consumed on these airline/union topics here since my rebuttal to MT’s father’s union busting comment Curval. Whether you’ll be as giddy to admit it, as your love for your wife for instance, it’s pretty apparent. Why?

I’m not sure. Somewhere a union did you wrong or something? My viable reply to MT , as it was true, just pointed out how a union could provide a positive, in that case wage increases. A simple comeback for a opposite example he described. Anyway, it’s pretty uncomfortably obvious it struck a nerve with you, as your posts on anything to do with this topic are guaranteed, short, spiteful, and lacking of anything of content or fact.

Get over it or bring a argument to the table. I know lots about this issue and can clue you in. If not, you sound like a angry tool.

Just saying*...

[Curval]

Originally posted by Creamo
Yes Funked.

You’ve been a self appointed foolish expert and consumed on these airline/union topics here since my rebuttal to MT’s father’s union busting comment Curval. Whether you’ll be as giddy to admit it, as your love for your wife for instance, it’s pretty apparent. Why?

I’m not sure. Somewhere a union did you wrong or something? My viable reply to MT , as it was true, just pointed out how a union could provide a positive, in that case wage increases. A simple comeback for a opposite example he described. Anyway, it’s pretty uncomfortably obvious it struck a nerve with you, as your posts on anything to do with this topic are guaranteed, short, spiteful, and lacking of anything of content or fact.

Get over it or bring a argument to the table. I know lots about this issue and can clue you in. If not, you sound like a angry tool.

Just saying*...

I'm management Cremo..it is my duty to go to battle against you blue-shirted types.

You wonder why I have a gripe against unions.  One reason is that I was involved in audits of two of the largest unions in Canada when I was working up there.  I have never in my life seen a larger waste of money or resourses.  They weren't airline unions but I am confident that it would be no better in that industry.  I cannot elaborate more than that as I don't want to risk divulging confidential information, but I suggest the next time your union produces a set of financial statements, read them..and try to understand what is being presented.  Ask your people what actually comprises balances in the expense accounts and on the balance sheet.  You will find that people will get very quiet, very quickly.

As far as this particular thread goes...I made a form of accusation.  I was rebutted by a simple statement from Toad that I was wrong and one example of a union shop that is making money was presented as a reason for this.  Sorry, but the onus is still on you to prove me wrong.  I will stick to my opinion until that time.  

The fact is that these airlines that are going under are doing so because they cannot seem to control costs.  Wages expense and benefits is one line item that is spiralling out of control on their P&L statements.  Revenues have dropped for a number of reasons, including 9/11 and fierce competition but I fly alot and notice that many of the flights I am on are full, suggesting the problem with the airlines is related to costs.

Educate me..I'm always willing to learn, if I am wrong.

[Toad]

Originally posted by Curval
I have never in my life seen a larger waste of money or resourses....   but I suggest the next time your union produces a set of financial statements, read them..and try to understand what is being presented.  Ask your people what actually comprises balances in the expense accounts and on the balance sheet.  You will find that people will get very quiet, very quickly.

LOL! Perhaps you have never seen in your life the results of "expert" managers such as those that ran Enron?

Those folks got very quiet, very quickly, didn't they?

As far as this particular thread goes...I made a form of accusation.  I was rebutted by a simple statement from Toad that I was wrong and one example of a union shop that is making money was presented as a reason for this.  Sorry, but the onus is still on you to prove me wrong.  I will stick to my opinion until that time.

Well, simplistic accusations get simplistics rebuttals. Nonetheless, you are wrong.

Airlines thrive when they have good management and marketing and they tank when they don't. Unions have nothing to do with the selection of management and marketing in almost every case.

Delta is a case in point. Under Dave Garrett, everything Delta touched turned to gold. Under his successor, Ron Allen a "personnel weenie" that brown-nosed his way to the top without knowing a d*mn thing about the airline industry, Delta almost went bankrupt. Under the new CEO, Leo Mullin, Delta did respectably well because Mullin, while not an "airline" guy is a capable manager over all. Sept. 11 is a wildcard that most management cannot deal with for numerous reasons. The foremost one is perhaps the unwillingness to accept the fact that the entire industry method of operation needs a complete overhaul.

Southwest is another airline that shows what management that knows its own business and knows that treating folks as you yourself would want to be treated will result in success.

Check out Bethune at Continental. It's true they operated in bankruptcy for quite some time after Frank Lorenzo totally destroyed what Bob Six had built. Still, by treating his people fairly, understanding his business and treating the customer correctly, Bethune has done quite a job overall.

It isn't the Unions that make airlines fail. It's piss-poor management. Union activity at an airline merely reflects the capability of management in understanding the core business and understanding how to treat people.

Again, which came first: Piss-poor managers or union organizers?

There... more detail. You happy now?

[Thrawn]

Curval, you presented a statement with absolutely no arguemnet to back it up, the onus isn't on anyone to prove you wrong, you haven't given any reason to think you are right in the first place.

[SOB]

Now I'm all for throwing out a meaningless statement without any fact to back it up (lord knows I do it myself), but if you think for a second anyone is going to take you seriously, or should have some responsibility in proving wrong a one line blip that you blurt out like a tard, think again.

Also, what Thrawn said.


SOB

[Sparks]

WTG Toad - I am with you 110%  

Originally quoted by Curval

The fact is that these airlines that are going under are doing so because they cannot seem to control costs. Wages expense and benefits is one line item that is spiralling out of control on their P&L statements. Revenues have dropped for a number of reasons, including 9/11 and fierce competition but I fly alot and notice that many of the flights I am on are full, suggesting the problem with the airlines is related to costs.

This is absolutely TYPICAL of the faceless bean-counter speak I am so sick of hearing.  

Businesses go bad when they are managed by incompetents who have little or no knowledge of what they are managing and rely on the charts and accountants.

EXCESSIVE COSTS ARE CREATED BY BAD MANAGEMENT - FULL STOP

Example :-  In my hangar we had a nice bread and butter contract - big job but not rocket science.  Managed by idiots - hence this "not rocket science" job suddenly became "very complex" with "unrecognised challenges".  The Idiots seeing the job not matching their pretty graphs (because they wouldn't listen to people who knew how to really do the job) then insisted on trying to match the pretty graphs by invoking VP - Visual Progress. " I know we don't need to fit that cabinet yet - just do it".  
So now to do the VP and then un-do the VP and put right the cockups caused by having the VP in place and then try to do the job right we have to work lots of overtime ..... at  time and a half or double time.
But the Idiots didn't keep track of the overtime because it wasn't on their graphs and the bean counters only look at the quarterly figures.
Job finishes and bean-counters look at the overtime bills - HOLY CRAP !!! We need to cut costs - get rid of some people.
Guys are laid off.
Bread and butter job lost because we "can't make money at it"


And now the kicker - because the company didn't have a good year we can only have 2% pay rise (after agreeing to having none for 2 years to try to "remain competitive")[/i] - Oh and due to an influx of other work we are loused out with contractors to replace all the guys laid off  (contractors who cost way more than us per hour) and we are being asked to work overtime.

I'm in the union - I wonder why

Sparks

[Curval]

Toad, Enron IS an example of piss poor management, bad accounting practices and extremely bad auditing practices.  The same can be said for WorldCom and a few other recent notables, not involved in the airline industry.

The fact is though, that I cannot even begin to list the success stories.  Just too damn many.

You blame management...I blame exploding costs and the inability of management to control them.  So, effectively you same tomato..I say tomAto.  But, I ask you this...how can management control wage and benefit expense, one of the largest line items on the P&L statements, with unions constantly stepping in the way?  Creamo, in the thread to which he refers, was bragging that one paycheck paid for his union dues and that the union was responsible for getting him the increase that facilitated this....within a matter of weeks that airline filed for bankruptcy.  It just seemed to me to point to something a bit more substantial than simply blaming management.

[Curval]

I take back what I said about the onus being on you to prove anything.  I stick to the rest of what I have said.  Happy?

Just do me a favour Sparks...ask your union "brothers" about what actually comprises the balances in your union's financials as I suggest above..then come back and say it is just accounting speak.  Strange how you all did not comment on that.

"EXCESSIVE COSTS ARE CREATED BY BAD MANAGEMENT - FULL STOP"

LOL....omg.  What planet are you from?

[funkedup]

I've had some bad experiences with unions (operating engineers and UAW), but if they were so destructive to airlines, then how come the most ass-kickingest cut price airline ever (SWA) is a union shop?

[ccvi]

Back to the question...

Don't the cheap airlines use much smaller airports, just airfields in some cases, than the big ones? Landing costs are much lower there. Could be a factor.

[Curval]

Just a guess funked..but probably because they give them what they want and cut costs in every other department.