DELTA as KAMIKAZE ????
ANYONE WHO STILL DOUBTS ... that major U.S. air carriers are on a suicide mission should look no further than the executive suite at Delta Air Lines. Here's a company that lost $3 billion in the first nine months of 2004 and has a cost structure much higher than its struggling rivals. So what's its solution? LET's CUT FARES !!!!!
In theory, cutting fares should fill more seats and might bring in more money. But only in a vaccumn. Three decades of post-deregulation experience with fare wars shows what happens --- every rival matches the fare cuts. Any increase in business that Delta expects will be dissipated among all its rivals and all will lose more money. The fare war(s) are predicted to cut $3 billion from the industry's expected $70 billion in 2005 revenue. Delta obviously needs cash, and needs it badly. But fare wars aren't the way to get it done .... only in Widget World. And Delta used to be the head of the class ....
WIDGET WORLD LOGO
Even before the 9/11 attacks and recent oil price spikes, the legacy airlines were arguably the worst managed businesses in North America. Many decades of:
1. Greedy "executive management teams" chasing healthy bonuses and stock options ...
2. Self-serving union "leaders" (boy -- am I gonna' be in trouble, or what???) ...
3. Bureaucratic interference, usurious taxing policies and a general attitude of "I'm from the government and I'm here to help" level of incompetence .... have all served to stagger the US airline industry.
And you can't compare "low-cost" (read: low salaries) airlines to the large carriers. When was the last time you took a ride on a 737, an Airbus 320, or a Canadair RJ from .... say Mid-town, USA --- to Hong Kong or Singapore, with meals (oh, would you prefer to bring your own?), checked baggage, transfers, etc., etc.... you get the picture.
ANYONE WHO STILL DOUBTS ... that major U.S. air carriers are on a suicide mission should look no further than the executive suite at Delta Air Lines. Here's a company that lost $3 billion in the first nine months of 2004 and has a cost structure much higher than its struggling rivals. So what's its solution? LET's CUT FARES !!!!!
In theory, cutting fares should fill more seats and might bring in more money. But only in a vaccumn. Three decades of post-deregulation experience with fare wars shows what happens --- every rival matches the fare cuts. Any increase in business that Delta expects will be dissipated among all its rivals and all will lose more money. The fare war(s) are predicted to cut $3 billion from the industry's expected $70 billion in 2005 revenue. Delta obviously needs cash, and needs it badly. But fare wars aren't the way to get it done .... only in Widget World. And Delta used to be the head of the class ....
Even before the 9/11 attacks and recent oil price spikes, the legacy airlines were arguably the worst managed businesses in North America. Many decades of:
1. Greedy "executive management teams" chasing healthy bonuses and stock options ...
2. Self-serving union "leaders" (boy -- am I gonna' be in trouble, or what???) ...
3. Bureaucratic interference, usurious taxing policies and a general attitude of "I'm from the government and I'm here to help" level of incompetence .... have all served to stagger the US airline industry.
And you can't compare "low-cost" (read: low salaries) airlines to the large carriers. When was the last time you took a ride on a 737, an Airbus 320, or a Canadair RJ from .... say Mid-town, USA --- to Hong Kong or Singapore, with meals (oh, would you prefer to bring your own?), checked baggage, transfers, etc., etc.... you get the picture.
