Why do AIRLINE Co. go Bankrupt? Instead of price drop?

[freemanteo]

I am waiting for a price drop for internation flights but never seen a big drop or permanent drop in price.

Why Airline companies rather go bankrupt than charge redicilous airfare prices to attract customers?? I would certainly be interested in a drastic price drop.

I know they got overheads, costs and all that, but is there a law that they cannot drop the price too much? Some might say the poor should'nt think about travelling! Or No Money, No Talk!

 

[UDT89]

b/c it just costs a lot to operate an airline.

think about the leasing costs for a gate at a major airport, plus employees, computer systems, planes, fuel, etc.

I think its not bad right now

 

[ElFenix]

when you have lots of union contracts and rent on the planes and gates to pay it really affects your ability to move prices downward.

 

[HappyPuppy]

Most airlines are losing money right and left. They can't drop prices any more.

 

[brtspears2]

Even southwest airlines, with their low fares and low costs, reports that next quarter they might have problems pulling a profit. Its starting to look really bad for the airlines.

 

[pulse8]

Originally posted by: brtspears2
Even southwest airlines, with their low fares and low costs, reports that next quarter they might have problems pulling a profit. Its starting to look really bad for the airlines.

When isn't it looking bad for the airlines?

 

[BD231]

There should be one central airline if you ask me, I don't think there's enough buisness to have multiple airlines like we do. It should work somewhat like public transprotation or something, maybe make the airlines a federal job.

 

[charrison]

Originally posted by: BD231
There should be one central airline if you ask me, I don't think there's enough buisness to have multiple airlines like we do. It should work somewhat like public transprotation or something, maybe make the airlines a federal job.

I will pass on that idea. If you think airlines are cattle cars now, just wait till they are all fed jobs.

 

[no0b]

Originally posted by: BD231
There should be one central airline if you ask me, I don't think there's enough buisness to have multiple airlines like we do. It should work somewhat like public transprotation or something, maybe make the airlines a federal job.

...and see crashes sky rocket...

 

[HappyPuppy]

Originally posted by: BD231
There should be one central airline if you ask me, I don't think there's enough buisness to have multiple airlines like we do. It should work somewhat like public transprotation or something, maybe make the airlines a federal job.

No doubt turning over the airline industry to the government would make it more efficient and less costly. I can't wait. Speaking of waiting....................

 

[Atrail]

Originally posted by: BD231
There should be one central airline if you ask me, I don't think there's enough buisness to have multiple airlines like we do. It should work somewhat like public transprotation or something, maybe make the airlines a federal job.

What happens when a plane crashes?
You sue the Federal Government for negligence.
Federal take over will not be happening anytime soon, thought it may eventually become needed...

 

[glenn1]

Because as long as airlines and other industries continue getting bailouts, it's impossible to shake out the weak players and allow the survivors to have some pricing power. Look at what happened to WorldCom. They began a pricing war which led to a death spiral in telecom stocks and their own bankruptcy (all on borrowed money and by lying to investors) consuming billions of dollars in capital which could have been used more productively elsewhere. But instead of allowing them to go belly-up and be liquidated, they're going to be allowed to come out of bankruptcy with a clean balance sheet and allowed to begin the entire process again.

 

[charrison]

Originally posted by: glenn1
Because as long as airlines and other industries continue getting bailouts, it's impossible to shake out the weak players and allow the survivors to have some pricing power. Look at what happened to WorldCom. They began a pricing war which led to a death spiral in telecom stocks and their own bankruptcy (all on borrowed money and by lying to investors) consuming billions of dollars in capital which could have been used more productively elsewhere. But instead of allowing them to go belly-up and be liquidated, they're going to be allowed to come out of bankruptcy with a clean balance sheet and allowed to begin the entire process again.

Also the only ones that have remained profitable(southwest,jetblue...) are non union shops.

 

[Viper GTS]

Air travel is a bit unusual in that for most people there is no alternative.

If gas gets to $1.65 a gallon, a certain number of people will walk to work, take public transportation, etc.

When people need to fly somewhere, they pretty much pay the price because there is no real alternative.

Also, airfare is not really a luxury item - I don't sit around all day dreaming of the places I could fly if only I could afford the airfare. When I need to go somewhere I buy a ticket. When I don't, I couldn't care less what a ticket costs.

Bottom line is the people that need to fly are already doing it - At current prices.

Although a price drop would produce SOME increase in passenger volume, it would likely not overcome the loss in revenue per individual sale.

Viper GTS

 

[LH]

Uh no. Southwest has several unions, flight attendent, pilot and mechanic. They just happen to pay their employees less than other airlines, its not because they dont have unions. The reason Southwest is profitable is because it operates differently than other airlines. In fact no one operates like Southwest.

 

[kami333]

And don't tell me you guys pay full fare...

Paid $550 for round trip to Japan.

 

[XZeroII]

I would let them go under. Maybe we will get some new players in the market.

 

[db]

First off, airlines were hurting (b/c of the economy) BEFORE 9/11, but most of them did nothing about it until After 9/11. They were one of the very first in a long series of companies and industries to blame 9/11 on their misfortunes.

No matter what the reason for their condition, the airlines are going to take maximum advantage of this opportunity to get anything and everything they can, whether it's from the government, the public, or its employees.

Notice that United got a court order to force one of its employee groups to take a pay cut.
Now that American is posting its largest loss ever, it is positioning itself to do the same as United. And the other airlines will have no alternative but to do the same. With Republicans in the White House and both houses, this is prime time to jump on this thang and do it.

And BTW, the RLA (Railway Labor Act) is now the next target of the airlines for amendment, to swing the advantage to their favor against employees. Check what McCain and others are up to now. This is the time for a whack party for the airlines--their 2 biggest expenses are fuel and payroll, normally something they have no control over. Make no mistake, all airline employees will be taking a pay cut this year, voluntarily or forced by court order.

Needless to say, this will give union haters much glee; but that is simple-minded and ignorant--a political play. There is no less greed on behalf of management than there is on the part of unions. It's all about who you love to hate.

 

[FoBoT]

Originally posted by: UDT89
b/c it just costs a lot to operate an airline.

^

several of them need to go bankrupt, any business losing $7 million a day doesn't know what it is doing/is getting screwed by its unions

 

[freemanteo]

Originally posted by: kami333
And don't tell me you guys pay full fare...

Paid $550 for round trip to Japan.

I'm sorry, please tell us how you got that price??



noone answered my question, you guys mean that a company would rather lose more money without much passengers than dropping prices and increasing passengers?

I mean it is better to have empty cabins in airplanes than to cut prices? If my example is not exaggerated, why is it not feasible to loss less money by dropping prices? It would not only fill the cabins, but increase customer circle!

For example:
Empty cabins= $1billion loss
Full cabins= $300 million loss

 

[Chadder007]

Originally posted by: LH
Uh no. Southwest has several unions, flight attendent, pilot and mechanic. They just happen to pay their employees less than other airlines, its not because they dont have unions. The reason Southwest is profitable is because it operates differently than other airlines. In fact no one operates like Southwest.

WeRd. Its all about how they manage it.

 

[ElFenix]

Originally posted by: freemanteo

Originally posted by: kami333
And don't tell me you guys pay full fare...

Paid $550 for round trip to Japan.

I'm sorry, please tell us how you got that price??



noone answered my question, you guys mean that a company would rather lose more money without much passengers than dropping prices and increasing passengers?

I mean it is better to have empty cabins in airplanes than to cut prices? If my example is not exaggerated, why is it not feasible to loss less money by dropping prices? It would not only fill the cabins, but increase customer circle!

For example:
Empty cabins= $1billion loss
Full cabins= $300 million loss

you think they haven't thought of that?

 

[LH]

The airlines can blame their downfall on 9/11. Yes there was a pretty big slow down during the first part of 2001. However, most are barely at 50% of what they were at before 9/11. When you go from say 75% of the year before that, then after 9/11, 50% of that 75%, it hurts, those arent the exact numbers, just an example how big of impact 9/11 really had. They could have managed the major slow down, however they couldnt handle the major slow down and 9/11. They have a legit claim, 9/11 has had a huge impact on them. Some do need to go out of buisness, however they wouldnt have had to if 9/11 didnt happen.

 

[kami333]

Originally posted by: freemanteo

Originally posted by: kami333
And don't tell me you guys pay full fare...

Paid $550 for round trip to Japan.

I'm sorry, please tell us how you got that price??



noone answered my question, you guys mean that a company would rather lose more money without much passengers than dropping prices and increasing passengers?

I mean it is better to have empty cabins in airplanes than to cut prices? If my example is not exaggerated, why is it not feasible to loss less money by dropping prices? It would not only fill the cabins, but increase customer circle!

For example:
Empty cabins= $1billion loss
Full cabins= $300 million loss

I know United has recently gone from 747s to 777s on their flights from San Franscico to Osaka, which are a bit smaller. Plus a few years ago they started sharing the flight with ANA, half the passengers are United customers and the other half ANA. Becomes quite booked during the high season since they only have half as many seats available as before.

I use HIS for much of my travel or Pacific Express Travel. HIS is one of the biggest travel agencies in Japan and they have offices in Boston and a couple of other places. If you pick up one of their fliers they usually have some nice prices advertised, especially right about now until March when the fare is low. Only problem with the ticket I have now is that it's non-changable and non-upgradeable; ie if I oversleep and miss the plane I have to get a new ticket.

 

[kami333]

Originally posted by: LH
The airlines can blame their downfall on 9/11. Yes there was a pretty big slow down during the first part of 2001. However, most are barely at 50% of what they were at before 9/11. When you go from say 75% of the year before that, then after 9/11, 50% of that 75%, it hurts, those arent the exact numbers, just an example how big of impact 9/11 really had. They could have managed the major slow down, however they couldnt handle the major slow down and 9/11. They have a legit claim, 9/11 has had a huge impact on them. Some do need to go out of buisness, however they wouldnt have had to if 9/11 didnt happen.

I'm pissed cause free tickets using frequent flier miles isn't free anymore, you have to pay the tax and federal safety fee or something. It was $80+ when I picked up my ticket going to Europe. Ouch, that's about 10% of what a ticket would have cost me.