Airline growth - not sure exactly what this means

Discussion in 'Other Aspects of Aviation Security' started by Sunny Goth, Feb 1, 2012.

  1. Sunny Goth

    Sunny Goth Original Member Coach

  2. Lisa Simeone

    Lisa Simeone Original Member

    But we only just started 2012. Plus, this report is about international travel. It includes all different countries, not just the U.S.
  3. Mike

    Mike Founding Member Coach

    In the U.S. Delta is cutting capacity by another 3% in 2012. Their profit is soaring, but the airline itself is shrinking.

    15,000 layoffs were forecast today for American. AA & US are now both potential takeover targets.
  4. Sunny Goth

    Sunny Goth Original Member Coach

    Right! That's what I was wondering. I meant to post a link to the potential 15K layoff notice. It doesn't make sense that if number of passengers grew, that airlines would be laying off that many people.

    I guess it's what Lisa said, other markets are growing, and we're not. Maybe the airlines are making it all up in bag fees, and the rest is just smoke and mirrors.
  5. Mike

    Mike Founding Member Coach

    Delta would be running red ink instead of record profits if it weren't for their ancillary income (bag fees, outrageous change fees, credit card kickbacks). Except for Southwest, the large American airlines don't offer a profitable product that people will pay for.
  6. Louis Betti

    Louis Betti Original Member

    " The International Air Transport Association says passenger demand grew 5.9 percent last year but lagged behind capacity increases.

    1. Don't miss these Travel stories

      1. [​IMG]
        Raw emotion
        So, you think your last trip was exhausting? Trust us, if you want to know what exhausted truly looks like, check out "After: Portraits from Denali," a new photographic exhibit on display at the Anchorage Museum Feb. 3–April 15.
      2. Celebrate winter in Idaho at a Polar Bear Float
      3. Princess cruise passengers hit with stomach illness
      4. KLM wants air travelers to get social in the sky
      5. Gross! App lets hotel guests bypass icky TV remote
    The group, which represents some 240 major airlines, says the airlines increased their available seats by 6.3 percent meaning average loads declined slightly in 2011."
    Indeed, other markets are growing, such as Asia, but not us. Air travel has become a commodity, with pax usually travelling based on the lowest fare.
    As to Delta, it appears the model IS working; pay for what you need / want. "I just want to get there, I don't need food, and I'll take a carry-on bag."
    Sure, the airlines are adjusting capacity to match demand, and this makes sense. Airline merger / consolidation is also necessary to a point. Let's face it, we're paying less to fly now than 20 years ago, extra fees included. As to US Air and AA, US Air has been looking for a buyout merger for a while now. AA's mistake is that they wanted to stay solo, and the unions just didn't play along (among other factors). AA missed the boat by not courting CO or UA. Now, who's left for them, US Air?
    As to Southwest, when you can fly them from JFK to Rio on a 777, let me know.:cool:
  7. Mike

    Mike Founding Member Coach

    Southwest (especially with Air Tran added in to the mix) carries more passengers domestically than Delta carries domestically and internationally. The February report with comprehensive 2011 data will be out in a few days, but here are the enplanement states for 3rd quarter (July - September) 2011:

    Delta 27,524,156​

    Southwest 28,539,135​
    AirTran 6,533,019​

    Southwest by itself was flying 3.7% more passengers domestically than all of Delta.

    Southwest + AirTran was flying 27.4% more passengers domestically (plus a few Caribbean routes for AirTran) than all of Delta.

    Southwest has used the recession to reorganize its route network -- reduce service to non-performing destinations, increase service to better-performing destinations and add new ones. Southwest has no layoffs, no planes parked in the desert.

    When Delta & Northwest merged, they initially had 9-10% more enplanements than Southwest.

    Do you see a pattern here? Delta keeps shrinking while Southwest keeps increasing its market share domestically. And since Southwest's market is domestic, its domestic impact is a lot larger than the overall numbers suggest.

    Now think back 20-30 years to when the original Pan Am failed, and why: In the regulated environment of the time, Pan Am was not allowed to develop a domestic network to feed its international network. Free-market competition is now doing the same thing to Delta. Those 777s won't be flying to Rio if Southwest can't get the passengers to its international hubs to board them.

    International LCC's are just around the corner, waiting for 787's to be available. The 787 (once available in quantity) likely will do for international LCC's what 737's did for companies like Southwest & Virgin Blue. RyanAir is waiting for them. Qantas 787's (flown by their subsidiary JetStar) will be reaching up from Australia, initially to India & Asia but they will also be capable of serving U.S. destinations. Does anyone perhaps see some trends here?

    My hunch is that Delta is looking for more acquisitions to shore up its domestic feeder capacity. However, until they develop a competitive domestic coach product that people want to pay for, they will just be repeating the cycle (predicted by a number of us when they acquired NW & proceeded to treat the NW elites as :trash:) of acquire & shrink, acquire & shrink. When there is nothing left to acquire, they will just shrink.

Share This Page