Aircraft said:
On top of all that, aviation has always been the world's least profitable industry. If you average out the profits made by the world scheduled airline industry for the 54 years prior to 2001, you find that each operator averages $1,000 (USD) profit per year. One thousand dollars - how's that for razor thin profits?
Someone quoting Warren Buffett here? Didn't Warren Buffett once say "Any right-minded capitalist who had seen the Wrights' contraption take to the skies in Kitty Hawk might have shot it down and saved investors 100 years of agony". Buffett argued, airlines as a whole hadn't netted a dime since 1903.
Averages and cross-market accumulations are always interesting. If you average all the gains and all the losses of actual trades on the stock market, I think you'll find they average out to zero.
On a similar basis, the average Australian possesses one boob and one testicle. Approximately.
(sampling error -0001%, SD=0.9999, other terms and conditions apply).
Net returns for an industry where some players are producing stand-out returns (SIA, Qantas, for example) simply highlight the differences between management that can turn a buck and management that can't.
Do QF or SIA make world-leading profits by paying world's lowest salaries?
Airlines are price-makers, not price-takers. Of course there are competitive pressures, but cars and buses and to some extent trains all use the same hydrocarbon based fuels or derivatives thereof, and the same cost pressures apply.
Noticed how the price of an airline ticket is now markedly MORE expensive than it was in the immediate post 9/11 environment, when less people wanted to fly?
The thing is that all airlines are forced to become low-cost carriers in order to survive. Low-cost does not equate to low-price. Airlines are forced to compete for scant resources - customers, staff, fuel, routes, slots, real estate (terminal space), sometimes even for aircraft. The airline that juggles the cost and price pressures best with the available resources will give the best return to its shareholders.
Pilots are just another resource. A resource that has its own market, which these days is global. A pilot suitably qualified could work for a small island hopper, a mainline, or go play in the great big sandpit. In fact. of all the resources that have to be juggled, the pilot is probably one of the most flexible. A terminal in Dubbo can't be moved to become a terminal in Dallas, Devonport or Dubai, at least, not economically, whereas the appropriately-qualified pilot can redeploy her/himself to those places at very little notice and very little expense.
If I ran an airline, I'd be careful to maintain my most valuable, and easily lost, resources, if I understood that they were critical to my strategic capability of providing a service to my customers.
Not properly understanding the criticality of key resources, or treating any of those key resources with disdain, will surely result in the business going downhill, and not very slowly.
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VH-CU