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Old 28th Jul 2002, 17:45
  #41 (permalink)  
Wino
Union Goon
 
Join Date: Feb 2000
Location: New Jersey, USA
Posts: 1,097
Are they saving money?
Depends on who you ask.
Good will is not really a balance sheet item unless you want to deduct it to show a loss. It never shows on the plus side.

However, crew costs ARE a balance sheet item and it is always where they are tempted to scrimp and save (usually a false economy) If you can reduce your costs by 1 percent You make a big change in the bottom line.

The good will lost doesn't show up there and neither does the degredation of safety. Unfortunately gutting safety doesn't adverserly effect the bottom line, even if you have a crash. The dollars saved while you gutted safety DO improve the bottom line however.

As an example of why it doesn't cost to bump pax... it was explained how things are bumped at AA when a flight is overweight for takeoff. The first thing bumped are the people, not the bags or the freight. Here is why: if you bump a person's bag but carry them, they are angry and you have to spend money linking up the person with their bag, so you have spent money the pax is pissed AND you will never see them again. Can't bump freight, its time sensitive. So you bump the people and write them an x dollars voucher for another flight. Why do that? The people think they have gained something, in the meantime they rarely travel alone (if the guy was on business he will pocket the voucher and use it to go somewhere with his wife, so he won't travel alone either) so they think they have been given another flight for free, and yet they are gonna wind up roping in another pax for us. As a result the bumping fares are probably carried as a promotional expense (I don't know this for certain) rather than an operating cost...

So back to the thread the answer to the question of the thread (are profts before safety) is OF COURSE THEY ARE....

The problem with all of this is we all as pilots know we are right. Unfortunately I can't think of too many airlines that are run by pilots that are successful. So impirical evidence doesn't bare us out.



Cheers
Wino

Last edited by Wino; 28th Jul 2002 at 17:53.
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