Quote:
Some famous names in American aviation, such as Pan Am, disappeared entirely as they failed to adapt to the new era.
Others, such as United and American, went through repeated bankruptcies as they struggled to bring costs down. Meanwhile, salaries and benefits for staff at established carriers were seriously eroded.
What the article does not state is that the salaries and benefits were eroded as the costs were so way out of kilter with the profitability of the business. The companies were faced with three options. Maintain prevailing pay and benefits deals but reduce staff numbers, reduce pay and benefits deals and maintain staff numbers, do nothing and go bust. Last option is not a good idea, so it has to be a toss up between the first two. Many airlines actually laid off staff, but that meant they had to reduce capacity, which allowed the lowcost carriers to gain a greater foothold. The alternative, to reduce pay and benefits, but maintain the same size operation allowed others to keep the LoCos at bay. It also meant that when the market picked up, they could expand to meet demand.