What in heck is happening

[chiglet]

I don't know if I am being,
a, Innocent
b, Stupid,
c, Cynical,
d, confused,or
e, all of the above
BUT, that since Sept 11, every "major" carrier is cutting back.....
After a 3 week downturn? Are the margins THAT tight? :confused:
we aim to please, it keeps the cleaners happy

[eagerbeaver]

I would hazard a guess and say that the majority of airlines are bringing forward their future plans and trying to stay in business, heard on the news that BA reported a 30% decrease in trans-atlantic pax and up to 10% on other flights

[CaptainSquelch]

Talked with dozens of collegues, short haul and long haul, this week and all had been flying with full or at least normal loads for the time of the year.

So I think I am at least:

a, Innocent
b, Stupid,
c, Cynical,
d, confused,or
e, all of the above <<<<<-----

Sq

[Icarus]

Many flights may well be operating with 'normal' load factors. Try to remember that all that means is that the revenue on those flights has not changed! Many flights are also operating with 'below normal' load factors with a subsequent reduction in revenue. Now apply the fact that operating costs have just shot up considerably (primarily from the scandalous Insurance companies), and with already tight margins that will now mean an overall loss for a lot of companies. Add that to the fall in many airline share prices, it is no wonder there is so much suffering; if your liabilities can no longer be covered by your assets you are insolvent.

[NorthernSky]

'Scandalous' - this term might be better applied to the standards of domestic security in the US and the performance of the security services there.

[LabyrinthMan]

Here are the facts:

1. Loads are down; airlines reporting monthly traffic results are reporting system-wides load declines of 5 to 10 % points.
2. People are paying less -- so even to achieve the slightly lower load factor you have to charge less. Don't assume that "the loads are the same, so the revenue is the same". Average yield is lower than it was a month ago.
3. Advanced sales are down between 5-15% for future travel (and down 40-60% in the US), so predictions of future loads in comings months are pretty dire.
4. Cost are going up for passengers that are travelling. For UK airlines, increased insurance coverage cost will amount to more than £3 per passenger (or £6 per return journy) by the 1st of November as the insurance companies try to recoup the cost of the attacks. This is at least, if not more than, equal to any profit that airlines make per passenger. So even if demand were constant, profit would be wiped out.

Add everything together and the impact is unlike anything experienced before: falling demand, falling price, and increased costs.

And now comes the recession, too.

Yeah, the industry had problems before, and the weakest, worst managed airlines will fail first (Swissair/Sabena). But the situation is bad for everyone now.

That is except us low-cost carriers who rely on low-fares, anyway. We're used to it!

[renegator]

it sounds unbelievable. right, especially the timing and scope. but keep in mind that the industry we are in is a cash flow business with exceptionally high cost. It is the advance bookings which keep most airlines aloft and if you remember a very good year in your company it will probably result from 1 or 2 pax per flight from which you really EARN money.

that´s the theory. real life is what we see. every day. everywhere. i never expected it to get that bad either, theory su*ks!

good luck out there. silversurfer

[411A]

Told you so guys, with my "tip of the iceberg" thread a short while ago, but now that more of the iceberg is exposed, maybe some are believers. It will get a lot worse before improvement. Look for at least another year of declining yields for many carriers. A few bright spots, cargo for the AMC for example.
The lean and mean carriers such as Southwest and Ryanair will do better.
Does anyone expect SR or SN to survive?

[Ella]

"What in heck is happening?"..........I'll tell you what's happening......The anti-Christ has arrived..... and he's an accountant!!!! :mad:

[A Very Civil Pilot]

If i was a CEO of a multi-billion-multi-national company that was being screwed by the insurers, I'd set-up my own insurance company to cover the airline.. It wouldn't need to make a profit, so would show a far reduced premium for the shareholders

[blue up]

Of course, if we activated a severe security plan (ie second door between pax and FD, Flight Eng to supervise the baggage loading, and "arrest of ANY difficult passenges") then we might get the consumer confidence back.
Last year I had a good bitching session with the training department heads about F/D security and the fact that we are strapped in our seats whilst any A55hole can enter and grab the Fire Ax behind my head and kill us all.
I was made to feel like a paranoid idiot. Shortly after this there was that episode with the psycho on the Germania F/D who beat the captain to a pulp.
Flying, like economy and shares, relies on confidence. In the 1920s there was a lack of confidence that crippled the world. If our accountants managed to grasp this simple fact then we might just survive. (litterally!)

(Anyhow, my 2 cents)

[LabyrinthMan]

Very Civil Pilot, those discussions are already happening (with Virgin apparently leading the cause), but it will take time, and lots of investment. It's also not our area of expertise, so there's lots of risk. Watch this space. Even if the airlines don't do it, there are lots of capitalists out there that don't have to cover previous payouts that can take advantage of the market and come in at lower rates...again it takes time...