Letters to the Editor
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It's not about labor, it's about management
It's funny how when businesses do well, you get front-page stories about "visionary CEOs" and "brilliant managers" who are responsible for their companies' success, whereas when the company is doing poorly, it's always because of "high labor costs", "recalcitrant unions" or the latest (a la GM) "unfair pension, medical and retirement burdens".
The fact of the matter is the blame for current airlines' and their atrocious financial health is entirely due to their incompetent management. Everyone likes to complain about Southwest somehow being unfair, but here are MANAGEMENT decisions that Southwest has made and that are the current source of their profits:
1) fuel hedging. The article cites costs for different airlines but seems to imply that most of the cost difference between LCCs and legacy airlines is because of the greedy unions. But currently Southwest is paying about 50% the market price for its fuel because several years ago, its management presciently decided that fuel costs were likely to rise and that it would be better to hedge the prices while costs were still low. That is an enormous advantage. Any airline that doesn't have experts on its staff to predict and chart fuel costs several years out and develop appropriate strategies to take advantage of such predictions deserves to be at the mercy of the spot markets. And if they do have such experts who predicted incorrectly, well, they're paying the price for it just like anyone who's lost money on a Wall Street bet. Don't blame the worker for that.
2) Southwest has decided on their route structure and choice of airplanes in order to maximize their profits. Don't complain if other airlines don't do the same. If an airline analyzes a new route and decides that because of a 13 hour layover the route isn't profitable, then they shouldn't run it. And if they don't take into account costs like aircraft leases and the "ripple through an airline's entire operational matrix", then they're not doing their job.
3) Southwest is unionized. They just treat their unions well, and treat their employees well too. It might be news to some managers, but employees will happily take lower wages in return for intangibles like better job security, nicer work environment, a belief that the company really does value its workers, etc. It may not be a huge pay cut, but it still matters. If you look at people like Frank Lorenzo who bankrupted Eastern, he antagonized his unions so much that many of them actually wanted Eastern to go bankrupt figuring it'd be better if some other airline bought out the routes than to continue working for a guy like Lorenzo. How come corporate bosses never realize that when they boast to business magazines that they're going to "take on" or "wage war" against their unions (i.e. workers), the unions might get pissed off enough to fight back?
4) The core business of legacy airlines isn't running airplanes efficiently from point A to point B. It's ticket arbitrage. Their most valuable asset isn't their fleet of planes or their workers, it's the inner algorithms of their pricing model that allows them to fleece business and last minute travellers with such inventions as the Saturday night stayover and the 2 week advance purchase. This worked back in the pre-internet days when the average traveller might have checked once or twice with his travel agent and made his purchase, while the airline was changing its prices every minute in response to fluctuations in demand. But now, it's customers who have become arbitrageurs, repeatedly checking multiple travel sites, each querying numerous airlines, until some fluctuation in an airlines pricing algorithm leads to a temporary lower fare. Heck, these days, travel sites even allow you to set your goal price and allow the site to automatically keep checking until it can snag a ticket at that price for you. Now that the tables have turned, airlines keep crying about the old business traveller (i.e. one who would pay 10x the price for a similar ticket) while not preparing for the new realities of a much more level playing field.
I should say I'm not employed by Southwest, and indeed, I haven't flown it in years because it doesn't fly into my local airport. But I'm tired of airlines complaining about LCCs or their workers as if they're the ones responsible for all the airline industry's woes. jetBlue and Southwest don't grow money on trees. They offer a service that people are willing to buy (service that's nowadays usually rated higher than that provided by so-called "full-service" airlines) at a price that is profitable. And the secrets of their operations have been written up and analyzed in numerous B-school case studies throughout the years. It isn't voodoo. If the managers of the other airlines can't be bothered to study their competitors, analyze their market, and come up with ways for their airline to compete, then they deserved to be fired just like any one else who isn't up to the demands of their job.
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the problem isn't unions
I know that "mraju" made this point already, but in light of the quote in the article that low-cost airlines are "mostly unencumbered by unionized labor," I feel that it should be reiterated that Southwest Airlines, at least, does have unionized labor. I remember a number of year ago, when Herb Kelleher was still CEO of Southwest, listening to him proudly correct an interviewer who also suggested that Southwest was successful in part because of non-unionized labor.
Mr. Pilot, the existence of unionized labor is not the problem of failing airlines. Airlines don't have to jerk around their workers in order to be successful.
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Renewables for airplanes...
For those of you interested in renewables and aircraft, here is the short version:
it's possible, but the barriers to alternative-fuel planes are much higher than for alternative-fuel cars, trucks, buses, trains, and ships. They will very likely be the last mode of transportation to make the transition.
The slightly longer version goes like this:
To get the obvious out of the way, you can't run an airliner on batteries - they're too heavy. Nor is hybrid technology remotely useful on an aircraft.
Next cab off the rank is biofuels. There's no reason why you couldn't run a turbofan on the right mix of them. But putting different fuels into aircraft engines is a very big deal; regulators understandably get very nervous as to the effect on reliability and demand huge amounts of testing to do so. General Aviation airplanes are the very last vehiles to run on leaded fuel for just this reason. And given that biofuels can't go anywhere near meeting demands for automotive fuel, there's absolutely no sense in burning them in aircraft right now. But, if, say, the production of biodiesel from algae starts to supply significant fractions of our transport fuels, it's not inconceivable that they'd be used in airliners as well.
Finally, hydrogen. Hydrogen can be burned in conventional aircraft engines (with some modifications as described with the biofuels), but from an environmental perspective this doesn't make any sense unless the hydrogen is produced in a greenhouse-friendly manner, which is a huge challenge. But let's assume hydrogen is widely and cheaply available - would you use it for plane fuel? It is also incredibly hard to store efficiently and safely; it has a nasty habit of causing the tanks it is stored in to go brittle, something you probably don't want to happen to your planes wing tanks; and yet, your container for holding the hydrogen has to not only be safe but be lightweight and not add bulk to the aircraft. The ultimate promise is hydrogen fuel cells, which when combined with electric motors would form a much more efficient propulsion system than conventional jets. But hydrogen fuel cells are incredibly expensive, and they are also very heavy, which is kind of a problem for aircraft!
So it's not just airline intransigence that ties them to fossil fuels at this stage. It's very real engineering issues.