Hungry Jack
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Living and dying in 3/4 time...
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Post by Hungry Jack on Apr 13, 2017 17:11:16 GMT -8
Ummm, moving "another" crew would cause "another" flight to be cancelled. In that event hundreds of people would miss their flight instead of just four I spoke with a friend who is a pilot for another airline and he said that his company has crews on call for situations like this one. Hmmmm. Overbooking has been going on many many years, including the many years when airlines made losses rather than profits. Profit margins remain very tight. The point is to reduce costs. The more full the plane is, the lower the per seat cost, and the lower the airfare. Because lots of people cancel and/or don't show, the airlines need to overbook to have a reasonable chance of filling the airplane. I've got no problem with companies making money. But I am going to call BS on tight profit margins. In 2016 United brought in over $2billion in income after operating costs according to their own press release ( newsroom.united.com/2017-01-17-United-Airlines-Reports-Full-Year-and-Fourth-Quarter-2016-Performance). The airline business in general is a miserable one. Very high fixed costs, uncertain demand, intense competition, hard to differentiate your product--it is really crappy. I studied the industry a bit. At some point in the early 2000s, the collective profits of the commercial aviation industry were negative.
Think about that for a second. In its entire history, all airlines had collectively lost money. That's how effed up that industry is. Now, some companies have done well. Southwest had a string of like 30 years of positive annual net income. That's amazing in the context of what I wrote above. But overall, commercial aviation is a crappy business and many investors probably kick themselves for investing in airlines. When demand his high, even United can make decent profits. But downturns hit airlines very hard when people fly less. Accounting profits can be pretty misleading. Better off looking at cash flows. United's 2016 performance shows $5.5B in cash flow from operations, but $3.2B in cash expenditures on capital items. Aircraft, their parts, and related equipment are very expensive. That's the high fixed cost portion of the business. None of this absolves United of all the dumb stuff they did. We are talking about maybe $1000--the incremental difference of additional benefit required (4 x $250) in order to entice people to give up seats, rather than dragging them bodily off the plan. $1,000, or PR armageddon. Just dumb.
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Hungry Jack
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Living and dying in 3/4 time...
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Post by Hungry Jack on Apr 13, 2017 17:20:39 GMT -8
The kicking screaming passenger screwed up big big big time by escalating it to the point that law enforcement had to get involved, and then attempting to resist. So, you're blaming the victim? I think it is fair to question the actions of the victim once the situation got to that point. This is isn't "victim blaming" which is a fashionable term to throw out lately, but there is a part of society that must accept that sometimes you just have to agree to cooperate in the moment. By "part" of society, I don't mean to insinuate minorities, less affluent, or any particular class of people. Rather it is the notion that some judgment can be applied, and, on balance, it would have been better to cooperate so the plane could leave on time and many other passengers would not be inconvenienced. Again, the situation NEVER should have reached that point of escalation. That's on United. But once you are there, you have to think about your options and what might be the best course. We have all had to eat $hit at one point or another in our lives, and we live to tell about it.
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BigLoad
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Pancakes!
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Post by BigLoad on Apr 13, 2017 17:32:02 GMT -8
The airline business in general is a miserable one. Very high fixed costs, uncertain demand, intense competition, hard to differentiate your product--it is really crappy. I studied the industry a bit. At some point in the early 2000s, the collective profits of the commercial aviation industry were negative.My rule of thumb is that the most financially healthy airline is the one that most recently emerged from bankruptcy. I can't figure out why airlines exist as businesses, except that each hopes they'll be the lone survivor and can finally charge enough to make a profit. It worries me that the industry's existence is essentially financed by its creditors. The creditors have to make enough money on average to weather the bankruptcies.
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zeke
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Peekaboo slot 2023
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Post by zeke on Apr 13, 2017 17:35:43 GMT -8
For the kind of $$ we spend on keeping airlines running, we could have a great high speed rail thing going.
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Hungry Jack
Trail Wise!
Living and dying in 3/4 time...
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Post by Hungry Jack on Apr 13, 2017 18:26:10 GMT -8
I guess we consumers should all be grateful that so many investors are willing to burn money investing in airlines. We have lots of air travel options--even without getting our butts kicked. There are a few interesting stats on page 3 of this report. The table showing return on invested capital for 2014, 2015, and 2016, and then return on invested capital, subtracting out the cost of the capital (e.g. if your assets generate 20% return that's great, but not if it cost 25% to borrow the money to finance them). In 2013 and 2014, the return on capital minus the cost of capital was negative. In other words, the industry burned investor money.
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Post by hikingtiger on Apr 14, 2017 9:41:52 GMT -8
With respect, you clearly don't understand FAA crew rest requirements. FAA requires a minimum of 10 hour rest period between duty periods. The drive would have been part of the crew's duty time, after which they must have 10 hours of crew rest time before beginning another duty period. Further, while the crew would have been "on the clock" for FAA crew duty time, they would have been "off the clock" for crew pay time. In other words, the drive would have been unpaid crew duty time and they could not start working for pay until 10 hours after they arrived. It's a lousy system in a lot of ways, but that's the way the pilot unions have negotiated it. I appreciate the explanation. I'm not familiar to that detail...only familiar enough to know that I've had a few flights delayed because the crew arrived late the night before (not unlike this crew, due to the disturbance.)
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Post by High Sierra Fan on Apr 25, 2017 0:19:13 GMT -8
So out of the hundreds of pilots that United has in their system they couldn't move a different group to that flight? This was United's screw up, the passenger shouldn't be forced to lose his seat. Ummm, moving "another" crew would cause "another" flight to be cancelled. In that event hundreds of people would miss their flight instead of just four. And FWIW, when you book a flight, you enter into a "contract of carriage." That contract allows the airline to bounce you off the contracted flight for a number of reasons, including overbooking and (not kidding here) smelling bad. If you stink bad enough to offend other passengers, you can be booted. Also, I found out by experience, they don't actually have to fly you. When San Diego was fogged in I've been diverted to L. A. where we were put in buses for the ride down. Medium efficient and it appears, all covered in the contract where, at least then, they had a year to get me to my destination. Which sounds like a boilerplate from the days of sail. [not entirely outrageous. I've had boat insurance where one of the voiding actions was using it to commit acts of piracy).
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RumiDude
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Marmota olympus
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Post by RumiDude on Apr 25, 2017 8:43:05 GMT -8
The airline business in general is a miserable one. Very high fixed costs, uncertain demand, intense competition, hard to differentiate your product--it is really crappy. I studied the industry a bit. At some point in the early 2000s, the collective profits of the commercial aviation industry were negative.My rule of thumb is that the most financially healthy airline is the one that most recently emerged from bankruptcy. I can't figure out why airlines exist as businesses, except that each hopes they'll be the lone survivor and can finally charge enough to make a profit. It worries me that the industry's existence is essentially financed by its creditors. The creditors have to make enough money on average to weather the bankruptcies. I don't know jack about airline finances, but I do see things which make me wonder if there aren't a lot of subsidies paid by tourism and other businesses along with government subsidies. Rumi
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