Thursday, August 25, 2005

Daily FAIR!

10 comments:

Sam said...

That's just like you, Senor PiedPiper -- take the side of the proletariat. If you read this article in the NYTimes, you will learn that the NWA mechanics earn $36.39 per hour. If they work 40 hours per week for 48 weeks of the year, that amounts to $70,000 for the year. If they accepted the 26% pay cut the NWA bigwigs are demanding, they'd still be getting $52,000 per year. But how could they possibly live on such a measly sum of $52,000 per year? I'm sure these fine citizens saved their money instead of buying 52-inch plasma screen TVs when they were making $72,000 per year. (Note: I have no idea how many hours per year the mechanics work nor how large their plasma screen TVs are.)

On a larger scale, it's also interesting that the bigwigs are demanding a $176 million (per year?) cut in wages and benefits, but "in the last several months, the airline had spent more than $100 million to hire and train 1,500 substitutes."

And wait a second -- why don't Snoop and Dr. Dre have any say in this?

Ilya said...

Umm, what?

I think my eyes are deceiving me. Does sam really say that airplane mechanics buy plasma TVs and THEREFORE shouldn't protest pay cuts? That they can eke out a living and THEREFORE everything should be honky-dory? That they don't want less money and THEREFORE they are evil and greedy? That the PiedPiper should stand for EVEN MORE income inequality?

Yes, I can see that sam isn't exercised by the ancient battle cries of inequality.

xtrachromosomeconservative said...

Piedpiper spoke of managerial ineptitude, which is clearly the root cause of all the troubles of the legacy or hub and spoke carriers(American, United, US Airways, Continental, Delta, and Northwest). Part of this ineptitude was knuckling under to striking unions over the years and thus encumbering massive labor costs and benefit and pension obligations. I guess the question the union representatives will have to ponder is whether they would prefer their members to be unemployed or employed at a large pay cut. I am guessing that their members would prefer the latter option. But make no mistake, those are the options. Legacy carriers are at a competitive disadvantage because of a dated business model (hub and spoke vs. point to point) and high labor costs. There position is further eroded by high fuel costs (Low Cost Carriers, esp. Southwest, have aggressively hedged their fuel supply whereas the legacy carriers sold their futures for quick cash to stay afloat). As it is the Legacy carriers are finding ways to cut down on labor costs, i.e. avoid taking on union salaries and benefits, by code sharing with regional carriers with lower labor costs (think Northwest with Mesaba Aviation). Is it really wise to strike right now?

xtrachromosomeconservative said...

Oh and not to reopen an old debate, I find St. Paul eminently preferable.

Ilya said...

There is another option in addition to unemployment or employment at a lower pay scale. Employment at a higher pay scale, funded by higher ticket prices, reformed flying patterns and budget cuts elsewhere. Not to mention that the government could always lend a hand, as they've done before, to keep Northwest afloat by means of subsidies, tax breaks, etc. There are actually many options, which is why negotiations should go on.

PiedPiper said...

I'll address this in a separate post, because I think I need to clarify a position.

xtrachromosomeconservative said...

But why should government lend a hand? If Northwest were to fall over tomorrow do you doubt that te capacity and their routes would not be filled by competitive airlines? They most surely would. And why should Northwest pay higher wages when it appears that they can get on with lower wages? Government has lent a hand over and over in the airline industry and this has clearly had a deleterious impact. Reagan once said about washinton's regulatory tendencies "If it moves tax it, if it keeps moving regulate it, if it stops moving subsidize it." Ilya, you are right, though, government could swoop in and provide the additional cash that no investor would in the private market. I don't see what is to gain by doing that but they could.

xtrachromosomeconservative said...

There is one thing a government intervention would do, it would reward managerial ineptitude.

xtrachromosomeconservative said...

And ilya, have you given thought to why Northwest and other airlines don't feel they have sufficient pricing power. That money will have to come from somewhere else.

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