Last year was a profitable year for the airlines but it’s been a jarring couple months of late, and that might be an understatement. Within a week there was a rapid-fire succession of airline failures. Aloha Airlines, ATA and Skybus all went out of business. Include Champion Air and MAXjet Airways that became defunct in the beginning of the year, and it begins to look like a portentous trend.
Though Frontier Airlines continues to fly, it filed for bankruptcy the second week in April. The very same week, upon the FAA’s demands, American Airlines grounded its fleet of Boeing MD-80 jets.
Continental, AA and Southwest are all reporting disappointing quarterly earnings due to the staggering price of oil. And presumably, the planned combination of Delta and Northwest is putting pressure on United to take part in a merger to better compete in a tough market. However, some will argue that mergers are not the solution — bringing two struggling airlines together simply adds up to one large weak airline. Perhaps just one of the reasons behind Continental’s decision to not pursue a merger at this time.
Considering the logistics the airlines face — the margins they operate on, the cost of maintenance, the increasing price of fuel (according to the US Air Transport Association, every dollar increase per barrel of oil equals about $465 million in additional costs for US airlines. Since the start of 2007, the price per barrel of oil has increased from about $72 to $106), and downturn in the economy — some would say it’s amazing there are still so many carriers in the air … not to mention the number of disgruntled passengers.
But what does this mean for the ground support industry? Prices going up means travel will go down, which means fewer employees will be needed on the ramp. ”It’s a lot of contract labor and so that’s going to diminish,” say John Goglia. “It’s going to cut loose another bunch of mechanics, both aircraft and GSE mechanics, who are likely to leave the industry … you put them on the rollercoaster ride of work or no work, they are going to say ‘screw this’ and work for Detroit Diesel where they can work all the time.”
Right now, the International Association of Machinists and Aerospace Workers, representing 12,500 ramp workers, reservation and customer service agents and other employees, is planning to hold anti-merger rallies around the country and is also seeking to drum up support for its views on Capitol Hill.
A merger also means a glut of equipment, which could translate to a lessened need for new equipment, according to Tony Vasko. “Too much equipment is one of the biggies,” Vasko claims, “and with this overlap, there is going to be surplus gates, terminal facilities and all the rest of the nonsense there, so I can see some bloodbaths coming with this one.”
Opines Vasko, “I cannot believe Northwest and Delta are going to merge. You talk about two different cultures; Northwest was always kind of draconian and Delta was more laid back.”
Thirty years ago people argued against deregulation and today many continue to claim that the airline industry should have remained under the government’s watchful eye. I can guarentee you, it will never go back to the way it was. Please send a letter to the editor and tell us your opinions.
And as Always, thanks for reading.