DOCSLIB.ORG

Airline Financial Stability Hearing Committee On

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Airline Financial Stability Hearing Committee On S. HRG. 109–1093 AIRLINE FINANCIAL STABILITY HEARING BEFORE THE SUBCOMMITTEE ON AVIATION OF THE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION UNITED STATES SENATE ONE HUNDRED NINTH CONGRESS FIRST SESSION JULY 13, 2005 Printed for the use of the Committee on Commerce, Science, and Transportation ( U.S. GOVERNMENT PRINTING OFFICE 62–179 PDF WASHINGTON : 2010 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Nov 24 2008 12:42 Nov 17, 2010 Jkt 062179 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 S:\WPSHR\GPO\DOCS\62179.TXT SCOM1 PsN: JACKIE SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION ONE HUNDRED NINTH CONGRESS FIRST SESSION TED STEVENS, Alaska, Chairman JOHN MCCAIN, Arizona DANIEL K. INOUYE, Hawaii, Co-Chairman CONRAD BURNS, Montana JOHN D. ROCKEFELLER IV, West Virginia TRENT LOTT, Mississippi JOHN F. KERRY, Massachusetts KAY BAILEY HUTCHISON, Texas BYRON L. DORGAN, North Dakota OLYMPIA J. SNOWE, Maine BARBARA BOXER, California GORDON H. SMITH, Oregon BILL NELSON, Florida JOHN ENSIGN, Nevada MARIA CANTWELL, Washington GEORGE ALLEN, Virginia FRANK R. LAUTENBERG, New Jersey JOHN E. SUNUNU, New Hampshire E. BENJAMIN NELSON, Nebraska JIM DEMINT, South Carolina MARK PRYOR, Arkansas DAVID VITTER, Louisiana LISA J. SUTHERLAND, Republican Staff Director CHRISTINE DRAGER KURTH, Republican Deputy Staff Director DAVID RUSSELL, Republican Chief Counsel MARGARET L. CUMMISKY, Democratic Staff Director and Chief Counsel SAMUEL E. WHITEHORN, Democratic Deputy Staff Director and General Counsel LILA HARPER HELMS, Democratic Policy Director SUBCOMMITTEE ON AVIATION CONRAD BURNS, Montana, Chairman TED STEVENS, Alaska JOHN D. ROCKEFELLER IV, West Virginia, JOHN MCCAIN, Arizona Ranking TRENT LOTT, Mississippi DANIEL K. INOUYE, Hawaii KAY BAILEY HUTCHISON, Texas BYRON L. DORGAN, North Dakota OLYMPIA J. SNOWE, Maine BARBARA BOXER, California GORDON H. SMITH, Oregon MARIA CANTWELL, Washington JOHN ENSIGN, Nevada FRANK R. LAUTENBERG, New Jersey GEORGE ALLEN, Virginia BILL NELSON, Florida JOHN E. SUNUNU, New Hampshire E. BENJAMIN NELSON, Nebraska JIM DEMINT, South Carolina MARK PRYOR, Arkansas (II) VerDate Nov 24 2008 12:42 Nov 17, 2010 Jkt 062179 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 S:\WPSHR\GPO\DOCS\62179.TXT SCOM1 PsN: JACKIE C O N T E N T S Page Hearing held on July 13, 2005 ............................................................................... 1 Statement of Senator Burns ................................................................................... 1 Statement of Senator DeMint ................................................................................. 44 Statement of Senator Inouye .................................................................................. 2 Prepared statement .......................................................................................... 2 Statement of Senator Lautenberg .......................................................................... 46 WITNESSES Baker, Jamie N., Vice President, U.S. Equity Research, JPMorgan Securities, Inc. ......................................................................................................................... 30 Prepared statement .......................................................................................... 31 Hecker, JayEtta Z., Director, Physical Infrastructure Issues, U.S. Government Accountability Office ............................................................................................ 3 Prepared statement .......................................................................................... 5 May, James C., President/CEO, Air Transport Association of America, Inc. ..... 19 Prepared statement .......................................................................................... 21 Roach, Jr., Robert, General Vice President of Transportation, International Association of Machinists and Aerospace Workers (IAM) ................................ 36 Prepared statement .......................................................................................... 37 (III) VerDate Nov 24 2008 12:42 Nov 17, 2010 Jkt 062179 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 S:\WPSHR\GPO\DOCS\62179.TXT SCOM1 PsN: JACKIE VerDate Nov 24 2008 12:42 Nov 17, 2010 Jkt 062179 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 S:\WPSHR\GPO\DOCS\62179.TXT SCOM1 PsN: JACKIE AIRLINE FINANCIAL STABILITY WEDNESDAY, JULY 13, 2005 U.S. SENATE, SUBCOMMITTEE ON AVIATION, COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, Washington, DC. The Committee met, pursuant to notice, at 9:58 a.m., Senate Russell 253, Hon. Conrad Burns, Chairman of the Subcommittee, presiding. OPENING STATEMENT OF HON. CONRAD BURNS, U.S. SENATOR FROM MONTANA Senator BURNS. We’ll call the Committee to order this morning, and there are quite a lot of things going on in this part of the world, and we want to thank our folks for coming in this morning. I welcome this panel of witnesses, and especially in our continuing efforts to work toward ideas for the next FAA reauthorization bill, we are examining the financial condition of the airline industry. It is our intent to focus on a wide array of internal and external fac- tors that shape the industry today. I think it’s important this sub- committee understands the underlying principles, and problems in the industry in order to make an educated policy decision. As you know, as policymakers, we should operate with the idea to do no harm, and when we do know there are extenuating circumstances under legislation and sometimes we don’t see it coming. There are certainly several caveats to the airline industry. I an- ticipate that we will discuss them, among others, the relationship between the legacy carriers and the low-cost carriers, so-called ris- ing fuel costs, aviation taxes and fees, labor and management rela- tions, capacity concerns, fair pricing, aircraft leasing, industry con- solidation, and the role that Chapter 11 bankruptcy plays in the in- dustry. As if there is not enough on the platter already, this sort of fills the boat. Since 2000, many in the airline industry have experienced poor financial results and have lost somewhere around $35 billion with the expectation of heavy losses this year. A majority of those prob- lems can be traced back to the horrific events of 9/11 and SARS, but there are also several factors that were in place, and starting to evolve prior to 9/11. Legacy carriers—the business models—have been criticized for years, but the fragile line between profitability and red ink was not exposed until we had seen the events of 9/11, and the effects of that along with the downturn of the overall economy. One could (1) VerDate Nov 24 2008 12:42 Nov 17, 2010 Jkt 062179 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 S:\WPSHR\GPO\DOCS\62179.TXT SCOM1 PsN: JACKIE 2 argue that we are starting to see the actual results of deregulation now much more than the 1980s and 1990s. We now have prospering, low-cost carriers, evolving business, and aviation ventures, and because of it, more people are flying today. In fact, just last month we had a hearing on passenger lev- els and system capacity. Our traffic levels are back to record levels, planes are full, but many of the legacy carriers are still seriously struggling. It’s tough to understand why, in a business that seems to be booming, most of the legacy carriers are busting. For a Senator from Montana, it’s even more disconcerting to see our legacy tradi- tional hub-and-spoke carriers in dire straits. The hub-and-spoke model has provided historical foundation for rural access to my state and many others that do not fit into the traditional low-cost carrier business plan. Legacy carriers are making significant gains in improving their bottom lines, but still reporting large financial losses. Today we look at some of the reasons why. Our panel consists of a broad spectrum of aviation experts, and I look forward to their testimony. This morning I want to thank them for coming, because we know the industry is vitally important to this country for commerce and I know you take your job very, very seriously. Senator Inouye, thank you for coming in this morn- ing, also. STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR FROM HAWAII Senator INOUYE. Well, I thank you very much. I have a prepared statement I’d like to have made part of the record. Like a few of my colleagues, I do a lot of flying. In fact, last week, I spent more time in the air than on the ground. I spent 20 hours in Hawaii and 22 hours in the air. And so I’m well aware of the low fares. I’m well aware of the packed aircraft, and, yet, I know that since 2001, we have a shortfall of $35 billion. About 150,000 have lost their jobs, so this is a serious situation, and we are looking for answers, and I would like to commend my Chairman for calling this hearing. [The prepared statement of Senator Inouye follows:] PREPARED STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR FROM HAWAII Most aviation observers understand that despite the low fares and packed air- planes that have become commonplace, the Nation’s airlines continue to struggle through the toughest financial period in the history of commercial aviation. This has not been a blip on the proverbial radar screen. This has been an extended economic slump that resulted in the collective loss of tens of billions of dollars by the major carriers and the elimination of nearly 150,000 airline jobs
Load more

Recommended publications
  • 1995 Annual Report
    Southwest Airlines Co. 1995 Annual Report OUR 6 SECRETS OF SUCCESS Table of Contents Consolidated Highlights ..................................................................2 Introduction .....................................................................................3 Letter to Shareholders.....................................................................4 1. Stick To What You’re Good At ....................................................4 2. Keep It Simple .............................................................................8 3. Keep Fares Low, Costs Lower ..................................................10 4. Treat Customers Like Guests....................................................12 5. Never Stand Still .......................................................................14 6. Hire Great People .....................................................................16 Looking Ahead ..............................................................................18 Destinations ..................................................................................20 Financial Review ...........................................................................21 Management’s Discussion and Analysis .......................................21 Consolidated Financial Statements...............................................27 Report of Independent Auditors ....................................................39 Quarterly Financial Data ...............................................................40 Common Stock Price Ranges
    [Show full text]
  • U.S. Department of Transportation Federal
    U.S. DEPARTMENT OF ORDER TRANSPORTATION JO 7340.2E FEDERAL AVIATION Effective Date: ADMINISTRATION July 24, 2014 Air Traffic Organization Policy Subject: Contractions Includes Change 1 dated 11/13/14 https://www.faa.gov/air_traffic/publications/atpubs/CNT/3-3.HTM A 3- Company Country Telephony Ltr AAA AVICON AVIATION CONSULTANTS & AGENTS PAKISTAN AAB ABELAG AVIATION BELGIUM ABG AAC ARMY AIR CORPS UNITED KINGDOM ARMYAIR AAD MANN AIR LTD (T/A AMBASSADOR) UNITED KINGDOM AMBASSADOR AAE EXPRESS AIR, INC. (PHOENIX, AZ) UNITED STATES ARIZONA AAF AIGLE AZUR FRANCE AIGLE AZUR AAG ATLANTIC FLIGHT TRAINING LTD. UNITED KINGDOM ATLANTIC AAH AEKO KULA, INC D/B/A ALOHA AIR CARGO (HONOLULU, UNITED STATES ALOHA HI) AAI AIR AURORA, INC. (SUGAR GROVE, IL) UNITED STATES BOREALIS AAJ ALFA AIRLINES CO., LTD SUDAN ALFA SUDAN AAK ALASKA ISLAND AIR, INC. (ANCHORAGE, AK) UNITED STATES ALASKA ISLAND AAL AMERICAN AIRLINES INC. UNITED STATES AMERICAN AAM AIM AIR REPUBLIC OF MOLDOVA AIM AIR AAN AMSTERDAM AIRLINES B.V. NETHERLANDS AMSTEL AAO ADMINISTRACION AERONAUTICA INTERNACIONAL, S.A. MEXICO AEROINTER DE C.V. AAP ARABASCO AIR SERVICES SAUDI ARABIA ARABASCO AAQ ASIA ATLANTIC AIRLINES CO., LTD THAILAND ASIA ATLANTIC AAR ASIANA AIRLINES REPUBLIC OF KOREA ASIANA AAS ASKARI AVIATION (PVT) LTD PAKISTAN AL-AAS AAT AIR CENTRAL ASIA KYRGYZSTAN AAU AEROPA S.R.L. ITALY AAV ASTRO AIR INTERNATIONAL, INC. PHILIPPINES ASTRO-PHIL AAW AFRICAN AIRLINES CORPORATION LIBYA AFRIQIYAH AAX ADVANCE AVIATION CO., LTD THAILAND ADVANCE AVIATION AAY ALLEGIANT AIR, INC. (FRESNO, CA) UNITED STATES ALLEGIANT AAZ AEOLUS AIR LIMITED GAMBIA AEOLUS ABA AERO-BETA GMBH & CO., STUTTGART GERMANY AEROBETA ABB AFRICAN BUSINESS AND TRANSPORTATIONS DEMOCRATIC REPUBLIC OF AFRICAN BUSINESS THE CONGO ABC ABC WORLD AIRWAYS GUIDE ABD AIR ATLANTA ICELANDIC ICELAND ATLANTA ABE ABAN AIR IRAN (ISLAMIC REPUBLIC ABAN OF) ABF SCANWINGS OY, FINLAND FINLAND SKYWINGS ABG ABAKAN-AVIA RUSSIAN FEDERATION ABAKAN-AVIA ABH HOKURIKU-KOUKUU CO., LTD JAPAN ABI ALBA-AIR AVIACION, S.L.
    [Show full text]
  • Essays on Strategic Behavior in the U.S. Airline Industry
    Essays on Strategic Behavior in the U.S. Airline Industry Dissertation Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the Graduate School of The Ohio State University By Kerria Measkhan Tan, B.A., M.A. Graduate Program in Economics The Ohio State University 2012 Dissertation Committee: Matthew Lewis, Advisor James Peck Huanxing Yang c Copyright by Kerria Measkhan Tan 2012 Abstract In my first dissertation essay, \Incumbent Response to Entry by Low-Cost Carri- ers in the U.S. Airline Industry," I analyze the price response of incumbents to entry by low-cost carriers in the U.S. airline industry. Previous theoretical papers suggest that airlines might respond to entry by lowering prices to compete harder for existing customers or they might increase prices to exploit their brand-loyal customers. This paper tests which effect is more prominent in the airline industry. I find that when one of four low-cost carriers enters a particular route, legacy carrier incumbents respond differently than low-cost carrier incumbents to new low-cost carrier entry. Legacy carriers decrease their mean airfare, 10th percentile airfare, and 90th percentile air- fare before and after entry by a low-cost carrier. However, low-cost carriers do not significantly alter their pricing strategy. The differing incumbent responses can be attributed to the finding that low-cost carrier entrants tend to match the price set by rival low-cost carriers in the quarter of entry and tend to enter with a lower price than that of legacy carrier incumbents. The results also suggest that entry does not affect price dispersion by incumbent carriers.
    [Show full text]
  • Analysis of Global Airline Alliances As a Strategy for International Network Development by Antonio Tugores-García
    Analysis of Global Airline Alliances as a Strategy for International Network Development by Antonio Tugores-García M.S., Civil Engineering, Enginyer de Camins, Canals i Ports Universitat Politècnica de Catalunya, 2008 Submitted to the MIT Engineering Systems Division and the Department of Aeronautics and Astronautics in Partial Fulfillment of the Requirements for the Degrees of Master of Science in Technology and Policy and Master of Science in Aeronautics and Astronautics at the Massachusetts Institute of Technology June 2012 © 2012 Massachusetts Institute of Technology. All rights reserved Signature of Author__________________________________________________________________________________ Antonio Tugores-García Department of Engineering Systems Division Department of Aeronautics and Astronautics May 14, 2012 Certified by___________________________________________________________________________________________ Peter P. Belobaba Principal Research Scientist, Department of Aeronautics and Astronautics Thesis Supervisor Accepted by__________________________________________________________________________________________ Joel P. Clark Professor of Material Systems and Engineering Systems Acting Director, Technology and Policy Program Accepted by___________________________________________________________________________________________ Eytan H. Modiano Professor of Aeronautics and Astronautics Chair, Graduate Program Committee 1 2 Analysis of Global Airline Alliances as a Strategy for International Network Development by Antonio Tugores-García
    [Show full text]
  • Strategic Management: Competitiveness and Globalization
    D • AN HO L S E K R I I S • S T O T I N H Concepts Strategic Management Competitiveness & Globalization 9th Edition Michael A. Hitt Texas A&M University R. Duane Ireland Texas A&M University Robert E. Hoskisson Rice University Strategic Management: Competitiveness © 2011, 2009 South-Western, a Part of Cengage Learning and Globalization: Concepts, Ninth Edition ALL RIGHTS RESERVED. No part of this work covered by the copyright Michael A. Hitt, Duane Ireland, and herein may be reproduced, transmitted, stored or used in any form Robert E. Hoskisson or by any means graphic, electronic, or mechanical, including but not limited to photocopying, recording, scanning, digitizing, taping, Web VP/Editorial Director: distribution, information networks, or information storage and retrieval Jack W. Calhoun systems, except as permitted under Section 107 or 108 of the 1976 Editor-in-Chief: United States Copyright Act, without the prior written permission of the Melissa Acuna publisher. Senior Acquisitions Editor: Michele Rhoades Director of Development: For product information and technology assistance, contact us at John Abner Cengage Learning Customer & Sales Support, 1-800-354-9706 Senior Editorial Assistant: For permission to use material from this text or product, Ruth Belanger submit all requests online at www.cengage.com/permissions Marketing Manager: Further permissions questions can be emailed to Nathan Anderson [email protected] Senior Marketing Communications Manager: Jim Overly ExamView® and ExamView Pro® are registered trademarks of Marketing Coordinator: FSCreations, Inc. Windows is a registered trademark of the Microsoft Suellen Ruttkay Corporation used herein under license. Macintosh and Power Macintosh are registered trademarks of Apple Computer, Inc.
    [Show full text]
  • Southwest Airlines You Are Now Free to Move About the Country.™
    TB0333 Rev. 03/2017 Andrew Inkpen Southwest Airlines You are now free to move about the country.™ Southwest Airlines (Southwest), the once scrappy underdog in the U.S. airline industry, was one of the largest U.S. airlines and, based on number of passengers, one of the largest in the world. Te company, unlike all of its major competitors, had been consistently proftable for decades and had weathered energy crises, the September 11 terrorist attacks, and the 2008-09 recession. An insight into Southwest’s operating philosophy can be found in the company’s 2001 annual report: Southwest was well poised, financially, to withstand the potentially devastating hammer blow of September 11. Why? Because for several decades our leadership philosophy has been: we manage in good times so that our Company and our People can be job secure and prosper through bad times.… Once again, after September 11, our philosophy of managing in good times so as to do well in bad times proved a marvelous prophylactic for our Employees and our Shareholders. Now in its 45th year of service, Southwest was facing some major challenges. Legacy carriers in the United States had become more efcient, and the mega-mergers involving Delta/Northwest, Continental/United, and American/US Airways were shaking up the industry. Smaller companies like JetBlue, Alaska, and Spirit were pressuring Southwest’s cost advantage and low-fare focus. Southwest had the highest labor cost per employee in the U.S. airline industry. With more than 50,000 employees, the company was a long way from the small scrappy upstart challenging the industry with its innovative strategy.
    [Show full text]
  • To Change Your Strategy, First Change How You Think by Mark Bonchek and Barry Libert
    STRATEGY To Change Your Strategy, First Change How You Think by Mark Bonchek and Barry Libert MAY 17, 2017 Tim Evans for HBR It seems that everyone these days is looking for a disruptive business model. But a business model is only one part of the equation. Equally important is the mental model behind the business model, as well as a measurement model for both. It’s the combination of mental, business, and measurement models that allows real transformation to occur. The airline industry is a cautionary tale of what happens when companies emulate new business models without bringing over the associated mental models. For over 40 years, Southwest Airlines has been a disruptive force in the airline industry, creating an entirely new category and a record 43 consecutive years of profitability. Traditional carriers like United, American, and Delta have a wide range of fares with multiclass cabins, heterogenous fleets, and hub-and-spoke routes. Southwest’s innovation was to focus on low fares with one- class cabins, homogenous fleets, and point-to-point routes. From the start, Southwest cofounder Herb Kelleher saw his competition not as other airlines but as alternative forms of transportation, whether cars, buses, or trains. He wanted to enable people to fly who wouldn’t otherwise have been able to. Therefore his mental model was not how to gain market share from other airlines, but how to create a completely new market for air travel. This wasn’t the only difference in mental models between Southwest and traditional carriers. Kelleher is known for saying: “I tell my employees that we’re in the service business, and it’s incidental that we fly airplanes.” Other carriers fly airplanes that carry people.
    [Show full text]
  • AW609 Tiltrotor Will Likely Transform Travel Between Some Cities
    Maximizing your investment in private air transport April/May 2016 | Vol. 14 No. 2 BUSINESS JET TRAVELER® SOUND DECISION With California headquarters, an African wood mill, and customers worldwide, Taylor Guitars’ cofounders opted to upgrade their jet. VISIT HAVANA • BIZLINERS • DREAM HOMES BJTONLINE.COM Dassault Falcon Jet Corp dfj c017999 8X Interior Spread - BJT Proof 1 NON-STOP LUXURY FROM LONDON TO SINGAPORE AND ANYWHERE IN BETWEEN. To step inside Dassault’s new agship is to experience the ultimate expression of comfort and cabin chic. With 30 spacious con gurations to choose from and exquisite, handcrafted nishings, no detail is overlooked. With its 6,450 nm/11,950 km range, the 8X not only ies farther than any previous Falcon, it is able to y into airports other long-range jets have to y over. Falcon 8X. Arriving in 2016. WWW.DASSAULTFALCON.COM I FRANCE: +33 1 47 11 88 68 I USA: +201 541 5600 dfjc017999 8X Interior Spread - BJT.indd 1 2/29/16 6:45 PM BJT Spread 18 in x 10.75 in +.25 in bleed .4 in safety Dassault Falcon Jet Corp dfj c017999 8X Interior Spread - BJT Proof 1 NON-STOP LUXURY FROM LONDON TO SINGAPORE AND ANYWHERE IN BETWEEN. To step inside Dassault’s new agship is to experience the ultimate expression of comfort and cabin chic. With 30 spacious con gurations to choose from and exquisite, handcrafted nishings, no detail is overlooked. With its 6,450 nm/11,950 km range, the 8X not only ies farther than any previous Falcon, it is able to y into airports other long-range jets have to y over.
    [Show full text]
  • Before the Seniority Integration Arbitration Board Dana E
    BEFORE THE SENIORITY INTEGRATION ARBITRATION BOARD DANA E. EISCHEN, ROGER KAPLAN AND DENNIS R. NOLAN ___________________________________ ) In the matter of the seniority ) integration between ) ) THE PILOTS OF CONTINENTAL ) AIRLINES ) ) AND ) ) THE PILOTS OF UNITED AIR LINES ) ___________________________________ ) ______________________________________________________________________________ POST-HEARING BRIEF OF THE CONTINENTAL PILOTS’ MERGER COMMITTEE __________________________________________________________ Daniel M. Katz Gregory R. Shoemaker Grant E. Mulkey Katz & Ranzman, P.C. 4530 Wisconsin Avenue, N.W., Suite 250 Washington, D.C. 20016 (202) 659-4656 Counsel for the Continental Pilots’ Merger Committee Dated: July 19, 2013 TABLE OF CONTENTS THE FACTS ...................................................................................................................................1 A. Airline Economics......................................................................................................................1 1. Continental Earned More Profits and Enjoyed Higher International Yields and Operating Margins ...............................................................................................................1 2. United Collapsed During the Decade of the Aughts .......................................................6 3. Continental Strengthened During the Decade of the Aughts, Especially in Its International Divisions .........................................................................................................8
    [Show full text]
  • Business & Commercial Aviation
    JUNE/JULY 2020 $10.00 AviationWeek.com/BCA Business & Commercial Aviation 2020 PURCHASE PLANNING HANDBOOK Production Aircraft Comparison A Look at the Trends and New AND Performance Tables Developments in Avionics ALSO IN THIS ISSUE Bombardier Global 7500 Smoke Signals Under Pressure Mountain Wave Monsters One Too Many Digital Edition Copyright Notice The content contained in this digital edition (“Digital Material”), as well as its selection and arrangement, is owned by Informa. and its affiliated companies, licensors, and suppliers, and is protected by their respective copyright, trademark and other proprietary rights. Upon payment of the subscription price, if applicable, you are hereby authorized to view, download, copy, and print Digital Material solely for your own personal, non-commercial use, provided that by doing any of the foregoing, you acknowledge that (i) you do not and will not acquire any ownership rights of any kind in the Digital Material or any portion thereof, (ii) you must preserve all copyright and other proprietary notices included in any downloaded Digital Material, and (iii) you must comply in all respects with the use restrictions set forth below and in the Informa Privacy Policy and the Informa Terms of Use (the “Use Restrictions”), each of which is hereby incorporated by reference. Any use not in accordance with, and any failure to comply fully with, the Use Restrictions is expressly prohibited by law, and may result in severe civil and criminal penalties. Violators will be prosecuted to the maximum possible extent. You may not modify, publish, license, transmit (including by way of email, facsimile or other electronic means), transfer, sell, reproduce (including by copying or posting on any network computer), create derivative works from, display, store, or in any way exploit, broadcast, disseminate or distribute, in any format or media of any kind, any of the Digital Material, in whole or in part, without the express prior written consent of Informa.
    [Show full text]
  • Case 3 the US Airline Industry in 2007
    CTAC03 4/13/07 17:21 Page 26 case 3 The US Airline Industry in 2007 Here’s a list of 129 airlines that in the past 20 years filed for bankruptcy. Continental was smart enough to make that list twice. As of 1992, in fact – though the picture would have improved since then – the money that had been made since the dawn of aviation by all of this country’s airline companies was zero. Absolutely zero. Sizing all this up, I like to think that if I’d been at Kitty Hawk in 1903 when Orville Wright took off, I would have been farsighted enough, and public- spirited enough – I owed this to future capitalists – to shoot him down. I mean, Karl Marx couldn’t have done as much damage to capitalists as Orville did. WARREN BUFFETT, CHAIRMAN, BERKSHIRE HATHAWAY As they returned to work at the beginning of January 2007, the senior executives of America’s leading airlines experienced a feeling of optimism and joie de vivre that had been largely absent for most of the previous six years. Between 2001 and 2005, the industry had been ravaged by the horror of September 11, 2001 and the raft of new security measures that followed in its wake, by a tripling in the price of jet fuel, and by unprecedented competitive pres- sures from a new generation of low-cost airlines. During this period, the indus- try racked up losses of $35 billion and four of the countries six biggest airlines were forced into Chapter 11 bankruptcy. Yet, 2006 appeared to be a turning point.
    [Show full text]
  • To Change Your Strategy, First Change How You Think by Mark Bonchek and Barry Libert
    REPRINT H!"NPC PUBLISHED ON HBR.ORG MAY !", #$!" ARTICLE STRATEGY To Change Your Strategy, First Change How You Think by Mark Bonchek and Barry Libert This document is authorized for use only by Barry Libert ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. STRATEGY To Change Your Strategy, First Change How You Think by Mark Bonchek and Barry Libert MAY !", #$!" TIM EVANS FOR HBR It seems that everyone these days is looking for a disruptive business model. But a business model is only one part of the equation. Equally important is the mental model behind the business model, as well as a measurement model for both. It’s the combination of mental, business, and measurement models that allows real transformation to occur. COPYRIGHT © #$!" HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. # This document is authorized for use only by Barry Libert ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. The airline industry is a cautionary tale of what happens when companies emulate new business models without bringing over the associated mental models. For over 40 years, Southwest Airlines has been a disruptive force in the airline industry, creating an entirely new category and a record 43 consecutive years of pro!tability. Traditional carriers like United, American, and Delta have a wide range of fares with multiclass cabins, heterogenous "eets, and hub-and-spoke routes. Southwest’s innovation was to focus on low fares with one-class cabins, homogenous "eets, and point-to-point routes.
    [Show full text]