Airline Overcapacity, Profitability and Society

By Seth Sandronsky

I read in my daily paper about overcapacity in the airline industry. There are more airline seats than buyers. Mr. Supply outstrips Mr. Demand. Consequently, the profitability of these carriers is down. When profits drop, airline workers get pay cuts and layoffs. They don’t need advanced degrees to understand work and wages. Neither option is their cup of tea. And who can argue? Investors can, because it is their continued profitability that governs how everybody else lives and works.

Corporate investors have powerful allies in their pursuit of profitability. They control the state, a result of the elite’s bloody victories over the majority. We can call them the ownership class. At the top of this heap in terms of wealth is the Walton family of U.S. fame. They own the nation-state of Wal-Mart Stores Inc.

In the meantime, consider some of the service provided to investors by federal bankruptcy judges. Recently, one of them voided the labor union contracts for mechanics employed by US Airways. Poof. All gone. Just like that, baby. After all, it was better for some of the mechanics to get fired then for their employer to fold, the court ruled.

Presumably, such a move will help the carrier regain its profitability by saving the cash it would have spent on the salaries of the fired union workers. Working people after profits and market share is the operative concept. The former are the sacrificial lambs to the altar of capital. Thus some airline employees get to suck it up and hit the streets searching for an employer to whom they can rent their labor-power. Ain’t the free market for wage-workers grand?

I read about different causes of airline overcapacity. Low-cost competition is one cause. Cheaper air service is a driving force. The cheapening of prices for air travel results in lower-paid flight attendants, pilots, etc. Presumably, this race to the bottom is inevitable, a little like hair loss and other wonders of nature. At least that is the prevailing framework of news about air travel and economic events generally.

As low-fare airlines gain market share from the so-called legacy rivals with higher ticket prices, the customer benefits, I learn. S/he is king. There are many such kings, I read. Are you also a member of this royal family? If so, welcome to the kingdom of lower prices.

This kingdom is driving down business costs of airlines who can’t sell some of their seats to customers. The later are happy as good news bears. So are their employers, who can also pay lower wages and contribute less to employees’ retirement pensions. Very nice, indeed. We simply have to accept the fact that high wages and employer-paid pensions are bad for business. In this way, unelected corporate investors will, by backing the slashing of jobs, pay and retirement benefits, spur growth in revenue for ailing airlines. Maybe.

Against the backdrop of airline overcapacity and profitability, job security is not part of the national security state that the U.S. political class backs. Perhaps the politicians mean the freedom of U.S. workers to be without employment. Like unemployed airline workers, they are increasing the numbers of people seeking employment.

I am no economics expert. Nor do I play one on TV. But I can see one thing about airline layoffs. They will chill workers’ demands for higher wages. Both for those who remain employed and the ones out of a job.

Presumably, lower wages are the key to increased profitability. I know because I read this in mainstream news about the ailing airline industry. Meanwhile, it is flying towards a low-wage future, aping the U.S. economy generally. I see the Wal-Mart Stores Inc. business model in the skies. That will, in turn, mean weakened buying power for regular people who work for a living. Their buying only accounts for two-thirds of the U.S. economy. If reducing overcapacity by creating unemployment is not the path to increasing profitability, what is?

What if that is the wrong question? By asking that we would get a faulty answer. By contrast, accepting the organizing of human life around the profit motive warrants our serious attention. After all, it is the energy of regular people that create profits for investors, and not the other way around. The last I checked, overcapacity and profitability are not forces of nature. Not in the air or on the ground.

Seth Sandronsky, is a member of Sacramento Area Peace Action and a co-editor with Because People Matter, Sacramento’s progressive paper. January 22, 2005