SFO - Battle isn't over yet - Help

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Date: Wed Jun 19 2002 - 11:51:47 PDT


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Date: Wed, 19 Jun 2002 14:51:47 EDT
Subject: SFO - Battle isn't over yet - Help
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Cc: geohaye@yahoo.com-DeleteThis.com (George Haye)
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The battle over the SFO runways is heating up but not over by a long shot in
spite of Matier & Ross' assessment. Now is the time that simple action can
make a big difference.

6 of 11 SF Supervisors are backing a bill to that will give them control over
airport spending, but we need 8 Supervisors to override a veto by Willie
Brown. Willie has the special interests coming out in force to pressure the
Supervisors. Please check out the action alert below and give a CALL to the
swing vote supervisors.

Gavin Newsom (415) 554-5942
Sophie Maxwell (415) 554-7670
Mark Leno (415) 554-7734

Ask to leave a Message for the Supervisor, In your message say:

- "Please support Supervisor Peskin's legislation to cut airport waste.
- "I also request that you freeze all funding for the Runway Reconfiguration"
- Leave your name and phone number (to make your call legitimate).

ALSO, I included a great New York Times article below the action alert that
explains what is happening to the airline industry (contraction) and why the
runways aren't needed. The airlines making money are Southwest and Jet Blue
who don't overschedule and who avoid SFO. The companies losing money are the
big boys who admit they are scheduling flights that are guaranteed to lose
money because they are more worried about market share than profitability.
How will airlines that are losing money pay for runways in the Bay?

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

ENVIRONMENTAL ACTION ALERT: PROTECT SAN FRANCISCO BAY

THIS IS THE MOST IMPORTANT VOTE TO PROTECT THE BAY IN YEARS.

HEARING FRIDAY, JUNE 21 FOR CRITICAL SFO VOTE
The airport has already spent 70 million dollars promoting a massive airport
expansion that will fill one and half square miles of San Francisco Bay.
This is the largest environmental threat to the Bay in our lifetimes.

The airport already spends more than half of their budget maintaining their
4.6 billion dollar debt. In response to the financial crisis, S.F.
Supervisor Peskin has introduced legislation to bring runaway airport
spending under control and stop extravagant spending on expansion projects.

We already have six supporters on the Board of Supervisors and need only two
more supporters to make this legislation veto proof.

ACTION ITEM ONE: SPEAK AT THE FINANCE COMMITTEE HEARING
There will be a public hearing on Supervisor Peskin's legislation this week.
We need to be there in force to show our support.

TIME: FRIDAY, JUNE 21ST AT 11:30
PLACE: SAN FRANCISCO CITY HALL, ROOM 263
For Details Call Eric Saddik at (510) 848-0800 x 307 or
Michael Bornstein at (510) 848-0800 x303.

ACTION ITEM TWO: MAKE A CALL
We need two more Supervisors to make this legislation veto-proof. Make your
call today.
 
1. Call SF Supervisors:
Sophie Maxwell (415) 554-7670
Mark Leno (415) 554-7734
Gavin Newsom (415) 554-5942

2. Ask to leave a Message for the Supervisor

3. In your message say:
"Please support Supervisor Peskin's legislation to cut airport waste.
"I also request that you freeze all funding for the Runway Reconfiguration"

4. Leave your name and phone number (to make your call legitimate).

It is OK to call after business hours and leave a message on the answering
machine
You can during or after business hours. It helps if you are a San Francisco
resident, but every phone call counts.
 
PLEASE REPLY TO THIS EMAIL TO LET US KNOW THAT YOU MADE YOUR PHONE CALL.
 
FORWARD THIS EMAIL TO FRIENDS

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Below is an article from the New York Times that points out why SF does not
want to mortgage the future of the airport based on United's assurances that
they will be a partner with SFO. A couple of interesting quotes:

But lately, Mr. Bethune has been reduced to throwing up his hands. "We're a
stupid industry led by stupid people," he said, his face twisted somewhere
between a grimace and a smirk.

"My feeling is there is still too much capacity out there," acknowledged Rono
J. Dutta, the president of United. "But when we're adding back, we can't give
up market share to others."

> > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > >

New York Times
June 15, 2002

Winter's Frustrations Linger for U.S. Airline Industry
By EDWARD WONG

Gordon M. Bethune usually struts with enough Texan swagger to stave off the
clouds of gloom and doom. He drives a Porsche, rides a Harley and takes spins
in the Boeing jets flown by Continental Airlines Inc., which he happens to
run.

But lately, Mr. Bethune has been reduced to throwing up his hands. "We're a
stupid industry led by stupid people," he said, his face twisted somewhere
between a grimace and a smirk.

Mr. Bethune turned Continental from a near-bankrupt airline into the
country's most successful full-service carrier. But that is an empty
superlative in a profitless industry, and like some other top airline
executives, he admits that he is running out of ideas on how to breathe life
into the business.

Advertisement
  

 
Still staggered by the Sept. 11 attacks, the airlines are as close to
recovery as a comatose patient on an intravenous drip. They lost $2.4 billion
in the first quarter of this year and a record $11 billion last year. The
biggest carriers need to make deep cuts in labor costs while narrowing the
gap between leisure and business fares, experts say. But few people can agree
on exactly how to do that.

Everything is up for grabs as executives re-evaluate their operations, from
legroom to labor contracts. Some are even calling for retooling the
hub-and-spoke route model, which the biggest carriers have developed over the
last two decades to feed passengers through transfer points. The giants are
looking jealously at the lower-cost operations of Southwest and JetBlue,
which do not build their business around fast, easy connections.

So far, though, many of the industry's stabs at resuscitation appear
short-sighted.

Airlines that slashed their schedules to save money after Sept. 11 have been
furiously adding back flights to gain market share, regardless of whether
competitors fly the same routes on the same schedules and at roughly the same
prices. Carriers have done nickel-and-dime cost-cutting, removing hot towels
and food service, but have yet to address much more serious costs, like labor
inefficiencies. Three times in the last two months, carriers have tried \342\200\224 and
failed \342\200\224 to raise round-trip leisure tickets by $20, and they have yet to
overhaul their fare structures to woo back business travelers.

So low have the airlines fallen that they are looking to the government to
point the way to salvation, a quarter-century after Washington deregulated
the industry.

Executives are carefully watching United Airlines, the second-largest
carrier, and US Airways, the sixth largest, as they struggle to win the big
labor concessions that the government is demanding if they are to be granted
loan guarantees. That backing would come from a $10 billion program set up by
Congress after the Sept. 11 attacks.

If those airlines succeed in their negotiations, their competitors almost
certainly will set out to roll back their labor costs, too.

"What's broken is that the pricing model reflects a cost model that's not
sustainable," said Michael E. Levine, a former airline executive who teaches
at Harvard Law School. "The cost model that's not sustainable is not a
technological problem, but a problem of fixed commitments like labor
contracts and infrastructure contracts. There's nothing wrong that
reorganization won't fix. That could take place through renegotiation of
contracts, workouts or Chapter 11 bankruptcy."

Of course, the airlines would prefer to avoid bankruptcy court, having had
ample experience in it. And they hope that their usually combative unions \342\200\224
knowing that the industry has hit rock bottom \342\200\224 will deal with them.

That approach seems to be working at US Airways. The Air Line Pilots
Association said Monday that its 4,800 active workers would be willing to
give up $400 million a year in wages, benefits and work rule changes, more
than two-thirds of the $595 million that executives want. Other labor groups
have also offered concessions.

At United, the pilots' union and management reached a tentative agreement
yesterday on concessions. Both parties declined to give details. The
agreement is still subject to ratification by the union's members and
approval by United's board and labor committee.

"If approved, it will result in significant cost reductions for United while
providing our pilots with additional opportunities for participation in
United's future growth," said John W. Creighton Jr., the carrier's chief
executive.
But other unions have yet to start serious discussions with United executives
over the airline's recovery plan.

"When things are bad, the first place they come to is labor," said Robert
Roach Jr., the general vice president for transportation at the International
Association of Machinists and Aerospace Workers, which represents 110,000
active airline workers across the country. "But whenever you're in trouble, 9
times out of 10, it's because of mismanagement. We're back in that situation
now."

Beyond labor costs, airline managers are re-examining other fundamental
aspects of the industry that they now say might be hobbling operations. For
example, American Airlines, which popularized the hub-and-spoke system in the
1980's, is looking at whether it should alter its connecting schedules. One
idea is to not have so many flights converge and depart at the same time from
hub airports like O'Hare International in Chicago and Dallas-Fort Worth
International.

"Does it need to be loosened a little bit so that we can achieve reasonable
connections and get our costs down so that we provide a product that the
customer is willing to pay for?" asked Donald J. Carty, American's chief
executive.

At Continental, the fifth-largest carrier, Mr. Bethune said he did not know
what more he could do to cut costs without losing the carrier's high levels
of worker morale and customer satisfaction.

He has shrunk the fleet from 9 different kinds of aircraft seven years ago to
5. He has invested heavily in regional jets, which are cheaper to buy and
operate and make it affordable to feed traffic into Continental's system from
smaller airports. The airline has installed self-service check-in kiosks in
airports and replaced first-run movies on some flights with older films like
"Citizen Kane."

"We did about all we could without compromising the quality of the product
and taking the cheese off our pizza," Mr. Bethune said.

But that makes the industry picture even more worrisome, because
Continental's recovery remains sluggish. Its revenue per available seat-mile,
a standard industry measure, was down 6 to 8 percent last month from a year
earlier. It also expects to report a loss this quarter.

A core problem for the industry is that airlines refuse to downsize, with too
many carriers flying overlapping routes from the same hubs, experts say. The
airlines cut capacity by a fifth after the Sept. 11 attacks and boasted that
they would revive along leaner and meaner lines. Instead, they have added
back flights until capacity in April was down only 11 percent from the period
a year ago, often fighting it out in what Mr. Bethune calls "testosterone
wars."

Today, for instance, American Airlines is starting two daily flights between
New York and Long Beach, Calif. JetBlue began three flights on the same route
last November, added a fourth last week and plans a fifth in October.
American said it was strengthening its route structure rather than reacting
to JetBlue, but JetBlue executives disagree.

At O'Hare, a knock-down battle between American and United has been
unfolding, with the two airlines quickly adding back flights this summer to
reach pre-Sept. 11 capacity levels.

"My feeling is there is still too much capacity out there," acknowledged Rono
J. Dutta, the president of United. "But when we're adding back, we can't give
up market share to others."

Costs are only part of the picture. To regain their health, the airlines need
to lure back business travelers, who usually account for about 40 percent of
passengers but two-thirds of revenue. During the recent recession, though,
businesspeople turned to video-conferencing, trains, cars and discounted
plane tickets. Security delays and other post-Sept.11 inconveniences have
also kept many away from airports.

Some experts say that the major airlines should look at simpler fare
structures like the ones used by Southwest and other no-frills carriers.
These airlines usually have only four or five tiers of pricing, as opposed to
dozens at the larger carriers, and the walk-up tickets popular with business
travelers cost no more than twice advance-purchase fares.

"I think the way things are priced is going to change forever," said James
Corridore, the airline analyst at Standard & Poor's. "I think it's more than
just a cyclical issue. The cyclical highs are not high enough to offset the
cyclical lows. It's not just Sept. 11."

Some carriers are experimenting with advance-purchase fares intended for
business travelers, while many have offered deeper discounts to corporate
travel departments and small businesses, said Terry Trippler, an airline
consultant and fare expert. But the carriers have yet to come up with a fare
structure that truly works.

Like virtually all the other problems faced by the airlines, that remains a
Gordian knot.

"We need something going for us as an industry," Mr. Bethune said. "We're
constantly looking, but it's getting tougher. The tide is pretty heavy."



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