Delta Airlines has begun defining their plan to cut $3 billion in costs by the end of 2007. First, about 9000 jobs will be eliminated – that translates to 17% of Delta’s workforce. In addition to wage and benefit cuts, Delta’s cutting 100 aircraft out of its fleet. That is about 20% of the available seats in the United States.
Now, just suppose that Northwest opts for something similar, say standardizing its fleet for operational efficiencies – fewer aircraft types to save money. For illustrative purposes, let’s assume that action put 15% of their existing fleet in mothballs.
Imagine the chaos in the transportation industry caused by reducing capacities in America by 35%. Airlines will ditch service to small and mid-sized markets in favor of higher yield mid-sized and long haul markets. Now what happens if one or both decided they can’t emerge from chapter 11?
The prospects for re-regulation are very real indeed.