By highest single cost, do you mean total cost (all things considered) or do you mean their highest operating cost? I know businesses typically calculate operating and capital expenses differently so that airplane fuel is part of operating costs but the plane itself is capital.

“In actuality, both Wal-Mart and the airlines have incredible infrastructure and capital costs that dwarf labor costs.”

I can’t comment on Wal-Mart’s relative costs (other than to note that their labor practices are atrocious),
but the airlines themselves claim that labor is their highest single cost – around 35-40%.

Aren’t the discount airlines successful largely because they don’t have the union cost structures of the incumbents? Isn’t Wal-Mart successful largely because they take advantage of the reduced benefits of part time workers?

If you read this article in Fortune about Wal-mart entitled “One Nation Under Wal-Mart,” you’ll get a different picture of Wal-Mart’s success.

You’re obviously operating under a labor theory of economics (i.e., Marxism) in which it is labor that is the vital input. In actuality, both Wal-Mart and the airlines have incredible infrastructure and capital costs that dwarf labor costs. Naturally, labor is the most volatile and flexible and so that’s what gets cut first.

The World Socialist Web Site published this article:

CEO resigns over secret executive pay deal
American Airlines unions push through concessions after change at top
By Jeremy Johnson, 26 April 2003
http://wsws.org/articles/2003/apr2003/amer-a26.shtml

We can and should be passing a law that PREVENTS it.

OK. Um. Which “we” is going to pass this law?

This is truly the biggest looting job in human history, or part of it. Among the other parts, of course, is the hundreds of billions looted from the US treasury in the form of tax reductions for the wealthy, to pay off Republican campaign contributors and insure that the next round of kickbacks… errrr… contributions is even larger.

This makes the looting of Iraq — even the antiquities — look like peanuts. Perhaps that’s why Rumsfeld and Bush are so blase about the Iraqi looting. That’s small change compared to the job that the Republicans and the CEO’s of America are pulling off as we speak.

Boards and executives collude to create these situations, which amount to grand scale theft, plain and simple. There are no “market forces” at work when it comes to executive compensation. These executives serve on each other’s boards, and award themselves huge pay packages. There’s no shortage of qualified people to work at these levels, particularly at these pay points. It’s the farthest thing from the free market. And the common shareholder is the one who gets screwed, because the boards that control these companies (and who can legally change what’s happening) simply choose not to — they “play the game” instead.
Not one dime of taxpayer money should be usable for executive compensation. We can and should be passing a law that PREVENTS it.

Aren’t the discount airlines successful largely because they don’t have the union cost structures of the incumbents? Isn’t Wal-Mart successful largely because they take advantage of the reduced benefits of part time workers? Aren’t consumers who support these businesses saying everybody should work at minimum wage? The fat seems to be getting cut from the system. These executives better learn how to cook and clean. Might be time to short “Cartier”.

I find myself wishing that I could vote for a free-marketeer. If only one was available on the national stage. I’ve made fun of the phrase “free-market” in the past, but George W. Bush is turning me into an adherent of Fredrich Hayeck.

While American Airlines and others go bankrupt and receive federal aid and bailouts, Delta is using this market opportunity to create a new airline, Song, to compete with the successful budget airline JetBlue:

http://www.cnn.com/2003/TRAVEL/01/29/delta.song/index.html

I think the airlines that cut salries of their poorly paid employees and can’t run their own business without federal bailouts should just give up. What happened to the American religion of the “free market”?