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How can there be a supply chain crisis and a inventory surplus? I don't get it. It seems the market is completely upside down. Is the market completely incapabl

How can there be a supply chain crisis and a inventory surplus? I don't get it. It seems the market is completely upside down. Is the market completely incapable of adaptation? A few days ago I took a plane and more than half the flights were cancelled that day, supposedly because of the hiring crisis. Yet there are a record number of people travelling! These people booked their flights months ago! Why did the company not hire more people? Why did they not simplify the hiring process? Why did they not adjust the wages accounting for the labor shortage?

throwaway24124 4y ago
There have been a lot of pilot strikes for different airlines at major airports recently, that's a possibility for why it was cancelled last minute.
bookofjoe 4y ago
I'm with you — except for pilots.
throwaway22032 4y ago
Coronavirus restrictions flipped the world upside down in a number of ways that interrupted multi decade processes. As a personal example, my field went WFH and so I just left it because I like in person interactions. That's ten or more years of training gone. You can argue about whether in that specific case perhaps someone on the other side of the world can replace me, but in the abstract, you can't just change everything (e.g. fire everyone at the airline and attempt to rehire) and expect to be 100% back to normal just because you want to be. People moved city, bought pets, marriages broke, etc. Things changed.
naravara 4y ago
It takes over a thousand hours of flight time to even qualify as an airline pilot. It's not a labor pool you can just expand and contract on a whim. It's a work force you have to strategically cultivate and maintain. When companies get too eager to "trim the fat" in lean times this is the result. You can't always scale back up as quickly as you'd like.
- vidanay 4y ago
  And the rest of the in-flight crew has to deal with rude, obnoxious, and sometimes aggressive assholes. It's not a job I would ever take nor recommend.
colechristensen 4y ago
>How can there be a supply chain crisis and a inventory surplus? These are the same problem. Matching allocation to demand is a hard problem and the wild swings in demand caused by COVID and inflation responses means that you have both supply chain problems and surplus problems. Things aren't very elastic and money-saving just-in-time practices of eliminating buffers mean that it is harder to respond to the various shocks. You're essentially upset that the future wasn't predicted correctly when there has been a lot of uncertainty going around for years now.
- fdupress 4y ago
  It seems to me that "a lot of uncertainty going around for years" would make some attempt to actually set up a buffer to better absorb shocks and adapt. This is not about predicting the future, it is about failing to manage a clearly increased risk of failing to predict the future.
  - colechristensen 4y ago
    “Inventory surplus” is the buffer and a failed overestimation. Because of the uncertainty you have both large overestimations and underestimations.
  - kzrdude 4y ago
    Right now it seems like airlines in Europe are selling enough tickets so that the airlines are at or over their capacity of handling passengers. Lots of lines and delays everywhere. Maybe the airlines just don't have the incentive to slow down their sales, etc, even if the airports are not ready with enough staff.
AshamedCaptain 4y ago
Or from another point of view: why not cancel the flights preemptively? It should have been clear you'd not have enough people to man the flights. But they kept accepting bookings.
- layer8 4y ago
  You’d probably lose money due to those passengers who otherwise would have canceled their flight themselves.
  - bombcar 4y ago
    And day-of you can prioritize those flights with the most passengers.
groby_b 4y ago
The airlines are in the trouble they are in because they saw it as expedient to deny Covid exists. (Hard lobbying for an end of mask mandates on planes) Covid, alas, did not do them the favor of agreeing to their belief system and is still around. And so now they have a large number of people sick, and a large number of employees upset that their health is sacrificed for corporate profits. As for "why don't they just hire more", pilots don't grow on trees. A commercial licenses requires 1500 flight hours, spread out over at least two years. And (again, because it was cheap), airlines outsourced that cost to pilots. Same as all other education efforts. So, on the pilot side, addressing a shortage takes at least two years and requires finding a bunch of people willing to sink time and money into a license - while simultaneously the airline companies have sent a clear signal they don't care about their employees. "The market" can't fix those issues. Not in the short term, and with the trust lost, not even in the mid term. So why didn't airline cancel those flights? One, if you pretend the situation is different from reality, the pain of cognitive dissonance makes you buy into your own lies. Two, even if you resist that force, as a publicly traded company, cancelling thousand of flights in advance is a hit on your stock price. If you wait until the last moment, maybe something changes, or you might make it at least past bonus day. Ultimately, the market has adapted. It just has adapted to maximizing executive pay.
- CSSer 4y ago
  This is all basically correct. However, there are some supplementary bits of information that may be important too. At the beginning of the pandemic when demand dropped to virtually zero, they also paid older pilots to retire early. Additionally, it didn’t used to take that long to get a pilot’s license. Before 2013 you could obtain a license in 250 hours. This changed due to a law passed by congress that increased flight training time to 1500 hours in reaction to a commercial accident that occurred in 2009. The irony? The pilots of that crash both had far more than 1500 hours of experience. It was a sympathy play. Short-term profits and poor regulatory strategy led to this.
  - listenallyall 4y ago
    > Before 2013 you could obtain a license in 250 hours. This sounds a bit dubious. A pilot's license or a commercial pilot's license?
tyrfing 4y ago
> How can there be a supply chain crisis and a inventory surplus? Different times and different things. There can be a surplus of T-shirts from Vietnam and a shortage of 90nm PMICs at the same time. There can be a shortage of stuff in December due to port problems, but an oversupply of that (out of date) stuff in February. Not to mention the drop in real income and a large drop in goods spending as aggregate spending shifts again back to services like air travel. > Why did they not adjust the wages accounting for the labor shortage? There are far more jobs than people to hire, at present there are guaranteed to not be enough people somewhere. That will be wherever has the least capacity to pay more - and airlines are notable for being extremely low margin.
toast0 4y ago
> How can there be a supply chain crisis and a inventory surplus? The supply chain crisis doesn't mean nothing is being supplied. It means that there are unknowable delays in everything. Your order may be made on time or delayed for several months. Once it's on a boat, it make take two weeks or four weeks to get across the Pacific, but then it might be unloaded right away or stuck on the boat for months. Once off the boat, it could be stuck at the port for a week or get transfered to a truck or rail right away. When faced with all that uncertainty, you're going to have times where things start moving and too much stuff shows up at once. As well as times where you don't have much to sell.
vidanay 4y ago
I have a flight to Germany schedule in October (from the US), and I am terrified of what the situation will be like by then.
- Sohcahtoa82 4y ago
  In a similar boat...I'm flying to Italy in 3 weeks. I like to think that international flights are last on the chopping block, but I haven't done anything to verify if that's true at all.
- IX-103 4y ago
  Just make sure to pick a flight that is ferrying pilots/flight attendants around so they can operate other flights. Those are probably the last ones that will get cancelled.
  - khuey 4y ago
    The flights that are doing that are short haul flights from smaller cities to airline hubs, not long haul transoceanic flights from the US to Europe.
tengbretson 4y ago
shortage -> hoarding/over-ordering -> perceived false-demand -> over-ordering leads to over-supply -> cut re-supply orders -> suppliers reduce capacity Repeat as many times as necessary
BeFlatXIII 4y ago
> Why did the company not hire more people? Why did they not simplify the hiring process? Why did they not adjust the wages accounting for the labor shortage? Training pilots takes time. Even with an aggressive hiring ramp-up, the new crop probably wouldn't be trained in time for today. Perhaps for 2024's travel season.
- smn1234 4y ago
  not to mention that without consistent flight time pilots lose their certification. When things were grounded during COVID many ultimately did lose their wings...
fleddr 4y ago
"Why did the company not hire more people?" COVID dramatically reduced worker demand for airlines, hotels, restaurants, the like. So those people went to do something else, something that saw an increase in demand, say delivering packages. Now those workers are needed again, but no longer available. Or only a few. As an example, at Schiphol airport (Amsterdam) they require 500 new/extra security staff. It takes months to find them and just training takes several weeks.
jessaustin 4y ago
...supposedly because of the hiring crisis. It isn't so much a "hiring crisis" as "intentional early retirement is business as usual". Airlines received billions of dollars from Congress to encourage them not to lay off workers during 2020. They took the money and used some of it as early retirement bonuses for pilots and other employees. [0][1][2] They knew they wouldn't have enough personnel to fly many of the flights they scheduled, but tickets are paid in advance and free loans from would-be customers are good for executive bonuses. Now they're blaming "weather", when the sun beats down with not a cloud in the sky, so they don't have to help passengers pay for hotels and alternate flights. If there were anyone home at DoT there would be major fines to pay, but they know that CIA Pete isn't going to do anything to annoy donors. [3] [0] https://simpleflying.com/southwest-early-retirement-package/ https://simpleflying.com/southwest-early-retirement-package/ [1] https://www.dallasnews.com/business/airlines/2020/04/30/39000-american-airlines-workers-take-early-retirement-leave-or-reduced-hours-in-face-of-covid-19-pandemic/ https://www.dallasnews.com/business/airlines/2020/04/30/3900... [2] https://simpleflying.com/us-airline-layoffs-early-retirement/ https://simpleflying.com/us-airline-layoffs-early-retirement... [3] https://www.vanityfair.com/news/2022/06/airline-delays-are-impacting-everyone-including-pete-buttigieg https://www.vanityfair.com/news/2022/06/airline-delays-are-i...
kylehotchkiss 4y ago
Airlines are not as elastic as AWS :)

throwaway24124 4y ago

There have been a lot of pilot strikes for different airlines at major airports recently, that's a possibility for why it was cancelled last minute.

bookofjoe 4y ago

I'm with you — except for pilots.

throwaway22032 4y ago

Coronavirus restrictions flipped the world upside down in a number of ways that interrupted multi decade processes. As a personal example, my field went WFH and so I just left it because I like in person interactions. That's ten or more years of training gone. You can argue about whether in that specific case perhaps someone on the other side of the world can replace me, but in the abstract, you can't just change everything (e.g. fire everyone at the airline and attempt to rehire) and expect to be 100% back to normal just because you want to be. People moved city, bought pets, marriages broke, etc. Things changed.

naravara 4y ago

It takes over a thousand hours of flight time to even qualify as an airline pilot. It's not a labor pool you can just expand and contract on a whim. It's a work force you have to strategically cultivate and maintain. When companies get too eager to "trim the fat" in lean times this is the result. You can't always scale back up as quickly as you'd like.

vidanay 4y ago
And the rest of the in-flight crew has to deal with rude, obnoxious, and sometimes aggressive assholes. It's not a job I would ever take nor recommend.

colechristensen 4y ago

>How can there be a supply chain crisis and a inventory surplus? These are the same problem. Matching allocation to demand is a hard problem and the wild swings in demand caused by COVID and inflation responses means that you have both supply chain problems and surplus problems. Things aren't very elastic and money-saving just-in-time practices of eliminating buffers mean that it is harder to respond to the various shocks. You're essentially upset that the future wasn't predicted correctly when there has been a lot of uncertainty going around for years now.

fdupress 4y ago
It seems to me that "a lot of uncertainty going around for years" would make some attempt to actually set up a buffer to better absorb shocks and adapt. This is not about predicting the future, it is about failing to manage a clearly increased risk of failing to predict the future.
- colechristensen 4y ago
  “Inventory surplus” is the buffer and a failed overestimation. Because of the uncertainty you have both large overestimations and underestimations.
- kzrdude 4y ago
  Right now it seems like airlines in Europe are selling enough tickets so that the airlines are at or over their capacity of handling passengers. Lots of lines and delays everywhere. Maybe the airlines just don't have the incentive to slow down their sales, etc, even if the airports are not ready with enough staff.

AshamedCaptain 4y ago

Or from another point of view: why not cancel the flights preemptively? It should have been clear you'd not have enough people to man the flights. But they kept accepting bookings.

layer8 4y ago
You’d probably lose money due to those passengers who otherwise would have canceled their flight themselves.
- bombcar 4y ago
  And day-of you can prioritize those flights with the most passengers.

groby_b 4y ago

The airlines are in the trouble they are in because they saw it as expedient to deny Covid exists. (Hard lobbying for an end of mask mandates on planes) Covid, alas, did not do them the favor of agreeing to their belief system and is still around. And so now they have a large number of people sick, and a large number of employees upset that their health is sacrificed for corporate profits. As for "why don't they just hire more", pilots don't grow on trees. A commercial licenses requires 1500 flight hours, spread out over at least two years. And (again, because it was cheap), airlines outsourced that cost to pilots. Same as all other education efforts. So, on the pilot side, addressing a shortage takes at least two years and requires finding a bunch of people willing to sink time and money into a license - while simultaneously the airline companies have sent a clear signal they don't care about their employees. "The market" can't fix those issues. Not in the short term, and with the trust lost, not even in the mid term. So why didn't airline cancel those flights? One, if you pretend the situation is different from reality, the pain of cognitive dissonance makes you buy into your own lies. Two, even if you resist that force, as a publicly traded company, cancelling thousand of flights in advance is a hit on your stock price. If you wait until the last moment, maybe something changes, or you might make it at least past bonus day. Ultimately, the market has adapted. It just has adapted to maximizing executive pay.

CSSer 4y ago
This is all basically correct. However, there are some supplementary bits of information that may be important too. At the beginning of the pandemic when demand dropped to virtually zero, they also paid older pilots to retire early. Additionally, it didn’t used to take that long to get a pilot’s license. Before 2013 you could obtain a license in 250 hours. This changed due to a law passed by congress that increased flight training time to 1500 hours in reaction to a commercial accident that occurred in 2009. The irony? The pilots of that crash both had far more than 1500 hours of experience. It was a sympathy play. Short-term profits and poor regulatory strategy led to this.
- listenallyall 4y ago
  > Before 2013 you could obtain a license in 250 hours. This sounds a bit dubious. A pilot's license or a commercial pilot's license?

tyrfing 4y ago

> How can there be a supply chain crisis and a inventory surplus? Different times and different things. There can be a surplus of T-shirts from Vietnam and a shortage of 90nm PMICs at the same time. There can be a shortage of stuff in December due to port problems, but an oversupply of that (out of date) stuff in February. Not to mention the drop in real income and a large drop in goods spending as aggregate spending shifts again back to services like air travel. > Why did they not adjust the wages accounting for the labor shortage? There are far more jobs than people to hire, at present there are guaranteed to not be enough people somewhere. That will be wherever has the least capacity to pay more - and airlines are notable for being extremely low margin.

toast0 4y ago

> How can there be a supply chain crisis and a inventory surplus? The supply chain crisis doesn't mean nothing is being supplied. It means that there are unknowable delays in everything. Your order may be made on time or delayed for several months. Once it's on a boat, it make take two weeks or four weeks to get across the Pacific, but then it might be unloaded right away or stuck on the boat for months. Once off the boat, it could be stuck at the port for a week or get transfered to a truck or rail right away. When faced with all that uncertainty, you're going to have times where things start moving and too much stuff shows up at once. As well as times where you don't have much to sell.

vidanay 4y ago

I have a flight to Germany schedule in October (from the US), and I am terrified of what the situation will be like by then.

Sohcahtoa82 4y ago
In a similar boat...I'm flying to Italy in 3 weeks. I like to think that international flights are last on the chopping block, but I haven't done anything to verify if that's true at all.
IX-103 4y ago
Just make sure to pick a flight that is ferrying pilots/flight attendants around so they can operate other flights. Those are probably the last ones that will get cancelled.
- khuey 4y ago
  The flights that are doing that are short haul flights from smaller cities to airline hubs, not long haul transoceanic flights from the US to Europe.

tengbretson 4y ago

shortage -> hoarding/over-ordering -> perceived false-demand -> over-ordering leads to over-supply -> cut re-supply orders -> suppliers reduce capacity Repeat as many times as necessary

BeFlatXIII 4y ago

> Why did the company not hire more people? Why did they not simplify the hiring process? Why did they not adjust the wages accounting for the labor shortage? Training pilots takes time. Even with an aggressive hiring ramp-up, the new crop probably wouldn't be trained in time for today. Perhaps for 2024's travel season.

smn1234 4y ago
not to mention that without consistent flight time pilots lose their certification. When things were grounded during COVID many ultimately did lose their wings...

fleddr 4y ago

"Why did the company not hire more people?" COVID dramatically reduced worker demand for airlines, hotels, restaurants, the like. So those people went to do something else, something that saw an increase in demand, say delivering packages. Now those workers are needed again, but no longer available. Or only a few. As an example, at Schiphol airport (Amsterdam) they require 500 new/extra security staff. It takes months to find them and just training takes several weeks.

jessaustin 4y ago

...supposedly because of the hiring crisis. It isn't so much a "hiring crisis" as "intentional early retirement is business as usual". Airlines received billions of dollars from Congress to encourage them not to lay off workers during 2020. They took the money and used some of it as early retirement bonuses for pilots and other employees. [0][1][2] They knew they wouldn't have enough personnel to fly many of the flights they scheduled, but tickets are paid in advance and free loans from would-be customers are good for executive bonuses. Now they're blaming "weather", when the sun beats down with not a cloud in the sky, so they don't have to help passengers pay for hotels and alternate flights. If there were anyone home at DoT there would be major fines to pay, but they know that CIA Pete isn't going to do anything to annoy donors. [3] [0] https://simpleflying.com/southwest-early-retirement-package/ https://simpleflying.com/southwest-early-retirement-package/ [1] https://www.dallasnews.com/business/airlines/2020/04/30/39000-american-airlines-workers-take-early-retirement-leave-or-reduced-hours-in-face-of-covid-19-pandemic/ https://www.dallasnews.com/business/airlines/2020/04/30/3900... [2] https://simpleflying.com/us-airline-layoffs-early-retirement/ https://simpleflying.com/us-airline-layoffs-early-retirement... [3] https://www.vanityfair.com/news/2022/06/airline-delays-are-impacting-everyone-including-pete-buttigieg https://www.vanityfair.com/news/2022/06/airline-delays-are-i...

kylehotchkiss 4y ago

Airlines are not as elastic as AWS :)