The news is full of stories about USAir's financial woes, which they blame on the airline pilots. Their labor costs are probably too high. But I think there are other contributing factors. I just had to book a flight to Pittsburgh (round trip from Roanoke, Virginia). USAir has a hub there, and direct flights from Roanoke. The other three Roanoke airlines fly you through one of their hubs before getting to Pittsburgh.
You would think USAir would have a natural advantage, since businesspeople don't want to waste time in airports--a nonstop flight is always preferrable to one that requires a stop. Except when the nonstop flight costs two-thirds more! USAir is going broke because they are charging $800 for a single flight segment when all their competitors will fly two legs for under $500. Not only that, the times of the USAir flights are lousy, so I don't really lose that much time with the extra hop.
Another airline got my business, and USAir lost out because of absurd pricing coughed up by hideously complex pricing schemes generated by computer programs that only a bean counter could love. It's obvious that NO human being has ever looked at the Roanoke-Pittsburg pricing and asked, "Does this make sense?" If they had, the prices would be different, and USAir would be making money instead of losing it. Applied over their whole flight network, it's a wonder they have lasted this long. And it explains why the pilots are reluctant to make concessions--why should they if the real problem is not being fixed. Your costs could be zero, but if your prices drive your customers to another airline, it won't make any difference.
In part, this is a natural consequence of the Knowledge Economy. In the old days, travel agents worked mysteriously and invisibly to come up with ticket prices. They had special access to airline fee schedules, and we did not. So we took pricing more or less for granted. We had no information with which to make an informed decision. Today, I can hop onto Orbitz or Expedia and see every price from four or five airlines, and the pricing insanity that USAir calls a "business" is patently obvious.
Welcome to the Knowledge Economy. Information is power, and you need to remind yourself that everyone has a lot of power these days. You can't take customers, business, or economic development for granted anymore.