Company makes too little money: "there's no money in this industry! They need to be a regulated utility!"
The core part of air travel doesn’t really feel any different to a bus or metro or train. Off the tarmac then yes it absolutely feels like a Verizon store, as does some of the in-flight service, but there’s always been this weird feeling as a traveler that every carrier is basically the same thing but with different decals on it. Airline alliances are surely the ultimate example of this.
It very much is a different experience than flying a legacy domestic mainline carrier. I’m not alone amongst people i know who will happily fly the cheap seats on United/Delta/AA but won’t even look at a ticket from Spirit or Frontier even at a significant discount.
Compare it to a flag carrier like Singapore air and it is a shockingly different product.
All that’s an aside: we know what regulated airlines look like since we already tried it, much more expensive, with airlines competing not on price but on amenities.
One other difference I can think of is that carry-ons are more rarely included in the base fare in the budget airlines than the legacy airlines, though maybe that has also gone away since the changes where bags must be included in the listed price that Southwest pushed for.
I’m not from the US and have never flown any of the airlines being discussed here.
I’ve never heard of this, is there some YouTube videos you can point me to.
United even has commercials before the safety video; combined with the "if you're watching explicit content on this flight, please mind the children" announcement, those flights onestly honestly felt pretty surreal to me.
The flight attendant also makes an announcement about the United-branded credit cards near the beginning of the flight.
But this is really just an illustration of what the top-poster of this thread said: flying people places doesn't make enough money, so they have to pursue other revenue streams.
The cabin crew stand at the front of the plane, and either play a recording or make an announcement saying you can buy a lottery scratchcard for €2 or whatever, with some of the money going to charity. They then walk down the plane "scratchards? scratchcards?"
They repeat this with a collection for charity (no scratchcard), a promoted drink, and some sort of food.
I think this is mostly unique to Ryanair (in Europe), I don't remember Wizz Air, Norwegian or EasyJet doing this. Part of Ryanair's marketing is to make the experience worse than it needs to be, so you know you're saving money.
The only bad upsell they do is in the booking process. Are you sure you don't want a hire car?
...while other low-cost carriers try to distinguish themselves by not being quite as bad as Ryanair.
Now Wizzair is "mostly not an airline" for me, because they have all the negative traits I hinted above. E.g. they'll happily advertise flights they have no intention of flying, make refunds hard, are as misleading as they can be about pricing, make it impossible to checkin online a few hours before the flight so that you have to pay their high fees, etc.
I wouldn't want the Ryanair experience for long-haul flights; but for short 2-3h ones within Europe, they're fine, I'm always considering them. Not for the perceived cheapness, but for the "I expect them to actually fly AND be on time" part.
Generally I agree with your view that Ryanair is decent at what it does, but COVID refunds happened only after the regulator stepped in to threaten them over their original "no refunds" and then "refund in the form of a voucher, with a short expiry date on it" policies actually being unlawful, and even allowing for the scale of its operations it received more complaints to the UK CAA than anyone else about refund handling during COVID.
They have an entire theory of marketing based on people believing that "if it feels cheap, it is cheap", and so they deliberately build in a bunch of annoyances (scratchcards, arbitrary baggage restrictions, checkout hoop-jumping, endless PR about removing toilets or running standing-only flights) which serve to make their service seem as cheap and nasty as possible.
And it works: some people simply ignore the nasty aspects, others are willing to put up with them in order to get a bargain, and yet others actually take pride in wading through the crap - usually expressing it in "I beat the system" terms. And here we are talking about it on a barely-related thread - carrying their marketing message further!
First, as someone with relatively long thighs, I literally don't fit in their sardine can seats. But more relevant to most people, while things may be OK if everything goes perfectly and nothing is delayed or cancelled, you are completely SOL with Spirit/Frontier if something goes wrong (and "something" may just be they themselves decide to cancel an undersold flight at the last minute). It's nearly impossible to get someone to talk to, I feel like the employees know how shitty their companies are so they all have an attitude like they DGAF, and it's a mad (expensive) scramble to find alternative arrangements at the last minute.
I've never had as abysmal experiences as I've had on Frontier compared to any other airline.
But it's great they are not regulated utilities. Because either everyone would have to pay for extra legroom, even if they don't need it, or some freakishly long people would not be able to pay for the extra legroom that they need.
I don't pay a flat fee for my water, electricity, or gas usage, regardless of how much I use. I pay for the gallons, kWh, and therms I actually use. (Yes, there are other fees on those bills, but my usage actually matters.)
Airline regulation doesn't have to specify standardized seat pitch, etc.
I have no difficulty believing you when it comes to customer service. I’ve never had any issues requiring anything beyond the most basic customer service, so I just haven’t been exposed to differences between airlines in that regard. I also understand that a bad experience can leave an exceptionally bad impression. I suppose the only thing that might surprise me is if the higher-cost airlines don’t also have terrible service.
I still avoided them like the plague because the legacy carriers are selling you operational performance and the ability to usually get you where you're going within a reasonable timeframe if you're delayed or canceled. Spirit, Frontier, Allegiant, whoever else, do not do nearly as good a job when something goes wrong. Although they should get a lot of credit - none of them have ever had a fatal crash.
Yes, if you ignore the part where things are different, it's basically the same. Trouble is, those differences do meaningfully make a difference. There's no objective measure for misery and happiness, but flying Jsx is nicer than Spirit. You can put a dollar value on misery, that's why one's so much more expensive than the other.
Also, here in Europe, traditional aircraft carriers have been migrating their quality towards bottom end (ie Swiss not giving any beers for free even on intercontinental flights, microscopic legroom also on intercontinental) while for example Easyjet is for me at this point a high quality reliable carrier with no bullshit. Ryanair is a dumpste3r but luckily they don't serve my nearest airport well.
I’ve not flown them and stick to Alaska and the local puddle jumpers to get off the island.
Worse yet, you buy a ticket for carrier A, then discover that due to xyz partnership agreement you are actually flying on carrier B.
Try flying Delta. It isn’t the cheapest option, but you really do get better service.
If you want to feel special, do Aeromexico first class. The checked bags are waiting for you before you can even walk there on a domestic flight.
Spirit was cheap. And if you’re poor, you need cheap. If you aren’t, buy better service and don’t complain that it’s just Greyhound on a plane.
As long as the required crew of flight attendants doesn't assault me, I've never really got off a plane thinking anything at all about the service. Just "where do I need to go next" or "I'm glad to be home".
Which of the two was the Air Canada experience?
Not arguing against your point, but it astounds me how many airports do not have water-bottle refill stations. My home airport (SFO) does, but many in the US still do not. I feel like that sort of thing should be legally mandated, given we're not permitted to bring water through security. The paltry amount of water they give you on the flight (and at times of their choosing, not yours) is not enough to rehydrate basically anyone.
Can you enumerate these? As far as I'm aware Ryan Air is basically more "Spirit" than Spirit Airlines.
Also, look at Ryan Air (and Wizz Air) fares. They are consistently the lowest cost per kilometer travelled anywhere in Europe. Sure, it is like a flying bus, but it gets the job done, much cheaper than anything the US.
This doesn't seem to be a antitrust issue at all, it looks like it was one company bailing out another.
https://www.justice.gov/archives/opa/pr/justice-department-s...
“Our win in court is a victory for U.S. travelers who deserve lower prices and better choices,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “We fought this case to protect consumers who, as the court recognized, ‘otherwise would have no voice.’ I am incredibly proud of the Antitrust Division’s team and our state law enforcement partners’ tireless advocacy.”
There is plenty of crap legislation and regulation about, but it doesn’t have to be that way.
I'm not against regulation, I think there are areas where it's needed (privacy is a good example), but it is fire, and fire should only be played with when you really need it because it can easily grow out of control and burn things you don't intend to get burned.
Look what it took to wrangle the cigarette industry. Look how unfettered gambling is ripping through the USA.
Or look at industries pre-regulation. Meat, building construction, medicine...
At minimum we have as much evidence that "the market" is capable of being as bad as "bad regulation."
The angle of treating transportation as regulated utility shifts the business focus away from profit onto providing services, which sometimes can cost more than your income. Similarly, would you close schools, because they didnt make enough money? Airlines are highly subsidized anyway, treating them as regulated utilities falls short of taking public ownership as public institutions, where services just cost money/subsidies.
Yes, of course. We should separate school and state.
> Airlines are highly subsidized anyway, treating them as regulated utilities falls short of taking public ownership as public institutions, where services just cost money/subsidies.
How are they highly subsidized? And where? Perhaps we should fix that, instead of adding to the problem? Two wrongs don't make a right.
Though I admit heavily taxing education on account of negative externalities is tempting.
[1]: https://www.npr.org/2016/04/18/474256366/why-americas-school...
[2]: https://www.nea.org/nea-today/all-news-articles/no-accountab...
Now what is vital? Is Spirit vital? That’s the hard to define part.
2. "We won't pay for this, but we still want to have it!"
These are of course both fair points. Why should we "pay for" things, what's that all about? We should just naturally have the natural things that we naturally want, supplied by pixies.
If the airline goes bankrupt, that just means that the creditors get less than they otherwise expected. That's something to haggle out between creditors and management and shareholders.
(Or do you want to imply that if the shareholders saved money on CEO compensation, they would give the money to ordinary workers?)
There's no fundamental rule of a capitalist society that consumers have to make their choices out a narrow selection of options provided by corporate oligarchies between the criteria they would prefer to compete on. As a customer, I can choose which airline I want based on whatever criteria I want. Maybe I pick it based on pay ratio between executives and average workers, maybe I pick it based on whichever has the font I like best on their homepage.
Edit: maybe a piñata is a better metaphor. :(
Is this how you see roads? Are we entitled for wanting those to be paid for by the state? What about the police? Should we have to pay whenever a police officer stops a mugging -- or is the wage of that officer, too, supplied by pixies?
https://web.archive.org/web/20040603010444/http://awdal.com/...
So obviously there are theories about how these things can be privately funded. But I can never remember the theories. Looking at that link, it was going to be toll roads. People dislike this, understandably. One problem with private roads is that you can't exactly use a competing road, which might entail moving house, or changing your plans for the day, or your job.
I have a vague notion that roads could be funded by a group of businesses that benefit from them, sort of like the W3C or a mall. Non-profit, sponsored roads, or something. (Now I'm thinking of runestones, several of which are near bridges and say "He made this bridge for his soul" or a similar statement.)
Don't ask me about police, I don't even understand crime and punishment, really.
I should maybe add that I meant "We should just naturally have the natural things that we naturally want" somewhat unironically. I feel that way, the same as anyone else. The difficulty, as observed up the thread, is in working out what's natural, or vital, or wanted and feasible. There are no pixies to magically know the answers, to my regret, only governments, and they only pretend to know. By buying and selling we can almost figure out the answers, contingently and approximately, but a lot goes wrong with that, including the friction of having to do it all the time, and "rent-seeking", whatever defines that really.
Good regulation doesn’t completely avoid market mechanisms it tries to tame the more brutal ones in order to maximize return to society. The roads argument is important because without roads we do not have any trade. So by collectively and somewhat proportionally, to use and income, managing the cost of road it makes everything else the market does possible.
Maybe you mean that in desperate situations - such as working out what to do about roads - we might as well resort to government. We do, so I guess you're right.
"The act of growing one's existing wealth by manipulating public policy or economic conditions without creating new wealth." This is in opposition to profit-seeking, where "entities seek to extract value by engaging in mutually beneficial transactions." https://en.wikipedia.org/wiki/Rent-seeking
Friend, with respect, the mental blocks you're coming up against regarding roads, police, and resource distribution, within an American libertarian framework, are outlining exactly why American libertarianism (unregulated capitalism) is an untenable ideology.
Private roads don't make sense in capitalist framing because there's no possibility of competition - no market for a free hand to move in. Furthermore, there's ethical issues around the fact that roads won't be built to people who aren't as instrumentally valuable to capitalism, which is in opposition to the idea that all humans are equally intrinsically valuable. In plain words: poor people won't get roads built to them, won't be able to work, will get poorer. This is bad, and if you want to just be selfish about it, will lead to crime and social discohesion.
This argument extends to all the resources governments typically involve themselves in: electricity, sewage, water. We have direct evidence that when they try to privatize these things, it goes horribly wrong: see, the American healthcare industry, or, what's happening to the UK as it privatizes sewage. See the Texas privatized power grid.
All capitalist entities (corporations) are simple algorithms: Make profit go up. We like to tell ourselves that making profit go up is possibly only through mutually beneficial trades, aka the aformentioned profit-seeking, however that's not true in practice. The most profitable activity is slavery driven labor, and the most profitable state for a corporation to be in is monopoly. All optimized capitalist behavior selects for and trends towards that activity and that state, and literally the only way to stop this is through establishing some kind of hierarchy that allows for the limiting of corporate behavior - governments, and regulations.
Any example you give of a corporation in capitalism not trending towards slavery or monopoly has one of several explanations. 1. It's regulated, 2. It's led by someone who ethically doesn't want to trend towards slavery or monopoly, or isn't intelligent enough to do so. In the case of 2, that company will eventually be surpassed and consumed by someone with less morals, more intelligence, and more capital (more power).
> "We should just naturally have the natural things that we naturally want" somewhat unironically. I feel that way, the same as anyone else. The difficulty, as observed up the thread, is in working out what's natural, or vital, or wanted and feasible.
I completely agree, and there are other ways to do this other than capitalism, regulated or otherwise. I strongly recommend the most cited economist in history: Karl Marx. Peter Kropotkin is also very good, "The Conquest of Bread" is a great speculation of alternative systems.
The first scenario it harms us by under-serving and scammy practices, the second scenario it’s over-extractive and funneling money from the many to the few.
Whether or not you solve this through regulation, that's up to you.
I'm not sure it's great to have important infrastructure operated this way. Other than regulation do you see a way out?
This is absolutely not true. If all the airlines were prohibited from making money with anything else (miles, credit cards) then airfares would rise across the board and there would still be plenty of demand. Not as much, but still plenty.
I'm clearly not the only one who thinks so, judging by both Amtrak ridership statistics and the cost ineffective nature of my attempts to travel on it.
People and goods have travelled around the world long for thousands of years before air air travel and train travel. And people have made decisions above the trade-offs of travel to see family for thousands of years before air travel and train travel.
If air travel was unavailable or unsubsidized, people would continue to make those decisions and life would go on.
Yes, and it really, really sucked back then. And the number of people who could actually do that travel was much, much smaller than today. Air travel (and train travel, to some extent, though it mostly sucks in the US) has enabled people to travel around the globe who never would have been able to in the past.
What a bizarre argument.
If air travel didn't exist, I likely wouldn't move around the globe at all. Hell, I wouldn't move around the country even.
In the US, roads are mostly publicly-owned (the ultimate subsidy). Local bus and rail transit is usually also publicly-owned, though when it isn't, it's done through public-private partnership and/or subsidy. Regional and long-distance rail is subsidized. Why shouldn't air travel follow the pattern?
Indeed! We don't need air travel when we have perfectly good teams of oxen and covered wagons. We could even hunt and forage for our food along the way to save some money!
But that's a contradiction. If they are valuable, their customers would pay more for their services - that's the definition of valuable. And if their customers would pay more, they could afford higher air fees.
Btw you don't need to completely disregard other modes of transport to appreciate bus :)
Of course, we can argue that there are network effects or natural monopoly effects for fixed infrastructure like roads and rails, and thus there must be a public role. However policy rarely seems to remain at this reasonable position and instead quickly expands into something altogether different.
Aren't all modes of transportation in the US either subsidized or public-owned to some degree? We haven't arbitrarily picked one; we picked them all.
Air travel is maybe the least subsidized, though? Essential Air Service is probably the main thing? Long-distance bus like Greyhound is only minimally subsidized too.
But local transit (bus & rail), and regional and long-distance rail are all subsidized or publicly owned in the US. Most roads are publicly-owned, either locally or by the federal government. Long-distance bus and rail are actually unusual in how little they're subsidized.
(And no, the market often does not provide.)
But that's hard to do, because for many people/uses, they have to use those roads to get done what they need to do. The alternatives (like high speed rail) just largely don't exist in the US, or are painfully sub-par.
Would love to compare the economic throughput in raw dollars of the Oregon trail vs a single flight route.
Don't forget that the whole point of transportation under capitalism is enabling and stimulating economic activity. So sure, get rid of the airlines if you want to collapse a bunch of economic activity. Personally I'd hope for it to get replaced by high speed rail, but kinda hard to do that when economic activity is highly depressed.
There kind of is. I can make it from here in Bucharest to Paris in about 3 hours by plane, while by car I'll need about 3 days (i.e. two sleepovers till I get there). This is magical to me. To say nothing of places like the Arabian peninsula or, I don't know, the Indian subcontinent, I wouldn't even think of getting there by car as it is close to impossible (at least when it comes to a land-route to India), but taking a plane is a 6-hour flight from nearby Istanbul to Delhi.
That's.... like a pretty shocking erasure of the idea of a demand curve given the forum here.
To be glib: no, that's not how it works. Increase the price and fewer people will fly, but the demand won't drop to zero. Decrease it and you make less money per ticket but the size of the market is bigger. At some point there is a local maximum, to which the market seeks.
But conditions change occasionally and the equivalent supply curve is moving rapidly because of the oil shock (i.e. it's more expensive to put planes in the air to service tickets you already sold). And things like the mess with Spirit are what happens when the market readjusts: the rest of the industry will (probably) backfill some of the lost capacity, but not all of it, and prices will (probably) rise a bit to a new equilibrium.
Honestly, with the looming climate crisis, we should probably just let them fail one by one and let alternatives (who can actually be profitable) take off.
You mean every laboring slave.
No free market means corporations are allowed to engage in slavery, chattel or otherwise. Let's be honest about what a free market actually is. Factory towns, lifetime debt bondage.
I'd also feel similar I'd my primary water, electricity, or internet provider was on the brink of failing due to "free market pressures".
The "regulation vs. no regulation" stance is the wrong way to look at it. Airlines are still regulated, of course. Maybe some of the regulations we do have are unnecessary, some of the regulations we got rid of we should really bring back, and perhaps there are others that we never had that we need.
My guess is MANY more people fly and are able to afford to fly vs before. There are probably many others things that changed.
It's also very nice to fly.... in first class.
For a much deeper dive on this, see https://www.complexsystemspodcast.com/episodes/gary-leff-fre...
(there's a well-formatted text transcript)
Enough money for who? One person has a pay package north of $30 million.
Best not to generalize.
I pointed out the simple fact that Ryanair can't be considered a counterexample to airlines tending not to make money on flights since it relies on upsells to make a profit.
Spirit was designed to be ultra low cost, which attracts flyers that are much more price sensitive. Higher Jet A costs means higher ticket prices, which means lost customers, which means lost revenue. Pulling a JetBlue and adding higher tier product offerings to attract the business travelers that _actually_ makes money for airlines would've required an overhaul of their entire business, which they couldn't afford to do.
I agree that Spirit will be chopped up by whoever buys them. It happened to Braniff, PanAm, and a whole bunch of other airlines that weren't thrown a lifeline.
(JetBlue tried to acquire Spirit to prevent this outcome, but the acquisition didn't pass antitrust. Everyone knew that that acquisiton failing was a death sentence to Spirit, but it was what it was.)
But that's not necessarily a bad thing. If the company is worth more to the market and society when sold as pieces, so be it.
It sounds like there’s a problem with having too many flights that are barely full and hence unprofitable. AFAIK the federal gov spends significant money subsidising many “small airport” routes even if they’re barely used.
Before them Alaska Air was similar, and is now similarly bad.
Having the customers actually own the airline seems like a reasonable approach. The trick is kicking all the assholes off the board, so they can’t fire leadership for treating customers decently while turning a sustainable profit.
I can't fathom how this airline was allowed to keep existing.
However, if you wait till your competition goes broke, you need to ensure you survive long enough and stay big enough so you don't get bought. That's not exactly easy.
I wonder if this will be the next "market" to exploit if ad revenue ever dies down too much, or if it's one that's always been there, and I've simply never been a part of.
If that's the case then how RyanAir survived and is thriving?
Some flights make money.
Some flights lose money.
Some finance structures make money while looking like losses to acrue tax benefits for other activities.
Sometimes the money is being made by holding companies not operating companies. Sometimes the assets are worth more as spares than operating.
All companies are complex. I do not think "flights don't make money" is true for all airlines, all flights.
Air France, British Airways, Finnair, Turkish Airlines, just to name a few, all have miles programs.
They just aren't tied to credit cards because the EU caps interchange fees to 0.3%, so there simply isn't enough money to have a meaningful credit card point system.
What's your point?
Did airlines get cheaper due to deregulation or because technology and engineering made operating them cheaper?
Case in point: Old Perry Mason shows where characters regularly drive to the airport, pay for a ticket and get on a plane. Flying was actually faster than driving back then, even when measured by time between deciding to leave and arriving at destination!
(Yes, tickets used to cost a bit more. Whatever. Figure in the price for camping in the airport for 4-5 hours, and then tell me the current system is cheaper!)
Tickets used to cost 4-8x what they cost now, depending on route. It wasn't a couple percent extra. A lot of what made flying seem like such a glamorous activity was that everyone but the upper classes was excluded.
An economy class round trip from the US to Japan in the 1970s with Pan-Am was $8,900 in 2026 dollars. About $15,000 if you flew first class.
Deregulation also allowed international carriers to sell to us too. An ANA round-trip on economy class is a couple hundred dollars cheaper. Their business class is similarly cheaper than Delta One.
Air travel is so much cheaper than it was back then that it is affordable for most people to take one international trip a year if they really want to. Even to exotic places in Asia or Southern Europe.
But you have to follow the same model: use cheaper airports, a single modern aircraft type to simplify operations, high turnaround speed, charge a lot for extras.
Southwest has 30B in assets and makes $441M in profit. Like most airlines it’s a miracle of modern economics and should practically be considered a charity or a nonprofit. You would make more in treasuries or corporate bonds.
https://en.wikipedia.org/wiki/Largest_airlines_in_the_world
Obviously their model is different to the big American carriers. Perhaps there’s something about the homogeneity of the US domestic market compared to the EU market that favors loyalty based airlines versus budget airlines.
It suggests we'd be better of eliminating the absurdly high hidden taxes paid to the credit card companies, that in turn act to gamify the business. In the end they raise the cost of doing business, for virtually no benefit at all. It's a monopoly extracting as much wealth they can get away with.
The question at the heart of this: How can "the shining light on a hill" be so stupid? It's digging its own demise.
yeah in the US airlines are fintechs.
I don't get it. Why should they have been turned into utilities? Just because the current iteration loses money?
Please be aware that airline pricing is endogenous. That means, it's not set from the outside, but a reaction to market conditions and feeds back into market conditions. Eg airlines might be on the edge of profitability at time X, but when at time Y fuel prices drop a bit (or rise a bit) that doesn't mean that airline will suddenly all make lots of money (or all go bankrupt): the pricing of their product will adjust.
That doesn't only go for fuel prices, but also for loyalty programme revenue. If such revenue is available and competition is fierce, then prices will go down until airline can just about stay afloat after taking that extra revenue into account.
> Private equity will likely sell the company for parts.
You say that like it's a bad thing.
Member-owned co-ops don't need to make money. Structuring an airline as a member-owned co-op is not a fundamentally-stupid idea.
Even in this "airlines as point program companies" view of the world, flights don't make money in the same way that electricity going into data centers don't make money. It's a place where you have major costs and you want to try and gamify it, but at the end of the day it's pretty necessary for successful operations!
Consider why airline points even work as a model in the first place! Airlines have blackout dates and don't offer every seat in a plane for points because _they can make money selling a seat for more than what the points are worth to them_.
I heavily doubt PE firms are interested here as there is no potential for growth or a multiple. Spirit's assets are mainly their fleet, there are like 4 maybe 5 people who could buy, of these 2-3 are facing similar financial crises.
In the US I think nobody except United can afford to make a move, more likely some Asian airlines will move; many have grown and have route demand they can't service due to lack of aircraft. If you fly to Asia often you'll note that much of the time Asian airlines have to operate an aircraft from a US airline.
They used to be. Read up on "Civil Aeronautics Board".
"If you want to be a millionaire, start with a billion dollars and launch a new airline."
Don't know where I read that, but it seems apropos.
Be sure to actually go read the read the contracts and what they contain.