[rapatel0]

Fundamental problem: Flights don't make money. Airlines actually make all of their money through loyalty programs and credit card payments. They basically should have turned into regulated utilities long ago, but loyalty program revenue saved them.

Unless this initiative will turn into a credit card company (which nobody likes or wants to do) it won't go anywhere

Private equity will likely sell the company for parts. There is no operational improvements for cash flow that they can do.

Useful watch (skip to 2:20): https://youtu.be/ggUduBmvQ_4?si=cyysP7aH_CIEDZRq

[gizmo686]

Why does any of this imply they should become a regulated utility? This seems like a textbook case of the free market pushing prices down to cost. Having alternative revenue streams pushed that minimal price down; but even without that, there is no reason to think the market would have done anything other than push prices to the lowest level possible in that environment as well.

[gruez]

Company makes too much money: "they're extracting monopolist rents! They need to be a regulated utility!"

Company makes too little money: "there's no money in this industry! They need to be a regulated utility!"

[gorgoiler]

A more fair assessment would be: company runs a utility => 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.

[dghlsakjg]

Have you ever flown spirit or any of the other ultra low cost carriers?

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.

[tshaddox]

I’ve flown Spirit and Frontier several times, and Southwest many times (I know they’re not quite in the same category, especially after their recent changes). I genuinely don’t know what you’re referring to regarding the experience being wildly different. Other than a few quirks about what they do and don’t charge for and how they board and assign seats, I feel like there’s almost no meaningful difference between these and legacy carriers like United and American. I honestly don’t even feel like the prices are consistently that different.

[SOLAR_FIELDS]

The two main differences are more armchair lawyering required to avoid fees (legacy carrier is often not going to put your bag in the dimension bin, but the Spirits and Frontiers of the world certainly will) and having to sit through three sales pitches instead of one on the legacy airlines. I think Delta is the only legacy carrier in the States that doesn't do obnoxious sales pitches - only the food cart upsell. Ryanair will come through with their hands out minimally three times since last time I rode them (though it's been several years, is it four now?)

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.

[dghlsakjg]

Besides the seats, seat pitch, entertainment, cabin classes, upcharges, boarding staff paid commission to reject carryons, advertising everywhere, the unpolished behavior of other clientele, customer service, and how they handle failure, sure it’s practically the same.

[hn_throwaway_99]

I feel like you're living in a different universe then. I will literally never fly Spirit (well, neither will anyone else) nor Frontier ever, I loath the experiences I've had on them so much.

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.

[jmspring]

You state an opinion, but not why for that opinion. I’m mostly stuck with Alaska or a small handful being a couple hours north of Seattle and driving to/dealing with SeaTac is not fun. In the caliber you said you wouldn’t travel includes aliegent.

I’ve not flown them and stick to Alaska and the local puddle jumpers to get off the island.

[fcarraldo]

Singapore Air is majority government owned and is closer to having “utility” airlines than not.

[SOLAR_FIELDS]

Conversely, Air India was majority government owned, did a pretty bad job of it, and is now privately owned.

[eru]

Yes, Singapore Airline is government owned, but I don't see how it's a utility?

[RajT88]

My company travel tool won't even let me book Spirit without it being flagged to HR.

[Krasnol]

Singapore Airlines is majority-owned by the Singapore government's investment and holding company Temasek Holdings, which holds 55% of voting stock as of 31 March 2020

https://en.wikipedia.org/wiki/Singapore_Airlines

[boppo1]

>Compare it to a flag carrier like Singapore air and it is a shockingly different product

Never flown one of these, can you describe the difference? Hard agree about what you said about the others.

[dghlsakjg]

Staff that are unfailingly polite, comfortable seats in all classes, well maintained interiors, a culture of excellence. It is an airline that competes on being the best experience possible. My FIL used to do a lot of business in Singapore, and exclusively flew them on any route that was possible mostly economy and business class, but a spend that was high five figures per year, in the top tier of whatever their points program was. A staff member who knew what he looked like would meet him at the curb and walk him into a private check in cubicle. Even if you aren't one of their frequent fliers, they just treat you far better than you can expect from EU/NA airlines.

US mainline carriers try to get the high end travellers in first class, while also trying to run an ultra low cost carrier with the new "basic" class tickets. They end up doing a mediocre job at both by not hitting the level of service that Asian airlines provide, and not having the low prices that the Ryanair's of the world give you.

[dec0dedab0de]

I think Spirit has the most comfortable seats out of all the ones you listed. Especially if you're lucky enough to have a row to yourself and get to lie across all three of them.

[xmlblog]

This. Maybe there's a market opportunity for people who want to be treated like cattle, but even Spirit couldn't find it.

[sandworm101]

>> every carrier is basically the same thing but with different decals

Worse yet, you buy a ticket for carrier A, then discover that due to xyz partnership agreement you are actually flying on carrier B.

[mr_toad]

Streets, tracks and maybe tarmacs are public utilities, not the vehicles themselves.

[xnx]

This is more accurate, but the case for tarmac is weaker than streets or tracks. The natural monopoly on tarmacs is weaker. It can be a very good think for a metro to have competing airports.

[cortesoft]

The question is whether we feel air travel is as essential to everyday life as busses and trains are.

In other words, do we need to make sure everyone can afford to take a flight somewhere?

Or is air travel a luxury that we can allow the market to set a price for?

Maybe flights are simply too cheap, and we should just allow airlines to fail, which will limit supply enough to bring ticket prices back up to a level that is sustainable for airlines as a business.

Of course, this means that a lot of people are going to be priced out of being able to fly places for non-essential reasons. Which, given the environmental impact, might not be a bad thing, although it will make life very different for most people.

[tracker1]

Personally, I'm inclined to drive over fly if I can get there in 8-12 hours or less. Even if it uses up close to a full day for a round trip. I absolutely abhor flying. I'm a bit tall and fat, and I've been stuck on the last row, inside seat with less room in both dimensions while the person in front of me tries to lean back literally dislocating my knee. All because they oversell flights, and your seat selection at purchase time apparently counts for jack squat when you show up at the airport to check in... you really needed to "check in" online the day before, even if you were in meetings until 9pm with no time to actually step aside to do the check-in on your phone that's just a miserable experience in itself, because nobody does accessibility testing with phones and larger text/display sizes.

[elektronika]

> The question is whether we feel air travel is as essential to everyday life as busses and trains are.

Anywhere I can get to by train in the USA I can go faster and cheaper by plane. By bus I can go "cheaper" if I ignore the value of my time and the people offering me meth at the bus-stop.

[bandrami]

I think the ultimate example is the fact that most routes are run by other companies than the branded carrier; capacity providers like Endeavour and SkyWest just borrow the name and livery of the major carrier they're operating for that day.

[ericmay]

Yea that's a good one. The problem is folks don't have patience. They see an airline fail and instead of waiting until a new competitor enters the market, as they inevitably will, they want to start regulating or look to other "solutions" but these things take time to work themselves out. It's a free market, not an instant free market.

[wat10000]

Or maybe a new competitor doesn't enter the market, and we're stuck with a mere four major, three mid-sized, and some smaller airlines in the US. It's still a highly competitive market even with Spirit gone.

[devilbunny]

Meanwhile, first class today is not very much more than coach cost in the regulated era.

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.

[rogerrogerr]

Am I the only one who really doesn't care what kind of service I get on a plane? I don't drink alcohol, so I don't care about that. I bring my own water bottle, so I'm good on that. The little bags of pretzels are nice, but if they stood at the front and launched them out of a t-shirt cannon, I'd be good with that.

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".

[jhgorrell]

When your flights are delayed/resechduled there is a world of difference. "Get in line" vs "you are already rebooked". (my Air Canada experince.)

[alister]

> "Get in line" vs "you are already rebooked". (my Air Canada experince.)

Which of the two was the Air Canada experience?

[rogerrogerr]

Fair enough, I've been in those situations where the service on the ground side of the gate matters.

[kelnos]

> I bring my own water bottle

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.

[wat10000]

You can ask them for more, and at a time of your choosing.

[eru]

It's good that you don't care, and that you can self selected into getting the cheapest fare possible. The market works.

[moduspol]

Honestly I kind of liked Spirit because the snacks aren't free. When it's snack time, I don't have to wait 45 minutes for the cart to get to me because it's not stopping at every row. And it doesn't bother me to spend $4 on a snack because I already spent so much less on the ticket.

But I guess I also don't fly much, and I never had to deal with delays or rebooking with them.

[throwaway2037]

I like the EU model. The regulators set a "bare minimum" set of requirements. They have much better minimums that North America, and the fares are (still) cheaper per kilometer travelled. Also, I love the penalty system when flights are late.

[extraduder_ire]

Some of that lower cost in Europe is down to jet fuel being tax free, as well as the US having multiple mandatory taxes on plane tickets.

The cost of EU passenger rights payouts is vanishingly small on the average ticket if almost all of them arrive as advertised.

[wallst07]

"They have much better minimums that North America"

Can you enumerate these? As far as I'm aware Ryan Air is basically more "Spirit" than Spirit Airlines.

[throwaway2037]

For one, the penalty system for late arrivals. It is such a big business now, that there are whole businesses setup to advise you and do the work for the cut of the penalty paid. And that penalty system applies for trains too.

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.

[lostlogin]

Company, always: "We need government subsidy". Then hell yes to regulating what they do.

[filoleg]

Spirit wasn't asking for a government subsidy to get saved from bakruptcy. They were asking to be allowed to get merged with JetBlue (which could've saved them from bankruptcy) and got denied by the government. Those two things aren't the same.

[rogerrogerr]

My understanding is that the Spirit/JetBlue merger was blocked by the Biden DOJ. Were they asking for that again, or was it a different thing that failed in negotiations with the feds recently?

[gizmo686]

The negotiations that were occuring directly prior to Spirit's shutdown were not merger related; but a direct government bailout.

[wallst07]

Biden/Warren backed/forced the DOJ to sue Jetblue/Spirit to block the merger for antitrust.

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.”

[eru]

Two wrongs don't make a right.

[lostlogin]

I know it’s frowned upon many circles, but regulation can work and do good.

There is plenty of crap legislation and regulation about, but it doesn’t have to be that way.

[eru]

Yes, but be careful not to commit the 'nirvana fallacy' of comparing real world circumstances against idealised optimal regulation.

[mysecretaccount]

Even with your uncharitable framing I agree with both quotes.

[jmalicki]

Can you educate the rest of us by explaining your reasoning?

[roxolotl]

Not op but I also agree with the framing assuming you add “and they provide a vital service” to both. If a vital service is being used to extract profits it should be regulated so that equal access to the vital service can be provided. If a vital service is being provided but cannot make money it should be regulated so that it can be sustained since it is vital.

Now what is vital? Is Spirit vital? That’s the hard to define part.

[card_zero]

1. "We want to have this, but we don't want to pay for it!"

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.

[throwawayqqq11]

Breaking down complex topics into binary black and white doesnt have to be wrong. The more important part is, how much wealth they extracted and how exactly. Was it market dominance with a superior product or amoral cost externalization.

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.

[eru]

> Similarly, would you close schools, because they didnt make enough money?

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.

[kennywinker]

Utilities and transportation should be public services, and they are in many places. Sometimes it works well, other times it works less well… usually because the capitalists lobby it into neglect and then say “see it’s not working / losing money let the private sector take over”.

[bigyabai]

Companies like John-Deere should be able to survive without abusing their downstream customers. Many farmers are importing tractors from China because they're cheap and not hostile to repair like JD is. Some people might call it a "smart business model" to sell interdependent services, but in the long-term it's suicide.

Whether or not you solve this through regulation, that's up to you.

[card_zero]

It would be nice if companies could commit suicide faster, instead of dragging it out over several decades.

[kennywinker]

The extremes of capitalism have a negative impact on people’s lives.

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.

[Humorist2290]

Company offers a service that is considered essential to function in society, and the overwhelming majority of people _must_ pay for as if it were a tax: "this seems like something generally useful to the public! They need to be a regulated utility!"

[lyu07282]

If it's basic essential infrastructure and in the absence of high speed rail it is, it shouldn't be a regulated utility it should be nationalized holistically. You have to 1) make sure nobody is profiting of a basic necessity because that will always eventually be unsustainable (profits need to rise always and forever like cancer), 2) holistically because the parts of it that are profitable need to be used to cushion the unprofitable parts (in contrast to privatization where the profitable bits get privatized and the unprofitable bits are subsidized like USPS vs. UPS/FedEx/Amazon)

[xnx]

And similar illogical arguments on regulated transportation: "the trains are too crowded! We need more money."

"No one is riding the trains! We need more money."

[threethirtytwo]

Changing it to a utility? Like Bart in sf? We should have Bart authority run the airline!

[themafia]

Okay, but the process of underwriting an airline now somehow involves operating a successful credit card company. Which, you know, are not typically successful based upon operating excellence but upon rapaciousness of interest rates and merchant fees.

I'm not sure it's great to have important infrastructure operated this way. Other than regulation do you see a way out?

[sgerenser]

No airline operates a credit card company. They just put their name on a card and sell miles at a discount in bulk to credit card companies like Chase or Citi.

[themafia]

Of course they do. Why do you think they get money in return? You don't think that's linked to performance? They just put their name on a card, get a fixed amount of monthly money, and that's enough to let them lead at a loss on airline tickets?

Hacker News has become simple minded. It's embarassing.

[sgerenser]

Missed this so coming in very late, but wow this is unbelievably off the mark. The airlines do not operate a credit card company, full stop. They sell airline miles, at a fixed rate per mile, to the credit card companies. That’s it. Citi, Chase, CapitalOne, etc. are the ones that operate the credit cards.

[hilariously]

Company is valuable to us as a society in a fundamental way but is fucking us up in all sorts of unique ways: They might need to be a regulated utility.

[parineum]

Hopefully we can regulate them like California electricity and let one airline be active per airport and let them charge more than triple national rates.

[hilariously]

I am not trying to be flip - I am just saying the two sides are not bad regulation ripping us off and bad private companies ripping us off, we can instead do good things and attempt to do them well, we can hold people accountable and have integrity; these are choices we make every day.

[the_gipsy]

Bottom line: there never really is any free market. Because it doesn't work.

[rapatel0]

Power companies are the classic example. If power companies were forced to compete, their costs + competition tend to drive them out of business. As a result most power companies are forced to operate in really tight constraints with very limited but predictable margin.

I'm not saying that this a better outcome (power companies have their problems too). I was just commenting that this issue parallels the historical solution that was applied to utility companies.

[granzymes]

Power companies are a classic example of a natural monopoly because they require a ton of extremely expensive physical infrastructure to connect every house to the grid that would be wasteful to duplicate for every competitor.

The whole point of airplanes is that they require no physical infrastructure between point A and point B.

You can have competing power companies generating the power if the grid is owned by the state (or a regulated monopoly). Coincidentally, that is a good mental model for airlines because airports are often state-owned or if not are highly regulated.

[allanca]

I'm starting to come around to seeing airports the same way. Airplanes need "a ton of extremely expensive physical infrastructure to connect every" city to the grid.

That's why the creditors let Spirit die. Their airport slots and gates are more valuable than the rest of the company combined.

[rapatel0]

Fair point and I don't disagree. The more meta point I would make is that airlines are still fairly capex heavy (even if there is no point-to-point infrastructure). Each incremental new route operating during standard hours still requires 90m+ on a new airplane.

So if they tend to compete themselves into oblivion, or need to turn into banks to subsidize their product, then it might make sense that they should be regulated monopolies.

Still you're probably right, if they can turn into banks and stay profitable, then maybe that's a better market outcome overall.

[thrance]

If we let the free market do its work, there'd be no airlines. Jet fuel is heavily subsidized, the State injects massive amounts of money into airports and plane manufacturers, etc.

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.

[carlosjobim]

In a free market, every working citizen could easily afford more expensive airline tickets, since they could keep their entire income with no taxes deducted.

[komali2]

> every working citizen could easily afford more expensive airline tickets

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.

[carlosjobim]

Ah yes, thank you for correcting me. That is exactly what I meant.

[komali2]

I've yet to hear a successful true free market argument of why slavery won't happen, or monopoly.

[abenga]

But the air travel system (airports/atc/etc) would not exist, because taxes were needed to bootstrap it.

[carlosjobim]

Modern governments have their fingers involved everywhere. That doesn't mean that nothing would exist and nobody would survive if things were different.

You could just as well say that if it weren't for private investors nothing and nobody would exist, because they also have their fingers involved everywhere.

But the post I'm replying to is a scenario of a different world. We're not discussing how things actually are and how things actually happened.

[thrance]

Sure they would. And some noble souls would pave the roads and build schools, act as firefighters... Like they did in Grafton.

https://en.wikipedia.org/wiki/Free_State_Project#Free_Town_P...

[kelnos]

That's a really cute idealized world, but it wouldn't work in practice. The structure of free-market capitalism all but precludes it.

[carlosjobim]

The poster I replied to was already in the territory of idealized worlds. You can't just look at one side without looking at the other.

[SecretDreams]

When a necessary service is pushed towards being unprofitable / breakeven due to "free market pressures", it probably should have some kind of backstop to ensure the service doesn't completely fold - because it is necessary. I think the suggestion to treat it like a utility was trying to emphasize this.

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".

[nilamo]

Consumer air travel is not a necessary service, though.

[SecretDreams]

How do you feel about high speed internet vs dial up?

[forgotaccount3]

Not necessary.

But also, 'Not necessary' doesn't mean 'not worth subsidizing'.

If you think the government finds value in having a connected population with easy access to information then there's value in subsidizing that. Assume the government valued it at $10 a month per person due to increased economic activity made possible from the information flowing, if the market price for it was $60 a month then you have expanded access to anyone who valued it at at least $50 a month.

You can make the same argument for air travel by the way. Why does the government value consumers flying around the country? Why would the government want to encourage people to fly from Charlotte to Florida to go to disney instead of drive to Pidgeon Forge and go to Dollywood? Or fly to NY 3x a year to see grandma for a weekend instead of drive to NY and see grandma for a whole week 1x a year?

[gwerbin]

In this case prices are _below_ cost, no?

[willio58]

Airlines basically were a regulated utility until they were unregulated to the point where normal people can barely fit in a seat and there’s basically no amenities anymore. It used to be kind of nice to fly. That’s laughable now.

[eru]

Now you have to option to pay as much as you used to (inflation adjusted) for a ticket, and get first class service with all the leg room you want.

[kelnos]

On the other side of that coin, when airlines were heavily regulated, most people couldn't afford to fly at all.

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.

[komali2]

We can't be sure whether cost came down because of removing regulation or improvements in technology. We can only guess.

[wallst07]

What other things changed besides regulation?

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.

[pc86]

> Why does any of this imply they should become a regulated utility?

Because the majority of the HN crowd defaults to "a massive government bureaucracy would do this better" unless it's even tangentially related to their industry in which case it's "regulations bad" and "move fast break things."

[rapatel0]

I'm definitely not this type of person. see other comment

[striking]

Because the amount anyone would actually pay is substantially below cost for most routes, but it's still a service that many people depend on (either directly or by the indirect economic impact of travel). It's a genuine force multiplier that is unaffordable without being subsidized; making it a utility would just shift the subsidy from credit card points programs to the government.

[crazygringo]

> Because the amount anyone would actually pay is substantially below cost for most routes

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.

[ajross]

> the amount anyone would actually pay is [...]

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.

[appreciatorBus]

If airlines didn’t exist, people and goods would continue to move around the globe as they have done for thousands of years. There’s nothing magical about air travel (or any other transport mode) that makes it worthy of subsidy .

[striking]

Listen, I'm the type of fella who'd gladly take the Amtrak from the East Bay to Portland, 18 hours each way, and I'm telling you even I'd do so only as a novelty. If I actually had somewhere to be, spending basically an entire day on a train would be a non-starter. And that's just on the same coast! If I had to take the Amtrak back east to see my family for the holidays I would probably just not go. My travel to the other coast (not to mention back to the country where I was born, an additional ocean's worth of distance) would only be worth the trip for like a life change or a death in the family.

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.

[appreciatorBus]

I didn’t say anything about trains or Amtrak?

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.

[kelnos]

> People and goods have travelled around the world long for thousands of years before air air travel and train travel.

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.

[vel0city]

I'd like to see a revival of trains in the US, but I agree their impacts will be limited. I think they make sense for regional travel (Texas triangle, New England area, West coast, Midwest, maybe NM/Colorado/South Wyoming, etc.) Hopping between these regions seem like planes are the obvious choice. The distances are just so high, with often very limited regional centers connecting them in between.

I'd love to take some HSR to Austin or Houston or San Antonio from DFW, but I just can't imagine the network to make a train work competitively to get from DFW to NYC or LAX.

[hakunin]

When something is that drastically different, it becomes different in kind. For example, if you have high network latency, you cannot jam (play live music) with friends remotely. If you have low latency, you can. Just because the difference is in a single value (I.e. net speed) doesn’t mean it doesn’t change the fundamental nature of what’s possible. Air travel makes the kind of business, shipping, and attendance possible that wouldn’t have been possible otherwise, because our collective lifetimes and risk tolerances are limited.

[rendaw]

I think you're saying that there are businesses that rely on cheap air transportation that are very valuable, but at the same time couldn't afford higher air fees.

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.

[hakunin]

No, all I’m saying is that air travel is so different than any other kind of travel, that it is very special, and borderline magical. Saying something like “nothing magical about air travel, things and people would still travel around the globe” is very reductive. I’m not giving my opinion on subsidies.

[eru]

That doesn't mean we should subsidise it.

[hakunin]

I’m responding to a claim that there’s nothing “magical” about air travel. It literally enables things otherwise impossible.

[kelnos]

There absolutely is something magical about air travel! We can get places much faster and much safer than we could before. I live in California, and another part of my family lives in Maryland. Are you saying that when I want to visit my family, instead of spending 5-6 hours in a metal tube in the air, I should spend a week (or more) either driving or taking various trains and buses?

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?

[paganel]

> There’s nothing magical about air travel (or any other transport mode)

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.

[devsda]

You can't think of a single situation where an airline route is infinitely better and probably the only viable option ?

Btw you don't need to completely disregard other modes of transport to appreciate bus :)

[appreciatorBus]

Buses and planes are both great! Both have advantages and disadvantages, and different cost structures. I trust people to make their own decisions about trade-offs for travel that work for them and their situation. When we arbitrarily pick one and shovel free money, land or infrastructure toward it, we are putting a thumb on the scale and depriving people of the power to make their own decisions.

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.

[kelnos]

> When we arbitrarily pick one

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.

[eru]

If they are so much better, why do they need subsidies?

[victorbjorklund]

Which transportation mode gets no direct or indirect subsides?

[folkrav]

This line of thinking assumes being profitable is the only thing that makes something desirable or not.

[1shooner]

Do you oppose the federal highway system (or rail systems) as well?

[appreciatorBus]

Basically yes.

[eru]

I guess at least when they are given away for free or severely underpriced to the user.

[kelnos]

Ah, you're one of those people who think we shouldn't have nice things. Got it.

(And no, the market often does not provide.)

[freedomben]

> people and goods would continue to move around the globe as they have done for thousands of years.

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!

[carlosjobim]

Not advocating for subsidies, but there are things like patient transports to hospitals, where speed is a factor.

[thrance]

Just build hospitals closer to people. Or make people move closer to them. If it wasn't possible to fly to the hospital, people would just not live so far from them.

https://en.wikipedia.org/wiki/Induced_demand

[komali2]

> people and goods would continue to move around the globe as they have done for thousands of years.

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.

[forgotaccount3]

> indirect economic impact of travel

Like what?

Nearly all 'goods' are going to travel more efficiently by rail and truck. And I say nearly all to cover the outliers like maybe an organ flying across country for transplant.

So if it's not the distribution method of choice for goods, then leisure? It's probably a global positive if people fly less. People will end up going to more local vacation destinations instead of aggregating all of those resources into a few popular locations that end up being massively overcrowded. This in turn reduces carbon impact because driving 3 hours is significantly less impactful than flying for 3 hours.

If you are just talking about all of the labor that has built up to support this inefficient and wasteful enterprise, that's probably for the best to reallocate that labor elsewhere. It will happen eventually, unless you think cheap oil is a permamenent feature, so why not happen sooner than later?

[miki123211]

This is like saying that movie theaters make money on popcorn, so they should just start selling popcorn and exit the movie business entirely. The reason those loyalty programs work is because of the flights.

For a much deeper dive on this, see https://www.complexsystemspodcast.com/episodes/gary-leff-fre...

(there's a well-formatted text transcript)

[antasvara]

I read it more as "you buy an airline because you want to run an airline, but what you actually end up running is primarily a credit card company." That doesn't mean you stop doing flights, it just means that the part you want to do is the part that loses your company money.

This sort of thing all the time when (for example) a movie lover opens a movie theater. Running a profitable movie theater is a lot less about movies and a lot more about maximizing concession revenue.

[an0malous]

The point still stands that a dependency on creating a profitable airline company is a credit card company

[cromka]

And then you have RyanAir in Europe with no credit card or loyalty program offerings. They did have a loyalty subscription program, but it cost more than it generated.

Best not to generalize.

[rapatel0]

When I lived in europe, RyanAir made most of it's money in the terminal. This is why every RyanAir terminal has a maze like exit from security (ikea-esque) before you get to the actual terminal.

The RyanAir CEO was even quoted that he expected some tickets to be come "zero-fare" Link: https://www.theguardian.com/business/2016/nov/22/ryanair-fli...

The point stands, airlines don't make money on flights. Flights are loss leaders.

[notahacker]

tbf, Ryanair generates a third of its revenues from other ancillary offerings (including kickbacks from insurers and car hire firms as well as its legendary fines and fees) so it does fit the general pattern of it being unprofitable to simply sell tickets in competitive markets...

[wolvoleo]

Those other companies do too So it's not distorting the competition IMO. If none of them had kickbacks then the prices would be overall higher but people would still fly because most of us don't just fly for the hell of it but because we have places to go.

[notahacker]

Nobody claimed it was distorting the competition.

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.

[fundatus]

And Ryanair is the largest airline in Europe! And one of the largest in the world.

[tim333]

And it got that way mostly be focusing on cheap flights rather than other nonsense.

[nunez]

They make a lot of money from loyalty programs and credit cards, but the legacy airlines do make money on flying alone. The margin they make on that is razor thin, but they do make money from the core product.

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.)

[eru]

> 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.

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.

[gtowey]

Or they could actually charge ticket prices that cover the cost of doing business and stop treating their passengers like a it's a time-share sales pitch the whole way.

[tomhow]

They can't do this most of the time because for most of the year on most routes, supply outstrips demand (i.e., many/most flights on most airlines fly at least a little bit empty, often significantly empty – overall load factors are about 80-85%). They have to charge fares that customers will be willing to pay, even if that means losing money on a given flight. They can only charge profitable fares on the routes and times of year when demand surges (peak routes, holiday periods, major events). They have to keep their network capacity high enough to satisfy the peak demand, but for most of the year and most of the network, demand is lower, so they have to settle for break-even or loss-minimization. (For the record, I co-founded a flight search startup that became a fare optimization platform.)

[dannyw]

Was that Flightfox? If so, I loved using it, helped me save so much money but also time :)

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.

[bobthepanda]

That’s just the nature of the beast. Airlines have to align large capital intensive assets with fluctuating passenger demand and fuel prices. And at congested airports the slots are also expensive assets that get auctioned off, and operate on a use it or lose it basis.

Spirit and the other LCC’s problem is that the legacy airlines are now offering a similar product in their basic economy that has less hassle, higher frequency, is sometimes eligible for earnings on their massive loyalty programs, etc.

[Karrot_Kream]

The EAS Program (Essential Air Services) is the US Government program which subsidizes routes to small communities of you're curious.

[klardotsh]

I only wish I could find these "a little bit empty", "80-85%" flights. Any flight I've been on in the past 4 years has been filled to the brim and gate-checking anyone who didn't pony up for Premium Economy or better - or even outright oversold and handing out "please take the next flight?" vouchers.

(Seattle is my home airport, so maybe this has something to do with it - but come on, SEA is no ORD or ATL...)

[acheron]

Sounds like a good way to lose all your customers to the other airlines that charge less.

[AlexandrB]

Yup, and this is exacerbated by how services like Google Flights work. There's little visibility into any kind of "quality" metric, but prices are always front and center. So why would you optimize based on anything else?

[asvitkine]

If the lowest prices cause insolvency for the company, then let your competitors go bankrupt to win in the long run?

[iSnow]

I guess some of the legacy carriers are now drinking champagne since they got rid of one of the more aggressive ULCC competitors.

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.

[hedora]

Southwest used to do this, but then somehow got a CEO that burnt it all down instead of raising ticket prices by $20-30.

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.

[wolvoleo]

True, Alaska skimped on maintenance so much they killed a plane full of passengers that should never have died. https://en.wikipedia.org/wiki/Alaska_Airlines_Flight_261

I can't fathom how this airline was allowed to keep existing.

[stackskipton]

Consumers only look at bottom line. There is basically two markets with airlines, higher end market with credit cards and premium seating; lower end where consumer solely looks at ticket price.

[kulahan]

A huge number of businesses survive on whales, it's becoming really apparent. I'm kinda surprised how common it is.

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.

[cybercatgurrl]

this is a direct result of the shrinking middle class and the greater concentration of wealth. this is the canary in the coal mine

[lotsofpulp]

They do, it’s just barely enough to cover the cost of doing business and volatility.

[bdunks]

This is a common narrative that simply isn’t true.

American Airlines has the largest loyalty program.

In last week’s report to shareholders they project it will grow to $1.5B in pre tax revenue, against a total 2025 pre tax revenue of $54bn (50bn passenger revenue).

The core business of airlines is still airlines. Optimizing TRASM & CASM, with tremendous effort on upsell and cross sell of premium services (seats, bags, food), at every point in the passenger flow.

[tylervigen]

It can both be true that (1) most of the revenue and operations focus is on the core airline and (2) most of the profit and valuation is driven by the loyalty program.

This is true for American Airlines: https://viewfromthewing.com/new-report-says-aadvantage-is-wo...

[hnav]

profit != revenue. Airlines have thin margins and the argument is that they're getting most of their profit from the financial side of things. This is the end state of any endeavor in capitalism: up the value chain there's always the business of trading imaginary units.

[boppo1]

Can you elaborate on your claim about capitalism and all activities being about trading imaginary units? My uni gave me a degree in finance & I can still basically explain CAPM off the top of my head, but I'm unfamiliar with this aspect. Always interested in expanding my understanding.

[hnav]

I guess a better characterization is that it's more profitable to be in a meta-business than what's stated on the label. The original business is a almost a foot in the door and the money is all in value adds, ancillaries and side quests.

McDonalds -> leasing land to franchisees. Private equity -> saddling existing business with debt while chopping them up for parts. Stock markets -> pump and dumps. Selling anything -> rewards programs and branded CCs. Car dealerships -> captive audience for servicing. Owning real estate with the goal of leasing it out -> speculation on its value.

[abustamam]

I know this is a bit tongue in cheek but I think they're referring to dollars being made uo, which is true, to the extent that anything else is made up.

But just because it is made up doesn't mean it isn't real.

[gordon_freeman]

> "Flights don't make money. Airlines actually make all of their money through loyalty programs and credit card payments."

If that's the case then how RyanAir survived and is thriving?

[ggm]

It isn't the case. It's a simplistic gloss on a complex finance outcome.

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.

[bombcar]

Because people take "airline X makes $50k profit, and makes $55k off of the credit card, so therefore it makes all money from credit cards" which is true from a certain accounting point of view, and also entirely false, in that it's all accounting tricks and the credit card would be worthless without an airline.

[wolvoleo]

Credit cards aren't really a thing in Europe and even where people might have them they don't make money. There's no kickback schemes, cashback etc.

[red_admiral]

Bag fees and other ways to get passengers to pay above the headline price. Like this kind of thing: https://hallofshame.design/ryanair-when-every-page-is-a-dark... and https://darkpatterns.uxp2.com/pattern/ryanair-travel-insuran...

[addandsubtract]

Not to mention that loyalty programs and credit card bonuses don't exist in Europe.

[Petersipoi]

This isn't true. European airlines do have loyalty programs with "miles".

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.

[roncesvalles]

Because it's nonsense. It's from some YouTube video that went viral a few years ago.

[the_gipsy]

RyanAir notoriously uses cheaper secondary airports.

[altmanaltman]

Because their social media strategy is fire

[4k0hz]

Airlines were heavily regulated in the US and essentially operated as government contractors until 1978 [1]

[1] https://en.wikipedia.org/wiki/Civil_Aeronautics_Board

[tt24]

Yeah and it was an absurdly expensive activity limited to rich people

[jollyllama]

You say that, but flying economy was much better back then. Less fights, more legroom. You've got to fly business today to get close.

[tt24]

Yeah and economy class was absurdly expensive and limited to rich people

[jollyllama]

I'd contend that inflation adjusted, the average flyer won out.

[SpicyLemonZest]

It was better because the Civil Aeronautics Board did not allow price competition, so the cost of economy tickets was much too high, on some routes reaching the inflation-adjusted level of business class tickets today.

[bsder]

And most families only had a single car prior to 1980.

What's your point?

Did airlines get cheaper due to deregulation or because technology and engineering made operating them cheaper?

[SecretDreams]

Or as simple as incomes crept up and airlines reduced some amenities - both allowing for increased ridership which helped to reduce per head costs.

[tt24]

Probably mostly deregulation and a little bit the latter

[victorbjorklund]

Was it cheaper or more expensive for the public to fly on them during that time or after deregulation?

[hedora]

As I understand it, everything about the industry was better back then too.

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!)

[missedthecue]

"Yes, tickets used to cost a bit more"

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.

[Conan_Kudo]

And for comparison, today you can do an economy round-trip flight with Delta Air Lines for roughly $1.6k (SEA-HND). A Delta One flight is roughly $8.5k. That's the apples-to-apples comparison.

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.

[tt24]

It would be prohibitively expensive for poor people to fly. I understand why you wouldn’t care about that, but some people are poor and still need to fly if you can believe it.

[whazor]

Both Southwest, but also Ryanair are profitable. Totally possible to make money off flights.

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.

[oceanplexian]

It’s not enough to “make a profit”.

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.

[HWR_14]

Their last earnings report says about 17B in non-cash assets with about 848M in profit based on those assets (assuming that the quarterly profit x 4 is a reasonable assumption). So where are your numbers from?

[Finnucane]

Corporate bonds won't take you to Disneyland.

[rhplus]

Wow… at 1.5% annual return wouldn’t they be better off just renting those assets (aircraft) to other airlines?!

[sithadmin]

The majority of airliners are on 'dry lease' to their respective airlines to begin with.

[missedthecue]

Ryanair moves the most passengers of any airline in the world and doesn't have any cobranded credit cards or loyalty program.

[rhplus]

Ryanair is 3rd by passengers and 7th by passenger miles, according to this wiki page.

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.

[childintime]

The comments here seem to suggest that the loyalty program funded with credit card margins are to blame for the difference.

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.

[JumpCrisscross]

> Flights don't make money

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.

[rtpg]

If airlines stopped offering flights then their loyalty programs would not be useful.

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_.

[wolvoleo]

I kinda doubt that. Ryanair make money and they don't have a loyalty program and companies in Europe don't make money off credit cards.

[eru]

> Fundamental problem: Flights don't make money. Airlines actually make all of their money through loyalty programs and credit card payments. They basically should have turned into regulated utilities long ago, but loyalty program revenue saved them.

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.

[tristor]

> Unless this initiative will turn into a credit card company (which nobody likes or wants to do) it won't go anywhere

There's another more fundamental problem with airlines like Spirit, which is they can't effectively make this change. Loyalty programs / credit card tiers require differentiated service. This is one of the drivers for why Southwest changed their entire seating model to match the other big players in the industry even though their Ops data showed faster boarding times using unassigned seating.

When you're on the lower tier of the market like Southwest and other budget airlines, creating differentiated service mostly means making things worse for most passengers, not better, in order to have loyalty programs provide a pathway to avoid the suck.

[rockostrich]

Low cost carriers are almost an entirely different industry than traditional airlines. For example, Frontier has a loyalty program as well as their "Go Wild" pass which is essentially "Movie Pass" for flying domestically in the US, but that operates as a loss leader for ancillaries, where they make most of their money (around $70 per passenger). As others have mentioned, RyanAir also has a loyalty program that they lose money on.

Traditional airlines are very much like Starbucks nowadays in that they are essentially banks, but low cost carriers are closer to movie theaters where they essentially make nothing selling the actual seat so the more people they get in the door, the more they can make on ancillaries.

[cuuupid]

The company is not forced to sell immediately to whoever offers it money, they can sell themselves off for parts.

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.

[selectodude]

Spirit's assets are almost entirely their slots at ORD, EWR, LAX and LGA. They don't many of their planes.

[cuuupid]

I hear this a lot but their fleet is valued upwards of a billion, they own most of their fleet it was just financed with debt (it's not like a house where the bank has equity in the asset, the lender has debt with spirit and levers on that debt that control what it converts to on default but Spirit legally owns the planes). The slots are <100M total

[victorbjorklund]

Huh? What do you mean? They and Wizz air are public companies. Nothing would stop them from selling their planes etc.

[evanjrowley]

>Airlines actually make all of their money through loyalty programs and credit card payments.

Spirit has been doing this since it's inception. The collapse of their business can't be through lack of this alone.

[Animats]

> They basically should have turned into regulated utilities long ago

They used to be. Read up on "Civil Aeronautics Board".

[fooker]

> turned into regulated utilities

Regulation won't magically save low margin businesses.

Nationalizing might, but then you make it difficult to compete for others. And of course, there's plenty of precedence of nationalized airlines failing catastrophically and having to be sold off to private or foreign entities to keep functioning.

[skinfaxi]

> Fundamental problem: Flights don't make money. Airlines actually make all of their money through loyalty programs and credit card payments. They basically should have turned into regulated utilities long ago, but loyalty program revenue saved them.

Enough money for who? One person has a pay package north of $30 million.

[aninteger]

Famous Richard Branson quote:

"If you want to be a millionaire, start with a billion dollars and launch a new airline."

[m463]

I don't know, reminds me of this article from a long time ago:

https://philip.greenspun.com/flying/unions-and-airlines.html

[Eric_WVGG]

Doesn’t have to be a profit-making venture though, just needs to cover the cost of flights — which are not money losers.

If they can build a model similar to REI, count me in.

[ThePowerOfFuet]

Tracking-free link:

https://youtu.be/ggUduBmvQ_4?t=2m20s

Bonus: auto-jumps to 2:20

[arcastroe]

Does this imply that most people who sign up for frequent flier programs end up losing money in the long run, rather than benefitting from them?

[kqr2]

They can probably make money on business class travelers who spend their companies money on flights which aren't necessarily the cheapest but can reap the rewards for their own personal benefit.

[dzonga]

some do - see RyanAir in Europe.

yeah in the US airlines are fintechs.

[MagicMoonlight]

Bullshit. Very few airlines even have points systems.

[tencentshill]

They could pay Trump to gid rid of some of the more costly FAA regulations. Do you know how much it costs to train a pilot these days? We have this little thing called autopilot now! Put Musk on the job, he'll straighten out those crybabies and their "safety first" ethos.

[wat10000]

Sounds like the industry is extremely efficient. Why would we want to turn this into regulated utilities?

[ajkjk]

sounds like it's not efficient at all? it's barely functional as a business and is only surviving on grifty addons?

[avarun]

This is a textbook case of competition pushing profits down to 0. That's an ideal case scenario. Why would you want to change this?

[thesuitonym]

Maybe they would have been more profitable if they weren't funneling $1 million every year into their CEO's pocket?

[wat10000]

They were losing hundreds of millions of dollars a year.

[hakfoo]

Because at the end of the day, "profits down to 0" also means things like "reserve capacity down to 0", "safety margins down to 0", and "any aspect of the experience that makes it less miserable than being crammed into the cargo pen down to 0".

A modest regulated profit could result in a healthier industry-- one where the least economic hiccup doesn't cause carriers to shut down with limited notice, where they can afford to not play chicken with hours-of-service laws and maintenance standards, and where people don't get promotions for trying to sell the idea of standing-room tickets.

[wat10000]

The industry is extremely safe. Neither of the two recent fatal accidents involved safety lapses by the airlines and air travel is so safe as to be difficult to measure.

I don’t understand how higher profits would translate to a less miserable experience. Nice experiences are available now! You just have to pay for them. All regulation would do is remove the option of not paying for them. If you want to pay more for a better experience, nothing is stopping you now.

The fact that the airline that just went under was one of the most miserable, most nickel-and-diming ones out there suggests that this isn’t actually the way to compete, and the market does allow for some room at the bottom there.

[ajkjk]

Because of the "grifty addons" part. Is that not obvious? This situation is not ideal.

[emmelaich]

"Perfect efficiency comes at the point of collapse"

Don't know where I read that, but it seems apropos.

[wat10000]

It’s highly functional. It’s barely profitable. That’s good for the customers.

[victorbjorklund]

It’s perfectly competitive. There is no rent seeking on the core.

[tt24]

Good? It’s dirt cheap

[lazyasciiart]

Because efficiency is not the end goal of life.

[victorbjorklund]

So the end goal is making poor people pay more for the flights home on holidays so that the investors can have higher returns?

[lazyasciiart]

The end goal is not letting the airline cancel the ticket of the lowest paid passenger when they overbook, for one example. An efficient market simply doesn't serve the people who can't pay enough to be attractive customers: it makes poor people either pay more or not fly. It can also change those rules on the fly by e.g. cancelling flights without enough passengers booked, or selecting the person with the lowest value customer profile to bump when a flight is overbooked.

Regulations are usually introduced when people realize that the very efficient corporate choice like 'cancel underbooked flights, sell as many tickets as we can for each flight and bump the lowest paying passengers at boarding time' really screws over passengers. In the US, this is accompanied by giant waterfalls of public money being spent on the infrastructure required by airlines to cover the overhead that is mandated, like airports and air traffic controllers.

[wat10000]

How about transportation?

[exabrial]

Sadly only expensive because the unions bleed the companies dry.

[jodrellblank]

When CEOs and shareholders take all the money out of a company while doing none of the work, you think it's fine. When workers do the work and get the money, you think it's "bleeding the company dry".

Unions are one of the more effective ways for workers to fight back against "divide and conquer". Unions work to slightly adress the massive power imbalance between employer and employee; that's why the wealthy hate them and spread negative propaganda about them.

[exabrial]

LOL the company is dead.

[jodrellblank]

Management being the "buck stops here" people, being in their position because they claim to be good at running a company, being paid more to take responsibility for the safe running of the company. And now washing their hands of responsibility and blaming the employees.

Why are you being hoodwinked by this?

[victorbjorklund]

Not really true. If over night all salaries in all airlines would drop by say 20% overnight. Then yes, they would make a lot of money very shorterm. But then same thing would happen. Competition where they all would lower prices towards where they again have the same margins.

[exabrial]

Lol.

Be sure to actually go read the read the contracts and what they contain.