Congress will take on private equity/hedegfunds/wall st dba as "airlines"

Discussion in 'General Discussion | Miles/Points' started by ahappyelite, Nov 25, 2014.  |  Print Topic

  1. ahappyelite

    ahappyelite Silver Member

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    It is now so obvious that Wall Street is in the cockpit and the price fixing (seat discipline) and complete devaluation created by the airline cartels (there are no longer any "low cost airlines, except Spirit which, well its quite amazing they are still aloft) has made the airlines public enemy #1 (worse than the banks). You can bet that Congress will step up in 2015 and take action to take the keys away from the aerogangsteros: we cannot have aerial mass transit completely motivated by greed. In a country this large where people must fly, the model has to be along the lines of public utilities. Unless the deal is in and the middle class mostly never fly (forget about the young.) Unless flying is now just for the rich at which point the ENTIRE enterprise should receive no public funds whatsoever, FAA, TSA, port authorities, DOT contracts, etc. Flew twice in the last 24 hours and noticed 30 empty seats on 737 (including non revs). Now that United has basically ended the FF program for a large swath of its members, it will be ugly I bet a couple of months from now.
     
  2. Wandering Aramean
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    Wandering Aramean Gold Member

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    So by "Congress will" what you mean is that you hope they will, right?? :confused:

    Also remember that "LCC" doesn't mean the fares to the customer are low; it means that the cost structure internally at the company is lower/different from a legacy carrier (and it barely means that any more). Flying is still WAY more affordable than it was 20-30 years ago.
     
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  3. Steven Schwartz
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    Steven Schwartz Gold Member

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    Aw c'mon Seth. Sometimes people just need to vent!

    You're not wrong, but there is something that strikes many of us as blatantly unfair - that plans are set up to look like contracts but that one party, and ONLY one party, can change them at will. Legal? Sure. But still disgusting. I get what he says. I bet somewhere down deep - you do too!
     
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  4. Gargoyle
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    Gargoyle Milepoint Guide

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    Not this congress. If anything they'll codify the things you describe and encourage it.
     
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  5. blackjack-21

    blackjack-21 Gold Member

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    A bit late for any reasonable action from Washington. They should have looked closer at the three major mergers much before they gave in and approved them. Promises of no route cutting, no large employee layoffs, no stations closed or drastically downsized, no fleets decimated thereby letting the merged carriers easily raise prices as they fly with full planes because of the downsized routes and fleets, they've really kept those original promises made to get those mergers passed, haven't they! How's everyone's elite upgrades going too? Less seats up front with merged FF plans having sometimes twice as many elites as the individual carriers, but smaller planes or less flights with space for upgraders means more demand for those seats with less availability for most.

    How's that "KoolAid" (heavily distributed on FT at the time) tasting about now?
     
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  6. NYCUA1K

    NYCUA1K Gold Member

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    With the flyer being squeezed and soaked by the plutocrats on every front, for anyone on the consumption side to keep beating the corporatocratic apologistic drums whenever someone dares to just vent or point out the evident trends is simply baffling...at least to me. Commercial aviation is now safer than it ever was. So what? There are now ridiculous baggage fees or etc...fees, too! I guess we should be thankful for these as well...:confused:
     
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  7. NYCUA1K

    NYCUA1K Gold Member

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    Are the airlines pushing their luck and inviting congressional scrutiny of their many and growing "cash cows" by resisting a proposed increase in the “Passenger Facility Charge" [PFC]? Note the hypocrisy and the crocodile tears!

    Quote of the day:
    Read the entire piece and laugh at the rich irony:

    Airlines Have Finally Found A Fee They Don't Like
    Posted: 11/18/2014 5:38 pm EST Updated: 11/18/2014 5:59 pm EST

    WASHINGTON -- Passengers are used to paying extra airline fees to carry on bags, cash in rewards miles, make same-day changes to flights and print boarding passes. So it may come as something of a surprise that airlines are intensely lobbying against a $4.00 increase to a routine fee that airports charge passengers to fund infrastructure upgrades and other improvement projects.

    The fee, called the “Passenger Facility Charge,” generates nearly $3 billion each year for airports. Currently, the fee is capped at $4.50 per flight, but airports say that cap, which was set in 2000, no longer carries the same purchasing power. Pointing to recent decreases in federal funding through the Airport Improvement Program, airports say the limit should be raised to $8.50 and indexed to inflation when Congress reauthorizes the Federal Aviation Administration next year.

    On the other side of the issue are airlines, which are working hard to prevent the fee from going up, as they did before the last FAA reauthorization in 2012. That reauthorization took five years and required more than 20 temporary funding extensions.

    Airlines for America, a trade organization of major U.S. airlines, says that a fee increase would be an undue tax that would depress demand for air travel [LOL!]. The group argues that the airports have sufficient resources to fund their projects and that travelers already pay enough in special taxes and fees.

    Continue reading...
     
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  8. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    Bitter tasting.

    That said... why do we all seem to be willing to have companies like Apple or Google be extremely profitable (and thus we pay premium prices for their products), but when it comes to the airlines, we want them to be constantly teetering at the brink of bankruptcy so we can get our upgrades, miles, and hot nuts? Just curious :)
     
  9. NYCUA1K

    NYCUA1K Gold Member

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    Because it is like apples -- pun intended -- and oranges?
     
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  10. blackjack-21

    blackjack-21 Gold Member

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    Canada has much higher PFC's for originating pax at most of it's airports. $25 CAD from YYZ for example, increased to that point several years ago, while a bit less for connecting passengers. So the small increase in the U.S. fee is small potatoes in the realm of things, just another added-on nuisance fee like so many others.
     
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  11. blackjack-21

    blackjack-21 Gold Member

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    Nothing against any business making a profit to stay in business...but more competition is good for everyone, including the airlines. It's now how they've gone about doing so in getting profitable once again that's annoying and costly to many of us, including those companies that have to foot the bills for their employee's travel, not just we who pay with our own nickels and dimes (pennies no longer work in Canada). After 9/11 everyone, including the airlines, were hurting. Airlines' bottom lines were disastrous for many years and some were courting bankruptcy. Several had been in and out of Chapter 11 a few times in prior years, and still were able to come back and survive and make a profit before that terrible day in 2001, all without merging then to do so. After 9/11, many once again came near to failing, some very close to doing so, but had they tried to make it on their own with management that believed they could do so (and without the Golden Chutes awaiting in the wings for some) perhaps they might have made it on their own, struggling, yes, but as a tighter, more competitive entity, with some security for their employees and competition still keeping fares and fees, "taxes", and some nuisance fees (YQ anyone?) at a reasonable level. WN got by with some smart fuel hedging for many years and was able to keep fares below many other carriers in tough times. Had any other airline thought of doing something similar at the time? DL and NW made the first jump into merging, would either have gone bust without the other? Then CO and UA, both having been through several bankruptcies in much earlier times, and with CO being the smaller but slightly in better shape then UA at the time, joining the merger bandwagon. Would either one have completely failed had they not merged, and if so, wouldn't that have made for a stronger bottom line for those still operating? AA held on for longer then the others, then decided too, to go the merger route by joining with US. Would either of them gone completely down the tube without their recent merger? Are all of their managements too concerned about their own paychecks to have really thrown in the towels without attempting to tighten up their carriers in the hopes of eventually becoming profitable again? Shareholders would've been hurt if no mergers took place, sure, but if some thoughtful and hard attempts to turn their bottom lines around, perhaps we wouldn't be seeing what's happened today, with all those little extra "extras", fees, YQ (oil is way down, where's the even slight reduction for passengers?), add-ons, and so much more.

    C O M P E T I T I O N.....remember that word from long ago? Gone, but not forgotten, at least by some of us. And please don't once again tell me about how fares of twenty or thirty years ago really haven't gone up with the cost changes of inflation in the economy. We got lots more included in those long ago fares, including decent included meals, FREE luggage included on our tickets, comfortable seating, even in the back of the bus, no YQ, extra fees, other "taxes", surcharges or the like. And we're paying with hard earned dollars that we're earning RIGHT NOW, not twenty years ago (although in some cases we're paying now with some of the dollars we had earned and put aside long ago for our later years), so where's the benefits for the higher costs? One airline decides to raise fares, others quickly follow suit. Another decides to gut their FF plans, and guess what....! Still another decides to add baggage fees, and advance seating purchase fees, and......! And the differences that competition once upon a time brought about, as airlines and other entities tried to set themselves apart from their competitors at the time, benefitted all of us, and indeed, even their profits to a large extent.

    Yep, COMPETITION was great while it lasted. I fondly remember it well.

    (And I don't have a Smart Phone, Apple or otherwise. They're much too smart for me. Instead I have an old plain CDMA phone for up here, and a not-quite-so-older GSM quadband flip phone that takes a SIM card for any of our travels. I still think of a phone as a phone, not a camera, pc, tablet, email, singing, or similar device, but that's just me, I'm still in the 20th century timewarp I guess).

    GTG. Wife's reminding me that I have to take my yearly twice weekly shower once again...early appointment today. BBL.
     
    Last edited: Nov 26, 2014
  12. ahappyelite

    ahappyelite Silver Member

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  13. ahappyelite

    ahappyelite Silver Member

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    This is a prediction......I have called several members of Congress and one of the staff people on the House Aviation Subcommittee sounded quite positive that Congress will intervene. .. The American public is clearly coming for the aerocarteliers with pitchforks. But it is unfortunately true that Hedgefunds/Private Equity for a Few, (AKA :Airlines for America") has an inexplicable stranglehold on Congress-the industry seems to have no fear of meaningful oversight. Is it free upgrades, holding planes, allowing multiple bookings, lounge privileges, campaign bundling of $$$ form's of C., or the revolving door of Congress and DOT people into pro airline lobbyists? The angriest people on Congressional staffs are the young people who know they are being shut out of travel due to the sociopathic piggery of Wall Street. Has anyone catalogued the dozens of way air travel has gotten worse just in the last 36 months? What got better? Wi Fi? Oh please.
     
  14. Dublin_rfk

    Dublin_rfk Gold Member

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    I fully expect that the political leaches will eventually act. Directly after several polls to confirm that they can say it wasn't there fault when their action result in negative polls. After all look how fast and how well they reacted to the public's out rage about immigration reform, health care, NSA spying . . .
     
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  15. Dublin_rfk

    Dublin_rfk Gold Member

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    Sorry about that. PC locked up in the middle of my rant. Big Brother?
     
  16. eponymous_coward
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    eponymous_coward Gold Member

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    You mean like my cable or phone company? Ugh. Seriously, I do not want to fly some Soviet-era monstrosity of an airline. I'll pass.

    Exaggerate much?

    Millions of people fly every year without crediting to a FF program. Millions more credit to programs where cheap fares do not give much in the way of return (this is very common outside the USA). Millions more credit to programs like WN, B6 and VX that offer very little in the way of frequent flyer arbitrage, aside from a straight small percentage of a rebate on fares. And the world continues on.

    The benefit is I don't have to pay for a crappy, calorie, salt and fat laden, blast-chilled and reheated coach meal on a 2 hour flight if I don't want to.

    Oh, and those of us who are nonsmokers also got cancer-causing cigarette smoke included with our flights 20-30 years ago. I guess we should be happy that this was included at no additional charge?

    I've paid round trip advance fares, Seattle to Vegas for about $190 this year. The inflation calculator tells me that this is the equivalent of a $81 fare in 1983. Feel free to show me $40 one way fares/$80 round trips that flew you 800-900 miles in the 1980's.

    I have no nostalgia for air travel in the past. A world where carriers compete on price instead of having government-set rates for fares has been very good for me getting to fly.

    One way to "turn a bottom line around" is to raise your prices, which is what you seem to be objecting to. At some point, cutting costs becomes impossible and the alternative is bankruptcy. It's not just shareholders who get hurt when companies cease operations due to bankruptcy; employees lose jobs, suppliers aren't paid, airports go empty, planes don't get manufactured.

    There isn't a lot of point in competing for unprofitable business. "We lose money on each sale and make up for it in volume" is a lousy way to run things.
     
    Last edited: Nov 26, 2014
  17. NYCUA1K

    NYCUA1K Gold Member

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    I miss the days of United, US Airways, Continental, American, Delta, Northwest, Southwest....

    The competition worked to the benefit of the flyer. With just three airlines controlling commercial aviation in the US, the flyer is doomed because the plutocrat is now in the pilot's seat, dictating the terms and conditions for taking the flyer where s/he wants to go. So, fees have multiplied, FF benefits have been or are about to be dramatically reduced, while quality of the product and service offered compared to top foreign airlines has continued to decline.

    Contrary to what the apologists seem to think, no one is against a for-profit company making money. But when the company is doing it on the back of consumers and getting away with it because there is no more competition and no elsewhere to turn, that is a big problem. That the plutocrats even have apologists on a discussion board designed to help members get the maximum value out of their travel funds is nothing short of heresy...
     
    Last edited: Nov 26, 2014
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  18. NYCUA1K

    NYCUA1K Gold Member

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    And you believe the mega-mergers promote competition?...:confused:
     
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  19. eponymous_coward
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    eponymous_coward Gold Member

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    Actually, customer satisfaction for airlines is about where it was years ago, perhaps a bit higher, and foreign airlines are both doing the same prune backs of FF benefits (inflating award charts, turning European business class into 30" pitch, etc.), or never gave the benefits out anyways (SQ has always had 10% RDM earning fares in discount economy, etc.).

    And AF and EK were doing 10 across in Y in 777s before AA started it.

    No. I believe new airlines entering markets does that. NK, G4 and VX have all came into markets in the last decade. B6 and AS have been very successful in the last 15-30 years.

    (I realize that none of those choices, save AS, has a traditional FF program that can be exploited in the MP/FT sense. Perhaps this speaks to market demand for Krug and caviar.)

    The mergers promoted stability. Having Chapter 7 liquidations of airlines, as opposed to Chapter 11 reorganizations or mergers would have been a legitimate alternative, but would have probably gotten us to much the same place, except even more painfully.
     
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  20. NYCUA1K

    NYCUA1K Gold Member

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    Why the airlines but not Apple? Because, like apples and oranges, the product offered by each is different. Apple offers you something tangible that is readily "consumable" - the iPhone, e.g. It is easy to judge an iPhone's performance and to like it and keep buying only iPhones. The airlines, on the other hand, offer service, an intangible. Why is this consequential? I will let much smarter people explain:

    Customer retention is not a key consideration in a monopoly. Decreased competition in the airline industry is enabling the airlines to take the consumer out of the loop because there is no other place the customers could go to get a service -- travel -- that most rely on like humans need air...

    Econ-101: Demand for air travel is high and will always be high; supply of this service is being limited as a result of the mega-mergers; so, prices and the T&C can now be manipulated with impunity by the plutocrats...
     
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  21. NYCUA1K

    NYCUA1K Gold Member

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    Puhleeze! How can KN, G4 or VX compete effectively in a world that is dominated by DL+WN, UA+CO, AA+US? Congress is going to have to intervene. Just you watch...
     
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  22. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    What makes you think that?

    If there is something the American should be coming for with pitchforks, it's some of the congress critters themselves ;)
     
  23. eponymous_coward
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    eponymous_coward Gold Member

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    Assuming you mean "DL+NW" because you're talking mergers, you left a rather large airline out.

    B6 or AS would be part of the competition as well.

    Anyways...

    http://finance.yahoo.com/q/bs?s=SAVE Balance Sheet&annual
    http://finance.yahoo.com/q/bs?s=ALGT Balance Sheet&annual
    http://finance.yahoo.com/q/bs?s=JBLU Balance Sheet&annual
    http://finance.yahoo.com/q/bs?s=ALK Balance Sheet&annual

    (VX's balance sheet not included because they just became publicly traded.)

    Seems like the new kids are doing OK at building new business in this environment. Are you suggesting that they would be doing even better were we to allow airlines to fail (which realistically is the alternative to allowing them to merge)?

    And how would you propose they intervene?
     
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  24. NYCUA1K

    NYCUA1K Gold Member

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    DL+WN was clearly a dyslexic inversion...

    All small potatoes in the scheme of things.
    I have no clue and it is not my job to figure out how congress addresses monopolies. They will just have to intervene because, in retrospect, the mega-mergers were a bad idea.
     
  25. eponymous_coward
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    eponymous_coward Gold Member

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    The airlines are not monopolies by the definition you and others are describing. The correct term to use would be oligopoly.

    For what it's worth, you do realize that ALL the airlines you mention (AA, CO, DL, NW, UA, US) were created as a result of mergers, right? So... was allowing THOSE mergers OK? If so, why were those OK, but this latest round wasn't?

    The problem is that the alternative to allowing airline businesses to merge or reorganize via Chapter 11 is allowing them to eventually fail and enter liquidation via Chapter 7. This has the same net effect of removing a competitor from the market, while having some pretty gruesome effects (suppliers and employees don't get paid, etc.). Mergers are generally less disruptive... but this would be an alternative; if competition ends up eliminating a competitor, then let the chips fall where they may.

    I don't think any proposed solution to the problems stated in this thread is as simple as trusting a bunch of politicians to "do the right thing". I don't even agree that everything seen as a problem necessarily is a problem. Having people choose to buy goods and services (and having competition based on pricing) is a fine way to organize much of an economy.
     
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