It's a tough business. Capital intensive, operationally complex, commodity product, unionized workforce, highly regulated...
Why airlines are always going bankrupt
11–20 of 76 posts
Re: Why airlines are always going bankrupt
#12Earlier quoted context omitted.
Maybe not related but fascinating: "Annual spending on Delta-branded American Express cards comes out to about 1 percent of U.S. GDP. In 2025, this produced about $8 billion in revenue for Delta, accounting for more than the entirety of its profit."
New revenue model idea: Charge $40/month on a person's credit card; a subscription. This buys the customer miles. Whenever you want to go somewhere, you use your miles. I think it would work based on the fact that people are willing to pay much more money for services if it's spread out and predictable. The fact that it's pre-paid also creates a lock-in benefit for the airline that the 'pay later over time' schemes l…
I mean a lot of airline point credit cards do something like that. Many have a fee, and you earn miles by using the card & get mileage bonuses for certain things. But these programs only make sense to a consumer if A) you’re good at finding good value for your miles and B) you’re passively earning miles by doing things you’d normally do anyways. (With a bonus for airline loyalty perks, if you fly a lot.)
Thing is, buying miles is normally a really poor use of your money, because the redemption rate isn’t great, and airlines devalue miles all the time. For example, the lowest option at delta is to buy 2000 miles for $70. That’s 3.5 cents per mile, but you can only expect to get a value of 1.25 cents per mile when you redeem them. Which only comes out to $25 in value, loosing you $45 — and that’s assuming you wait to spend miles for a good deal. (Redemption rate is worse during more popular flights.)
Airline miles are just not worth much, which is why people chase like hundreds of thousands of miles at a time through credit card sign up bonuses.
Re: Why airlines are always going bankrupt
#13How much of this is related to the pilots union? It seems like they capture all excess profit in the system during the good times, and fight vigorously to keep their inflated earnings even during the bad times.
Re: Why airlines are always going bankrupt
#14Earlier quoted context omitted.
Maybe not related but fascinating: "Annual spending on Delta-branded American Express cards comes out to about 1 percent of U.S. GDP. In 2025, this produced about $8 billion in revenue for Delta, accounting for more than the entirety of its profit."
New revenue model idea: Charge $40/month on a person's credit card; a subscription. This buys the customer miles. Whenever you want to go somewhere, you use your miles. I think it would work based on the fact that people are willing to pay much more money for services if it's spread out and predictable. The fact that it's pre-paid also creates a lock-in benefit for the airline that the 'pay later over time' schemes l…
Alaska Airlines apparently does or did this kind of thing: My sister in law had a “subscription” that was good for monthly tickets between San Diego and wine country.
Re: Why airlines are always going bankrupt
#15> From its deregulation in 1978 to the end of 2025, the airline industry has cumulatively lost money: its net profit over those 47 years sits at negative $37 billion. That was surprising. Goes against the idea that deregulation allows companies to squeeze consumers and earn excess profits. My understanding is that before regulation, routes were allotted by the government. So an airline might own New York to Boston, s…
A race to the bottom on pilot pay won't help anything. Well it may lead to less qualified pilots. You can ask Boeing how well screwing over labor has worked for them if you like.
All US airlines have the same labor costs for pilots and it isn't their highest cost anyway. That would be fuel.
If you want to divvy up costs that way: Boeing is probably the biggest problem. Both them and Airbus eat up all possible excess profit on the back end via the cost for airliners. Break up Boeing, bring back competition in airliner manufacturing. People who want to screw over labor don't usually frame things in those terms for some reason.
Re: Why airlines are always going bankrupt
#16This argues airlines are undifferentiated. In the aggregate, maybe that's true. Personally, I have a long list of airlines I try to avoid flying.
Southwest was very different and I personally preferred it. But Now it’s undifferentiated itself.
I have no reason to prefer it anymore other than if it’s the best on route and price. After all, it’s undifferentiated now.
Re: Why airlines are always going bankrupt
#17Fascinating article. One sentence jumped out to me: > So Chapter 11 is a relief valve for airlines struggling under the weight of their fixed costs; but it doesn’t really do much to help the system as a whole The American founders writing a uniform federal system of bankruptcy was a stroke of genius that's been paying dividends for 250 years now.
Chapter 11 bankruptcy as well as all modern corporate law has its roots in the tycoons of the late 19th century. They lobbied and wrote it which is why it's corrupt.
U.S. bankruptcy law is a foundational social technology that enables the marvelous world around you to exist.
Re: Why airlines are always going bankrupt
#18Earlier quoted context omitted.
Chapter 11 bankruptcy as well as all modern corporate law has its roots in the tycoons of the late 19th century. They lobbied and wrote it which is why it's corrupt.
U.S. bankruptcy law is a foundational social technology that enables the marvelous world around you to exist.
Is the marvelous world in the room with us right now?
Re: Why airlines are always going bankrupt
#19It's a tough business. Capital intensive, operationally complex, commodity product, unionized workforce, highly regulated...
I'd never given a lot of thought but the proliferation of budget airlines creating a race to the bottom always made it seem like airlines were a bad investment.
Re: Why airlines are always going bankrupt
#20How much of this is related to the pilots union? It seems like they capture all excess profit in the system during the good times, and fight vigorously to keep their inflated earnings even during the bad times.
The article touches on this. Pilot wages are very similar across major US airlines due to heavy unionization and pattern bargaining, so labor is more-or-less a fixed cost (and not the biggest fixed cost).
Additionally, pilots can and do take pay cuts in lean times. The pilots at my own airline saw a 20% pay cut in the contract following 9/11 and very reduced wage growth for a decade after that. Management took something like a 5% cut and kept the retirement benefits we lost.
Edit: I thought I recognized your name, I see we discussed pilot unions together on HN a few years back. Can I ask what you have against us? Out of genuine curiosity.