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Why airlines are always going bankrupt

davidoks.blog

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Re: Why airlines are always going bankrupt

#51

Post by fulafel »

These losses are peanuts compared to the externalities.

article:

> its net profit over those 47 years sits at negative $37 billion

EPA social cost of carbon: $190/ton [1]

US aviation annual emissions: 200 million tons/year

Global warming impact of aviation emissions is leveraged[3] 1.7x because burning it in upper atmosphere is worse.

cost: 190 x 200M * 1.7 = 64600M = or ~65 B / year.

And the articles calcualted loss was over the whole 47 years.

(The 190 per ton cost is for today, it's projected to go up as things get worse.)

[1] https://www.epa.gov/system/files/documents/2023-12/epa_scghg...

[2] https://www.eesi.org/articles/view/u.s-and-international-com...

[3] https://ourworldindata.org/global-aviation-emissions#non-co2...

Re: Why airlines are always going bankrupt

#52

Post by HWR_14 »

tadfisher wrote: post #48
anon7000 wrote: post #12

Earlier quoted context omitted.

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, bu…

They also have nothing to do with either Imperial miles or nautical miles. Like, a 2,500 mile flight costs something like 70,000 miles. I am irrationally angry about this and therefore refuse to participate in any related credit card scheme.

Miles refers to how they are generated, not spent. Absent multipliers or other bonuses a 2,500 mile flight generates 2,500 miles.

All rewards programs are phrased like this. You save up 10 nights at a hotel by staying there 10 times and you can spend it on a single stay.

Re: Why airlines are always going bankrupt

#53

Post by digitalPhonix »

tadfisher wrote: post #48
anon7000 wrote: post #12

Earlier quoted context omitted.

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, bu…

They also have nothing to do with either Imperial miles or nautical miles. Like, a 2,500 mile flight costs something like 70,000 miles. I am irrationally angry about this and therefore refuse to participate in any related credit card scheme.

> I am irrationally angry about this

Did you notice that the 2,500 mile flight earned/generated/conjured 2,500 miles?

(I know, I know, things can change the number you get...)

Re: Why airlines are always going bankrupt

#55

Post by [deleted] »

fulafel wrote: post #51

These losses are peanuts compared to the externalities. article: > its net profit over those 47 years sits at negative $37 billion EPA social cost of carbon: $190/ton [1] US aviation annual emissions: 200 million tons/year Global warming impact of aviation emissions is leveraged[3] 1.7x because burning it in upper atmosphere is worse. cost: 190 x 200M * 1.7 = 64600M = or ~65 B / year. And the articles calcualted loss…

[deleted]

Re: Why airlines are always going bankrupt

#56

Post by yason »

nunez wrote: post #37

The more interesting question is why airlines go bankrupt in such spectacular fashion. Every airline that goes belly up always does it with a bang. All flights cancelled, effective immediately. Stranded customers. Tens of thousands of jobs instantly lost. Every time. It's not like startups or even established companies wherein the time of death takes forever to get to, despite EVERYONE knowing that the body is a corp…

On the other hand, Spirit as mentioned in the article stopped making profit in 2019. Some years later, chapter 11 filings and then another round.. That's like a 7-year runway (pun intended) to insolvency.

Because fixed costs are what they are, I think, is the reason you can drive the business quite precisely to the brink of inoperation: it could literally come down to pure luck between how full your planes happen to be and how close you are to the next payment of some critical loan whether you can take off into the air for another month or so.

Re: Why airlines are always going bankrupt

#57

Post by yason »

bko wrote: post #2

> 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…

That was surprising. Goes against the idea that deregulation allows companies to squeeze consumers and earn excess profits.

I've held the belief that an occasional bankruptcy is basically a sign of healthy competition within an industry: those companies going down literally didn't know how to be any more efficient or they could've survived.

Regarding airline business, a crapload of more people are flying now with better prices than before the industry was deregulated. Sure it must hurt someone at one end, eventually. Part of the business is standing through price wars because someone will always lose: the best companies can endure that. While airline industry probably fluctuates as described in the article there are plenty of other cyclic industries. Churn itself isn't anything new.

Re: Why airlines are always going bankrupt

#58

Post by rcxdude »

xnx wrote: post #49
xboxnolifes wrote: post #42

Earlier quoted context omitted.

Pilots have a total monopoly... in the occupation of piloting?

For US commercial airlines it is my understanding that there are effectively no non-union pilots. That's good for the pilots (higher wages), but bad for the flyers (higher ticket prices).

Pilot pay has been trending downwards for a while. It's pretty badly paid for how high-stress and high-skill it is.

Re: Why airlines are always going bankrupt

#59

Post by Schiendelman »

DangitBobby wrote: post #45
dwd wrote: post #31

Simply because flying passengers is a losing business. The ones that make money operate as financial services from selling points to their partners via their frequent flyer programs.

But _why_ is it a losing business? The article also mentions frequent flier programs.

All commodities are losing businesses, because the margins become low through competition. This is great for us fliers.

Re: Why airlines are always going bankrupt

#60

Post by devilbunny »

bestouff wrote: post #50
rayiner wrote: post #8

Earlier quoted context omitted.

> was surprising. Goes against the idea that deregulation allows companies to squeeze consumers and earn excess profits. That's because this assertion is economically illiterate. Deregulation can lead to increased profits where otherwise companies have monopoly power. But often, the regulation was there in the first place to ensure that companies had sufficient profit to invest in expensive infrastructure. ( E.g. rai…

That also didn't work well. The US is notoriously very poor in railroads.

For passengers, yes, but primarily it’s poor for passengers because the infra is owned by freight companies that aren’t interested in passenger service. And rail freight service in the US is mostly pretty good.

And, at the time, they needed a lot of rail across huge distances. The transcontinental rail lines were hugely expensive and had immense amounts of graft involved in every step of their construction, but they got built. Also enabled the crushing of Native Americans, which was a usually-somewhat-tacit (though sometimes very explicit) goal in Washington.

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