“These are the sorts of proposals that sound good in theory—who wouldn’t want to pay less in junk fees? But some of these fees exist for good reasons. (Late fees, for instance, encourage people to pay their bills on time, which is good for both credit card companies and for users, who will otherwise rack up more interest to pay back.) And in any event, companies aren’t simply going to say, “OK, we’ll just make less money.”
Hotels may respond by raising base room rates or charging new fees for typical amenities. Airlines that can’t charge for choosing your seat may raise base ticket prices, baggage fees, or other costs. Banks that can’t fine people for overdrawing their accounts may raise rates for opening an account, require higher minimum balances, or deny more people bank accounts to begin with. Credit card companies that can’t charge late fees may deny more lines of credit or charge higher interest rates. And so on.
All the Biden administration is really doing is shifting people’s costs around.”
“massive flight cancelations from are a good reminder of what a raw deal those bailouts were for taxpayers and consumers. Rather than allow the shock of the pandemic to create some needed disruption in the passenger airline industry, Congress chose to prop up a messy status quo.
The $7 billion Southwest received from three COVID relief bills allowed ineffective practices at the airline to persist. Allowing the competitive pressures to more freely do their work might have spurred some productive change within Southwest.”
“”Data on overall traffic trends supports the notion that the average flier has not been negatively affected by consolidation,” the Eno Center for Transportation, a research nonprofit, found in 2017. “As the industry has consolidated and grown throughout the decades, the number of seats that are available for passenger use—available seat miles—has increased multiple times over. By some measures, the cost of domestic air travel has remained level since 2006, adjusting for inflation.”
However, there is some evidence that certain mergers have led to price increases. As a 2016 data analysis by travel writer JT Genter found, “On average, airfares between former Delta and Northwest hubs increased substantially—much more than the national average—demonstrating that the Delta-Northwest merger wasn’t good for hub-based flyers.” Genter continued, “However, airfares between United and Continental hubs have seen much more modest increases over the last five years, and the fares have actually decreased on average over the last four years.”
Current evidence, though not uniformly supportive of all mergers, points toward them being generally good for consumers. Larger airlines tend to mean more flights at similar or lower prices—especially when traveling through hubs. Even when evidence points to some mergers resulting in price hikes for consumers, Warren and Padilla’s assertions that airline consolidation “routinely heaps inconvenience and abuse on consumers” are exaggerated.”
“the idea of supersonic flight is appealing because it’s extremely fast and would shave hours off of transoceanic flights. That’s not to mention that it would be pretty cool to travel faster than the speed of sound.”https://www.vox.com/recode/22508975/united-supersonic-plane-concorde-boom-hermeus-virgin-nasa
“the fastest speed that a train has ever achieved—not while carrying passengers, mind you, but just as an experiment—is 357 mph. Over long distances, while carrying passengers and making stops at stations, the world’s speediest train is China’s Beijing to Nanjing line, which runs at slightly less than 200 mph.
Meanwhile, the average speed of a commercial jet in the United States is about 500 mph.
That’s not even close to being an apples-to-apples comparison. After all, planes carrying passengers used to routinely break the sound barrier (roughly 760 mph, though it varies based on atmospheric conditions), and experimental aircraft have gone far faster. Still, the world’s fastest train still finishes a distant second when matched up against an average, boring Boeing 737.”
“Regal Cinemas announced in early October that it will temporarily close all 536 of its U.S. locations as the COVID-19 pandemic continues to keep customers away. This move affects about 40,000 employees across the country. Yet nobody in Congress is talking about a bailout for theaters.
Now compare that with the airline industry.
In April, Congress passed a $50 billion bailout for the airlines, including $25 billion in subsidized loans and another $25 billion meant to keep most airline workers employed until the end of September. As predicted, since consumers were not yet ready to fly, this taxpayer-funded band-aid only postponed the inevitable.”
“Some companies are taking a different approach to retaining their employees. Southwest Airlines, for example, is asking its labor unions to accept pay cuts through the end of 2021 to prevent furloughs and layoffs. Singapore Airlines has done the same.
Airlines also have access to capital markets and have many durable assets they can sell or use as collateral to secure additional financing, even during a crisis. And even without sacrificing these lucrative assets, airlines can turn to their credit-card-issuing partners for liquidity, as they have in response to past financial challenges.
Sadly, as long as demand for air travel remains deflated, there will be no way for airlines to avoid slimming down their payrolls. Subsidies provided under the cover of payroll programs are not necessary to protect an industry that can, and perhaps should, pursue restructuring through bankruptcy. Airlines can continue to fly safely during this process as a judge imposes a stay on creditors’ claims and gives the carriers breathing room until consumers are ready to come back.
Unlike special favors granted by Congress, the bankruptcy process is equitable. It shifts the cost of the crisis onto airline investors, who make good returns during good times in exchange for shouldering the decreased value of their investments during bad times, instead of taxpayers. Without another bailout, the skies that the airlines fly will be fair as well as friendly.”
“Sadly, as long as demand for air travel remains so deflated, there’s no way to avoid airlines restructuring and slimming down their payroll. Subsidies provided through the cover of payroll programs aren’t necessary to protect an industry that could restructure through bankruptcy. Airline bankruptcies aren’t the equivalent of an airline collapse. They can continue to fly safely during the process where a judge imposes a stay on creditors’ claims and gives the airlines breathing room until consumers are ready to come back.
Importantly, the bankruptcy process is fair. It shifts the cost of this crisis onto those airline investors who make good returns during good times and should shoulder the decreased value of their investments, instead of taxpayers. Without a bailout, airlines won’t just be flying the friendly sky, but the fairer sky—for all taxpayers”
“Let’s remind everyone why we shouldn’t bail out airlines. Yes, the coronavirus crisis is both a public health and an economic tragedy. But this doesn’t justify the government granting special privileges to private firms, at least not without those firms first taking other available steps to potentially avoid the need for a bailout.
There are other options they could pursue.
First, the airlines still have plenty of access to private capital markets. They own significant amounts of durable assets that they can sell or use as collateral to get additional financing. Indeed, they’ve been able to secure substantial private capital since the beginning of the pandemic.
Second, if private financing fails, some airlines can and should do what they’ve done in the past when in such a predicament: declare bankruptcy. Past bankruptcies tell us that airlines can continue flying safely even during a bankruptcy, so there’s no systemic risk posed to the economy at large.
To be sure, bankruptcy would mean that, for the time being, airlines may fly on more limited routes. But that shouldn’t be a problem in light of a collapse in demand, which won’t be resolved as long as Americans remain wary of flying.
There’s no easy solution during this pandemic. Many people and businesses have no options at all. But an airline bailout would bring about more negative consequences. The first is that it’s a huge expense for taxpayers to shoulder with no promise for a solid return. We’ve already bailed out the airlines, and all this past coddling has done is to postpone the inevitable layoffs of its excess employees.
Analysts don’t think air travel will return to prepandemic levels for several years—some say up to seven. Let’s assume that it takes five years for air travel to return to its previous level. That would require taxpayers to extend up to $320 billion in bailout funds to the airlines.”
“The new rules, which the U.S. Department of Transportation (USDOT) issued yesterday, provide the industry with some additional flexibility for how many flights they’ll have to perform in order to access federal funding.
But USDOT’s minimum service standards will still require air carriers to operate money-losing flights in order to access government loans and grants, wasting both industry and taxpayer dollars, and potentially setting the stage for prolonged government intervention in the passenger airline industry.”
“the exact number of flights left up to the Secretary of Transportation to decide.”
“These loans come with their own set of requirements. Most significantly, the CARES Act gives the Treasury Department the power to demand equity in these airlines in return for loans, which it can hold for up to five years. (The government would not get any voting power with these shares.)
“What is the government going to pay per share on this? Right now, the share price is very low, at the level of support they are holding out, you could potentially have the government be significant, major equity holders in these carriers,” says Scribner.”