Over the past week or so, there has been lots of talk of the government bailing out Spirit Airlines, which is on the brink of liquidation. If finalized, this would almost certainly give the government a 90% stake in the budget carrier. There’s now talk of a much broader industry bailout, which I have to…
Continue reading: US Budget Airlines Demand $2.5 Billion In Government Assistance To Stay Afloat
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If the LCC model doesn't work with fuel prices over $4/gallon, then the LCC model doesn't work anymore. Sure it's high now because of Iran, but the idea that fuel prices will never be high again isn't realistic either.
Competition is of course good, and I don't want them all to fail, but if they need bailing out every time fuel prices go up then it just doesn't work anymore.
Take em over. Abolish their unions. Gov officials and contractors must fly them. No taxes on their tickets. Give them coveted slots. Maybe even pass the CCCA? High dollar government cargo contracts.
Of course I don’t believe in any of that (well maybe the unions), but the Feds could get creative and get closer to profitability.
Assuming B6 follows suit, merge with the LCCs then spin off the combined entity. That’s the only way this could possibly make any sense.
No. We don't need a socialist bailout for airlines, especially ULCCs. Socialism is the worst disease we have on this planet (see my friend Sean Hannity's 2000 book "Live Free or Die", Chapter 4: "Socialism, A History of Failure"; we need to stop the' spread of this cancer.
One is minded to ask …. Would the failure of the LCC’s be healthy or even necessary in the longer term?
Alternatively, with government intervention would this prevent larger economic shocks and therefore justify such intervention?
Then one has to consider other transport industries, if airlines are rescued due to the fuel costs, will the government assist the road haulers, train line operators, shipping companies or energy intensive industries?
Could this home grown financial crisis have been avoided if Mr ‘rump had kept his nose out of the Middle East?
One is sure that either Tim Dunn or 1990Bot will put me straight on these questions.
An interesting submission Jeff. Sean Hannity’s books are often viewed it as clarifying and important by his Conservative followers. While Leftists, Liberals or centrist readers: often see them as partisan and lacking distinction.
And there you have it... Now they all want a slice of taxpayer money. A word to the wise - competent strategic planning includes modelling stress-tests for worst-case scenarios. If companies have failed to do that, then their executive management is incompetent. No taxpayer bailouts!
Capitalism is the engine of socialism. When capitalists and socialists understand that, the world will be a much more comfortable place. The problem for the USA is that capitalism is the ideological winner of this century, much like socialism was the ideological winner of the last century. That is not good for a country with high wages and a desire to keep the latest tech out of the hands of capitalist/socialist/non-democratic countries.
Breaking News. Everything costs more because of His War. We all get a bailout or nothing is bailed out. The ULLC model cannot be subsidized without paying truckers and farmers. I see no point in paying for airlines that cannot raise prices like every other industry must do to survive.
If the Ultra-Low-Cost Carrier (ULCC) model can only survive when fuel is cheap, then the model itself is fundamentally broken. Bailouts just kick the can down the road and reward poor risk management. If they can’t raise prices to match costs like every other business, they should be allowed to fail so more efficient competitors can take their place.
Let them fail. Bailing out an industry essential to the economy in a global crisis like a pandemic is one thing. Bailing out companies with bad business models, even with sky high jet fuel, is insanity.
Sky-high oil prices (caused by a pandemic called political stupidity) could also be classed as a global crisis.
B6, F9, WN, perhaps XP (Avelo) a/o MX (Breeze) all merged into one lcc (let's all drop the u) is an intriguing idea. Combined entity would have some pricing power with solid domestic and international reach. It would keep FL competitive and minimize job losses except in Dania Beach.
Hopefully the legacies march into court and obtain a stay. If your business does not generate enough revenue to cover costs that's an indication you do not belong in business.
Operating airlines is expensive and now it's being turned into public transportation. Not only will taxpayers get screwed, "air rage" incidents will become common place. YT will be overflowing with content.
No, no… socialism and unlimited money for the rich and corporations… rugged individualism for everyone else… /s
So, you hate public unions? Huh. Sounds like you hate law enforcement... One of the largest public-sector unions is police. Seems pretty unpatriotic of you... Sel, D. *knock knock* "OPEN UP!!"
when you build an entirely industry around the idiocy of your fliers not being able to realize what they're actually paying vs what they see on Google Flights -- inevitably you run out of enough dumb flyers to be economically viable.
Let them fail if they can't make it
Both frontier airlines and spirit airlines have horrendous customer service. They dont refund or rebook. Its impossible to speak to a live customer service representative. They are not going out of business because of high fuel costs. They are going out of business because people have learned their lessons. I learned to never ever under any circumstances book a flight with frontier or spirit airlines. Most other frequent travelers have learned the same lesson. Both frontier and spirit owe me money. If both companies went out of business, it is because of their own policies and ways of doing business. If they both went out of business, I would be thrilled
Spirit is a competitor.
Avelo, Allegiant, Frontier, as predicted coming for the tit of government assistance… could also be a strategic way of nuking any bail out. After all Poker Face is a well established airline game look too. Why not play it.
And now the farmers want 20 billion, plus another 5 billion to Israel. Other than making the world less safe and more corrupt, what have we accomplished?
Wait, the 6x bankrupt guy? The guy all-over the Epstein files? The convicted felon? That guy??
If this helps to increase competition and therefore lower costs for Americans, this is a good use of money. Keep in mind, the US Government just made $27 billion from taking a stake in Intel last summer. Taking 10% of that to bail out the airlines doesn't seem like a bad idea at all.
Spirit airlines has been in operation since 1983. 43 years now. If it was a bad business model it wouldn't have survived that long to begin with
You meant to say "more expensive competitors can take their place" Less airlines = lower competition = higher fares = higher inflation. Not a good thing for the economy and consumers.
Using tax dollars to bailout failing companies (complete opposite of Intel) is not a good idea and how naive to think it will benefit consumers. Govt will be better off giving $27B to citizens to subsidize airfare
ULCC has been failing all over the world, the business model no longer works. Just because it worked before for 43 years doesn't mean it works anymore. No different than blockbuster or Kodak were in business for decades but business model changed and died off
No way that the government should bail out failing airlines. It's a private enterprise and should be able to survive or die so other competitors can get to that marketshare.
I don’t know that I’m for or against a bailout one way or the other. There are legitimate arguments to be made either way and I’m not going to re-hash Ben’s post because he lays out the argument well. What I am steadfastly against is the asinine citation of the Defense Production Act or other bogus natsec cover to do this outside of normal Congressional appropriations. This is transparently an allocation of taxpayer money and, one way or another, it should specifically go through regular order. Hand waiving anything and everything under the sun with “well it’s national security” is ludicrously bad governance.
The US supported intel for commercial, strategic and national security reasons that made sense. Saving a couple ULCCs that comprise less than 10% of total domestic capacity at a time when airlines are cutting capacity makes no sense.
Why stop here? Let’s give the legacy carriers a few billion while we’re at it. Let’s have the US government own a percentage of EVERY domestic airline. Seems only fair.
No more corporate welfare!! The oil companies are already subsidized by the feds hundreds of $$Billions. Instead, take that money, give people universal healthcare. From the money they save in premiums, copays, insurance company's obscene profits, people can then buy airline tickets.
You post a lot 1990Bot, however, you say very little. Are you just a Ben, click generator?
If the government does not bail, we will see Spirit and possibly JetBlue shutdown. Low cost can work in today’s world. Allegiant is profitable. Frontier just pulled a profitable quarter. It would be wrong for an industry wide bailout. But bailing out targeted airlines makes sense if the failure would otherwise negatively impact the economy. The government has bailed out automakers, finance and other industries. This is not new. Chrysler re tooled with the bail out and paid back with interest to the us government. Should the government bail out a Spirit, it obviously would come with a new marketing and business plan; as they have entered bankruptcy twice already. But there is zero need for the government to lend to all airlines. With Delta proudly saying they won’t drop their pricing and expect to rake in higher profits; that would be a hard sell
What the administration could do is to force United and Delta buy these companies. E.g. United buys Spirit and Delta buys Frontier. This happens all the time in the financial industry. Whenever a bank is in troublee, Chase buys it. United wanted to expand anyways, let them have Spirit.
I don't need to be pampered, and i don't need someone in india to try to speak with. I need legroom and good departure/arrival times, and a decent ticket cost. You do you, your 'free stuff' costs you a lot.
The gub'ment blocked the merger with Spirit! Seems ironic to now 'force' a merger.
And what do you think will change? Dems are paralyzing the budget, all both sides do is grandstand and bicker! They need to do their job and write a budget for the first time in 2 decades!
How about no nuclear bombs in the hands of terrorists? Isn't that good enough for the planet?
Ridiculous.... they should raise their fees, or fail. Why do they deserve money from the government, when regular working people are getting nothing to offset the cost of fuel.