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I've been saying for years that the only thing holding back massive disruption in the airline industry is the FAA. American and United are two of the most poor

I've been saying for years that the only thing holding back massive disruption in the airline industry is the FAA. American and United are two of the most poorly run mega-corps in the US. Customers hate them, but need to fly. Warren Buffet thinks they're notoriously bad investments. Why?

TerminalJunkie 10y ago
Isn't Berkshire Hathaway UAL's largest shareholder? http://www.marketwatch.com/story/warren-buffetts-big-bet-on-united-airlines-could-be-costing-him-millions-2017-04-11 http://www.marketwatch.com/story/warren-buffetts-big-bet-on-...
- ryanmarsh 10y ago
  You managed to google for Warren Buffet's investment in UAL but didn't manage to find any of his statements of how bad the airlines are? This still doesn't refute my primary argument.
yladiz 10y ago
There are a lot of regulations for airlines like American, but considering, for example, that there's nothing you can do at 35,000 feet in a giant metal machine if there's a mechanical failure, I'm much happier that there are a lot of regulations than not enough, in this case. There are a lot of things that suck about air travel in the states, but the FAA isn't one of them. As far as the companies being bad investments, it's most likely due to their extremely low margins and ROI.
- ryanmarsh 10y ago
  Safety and Regulation are two partially overlapping sets. The FAA regulates an immense amount of things that are trivial and those regulations are very hard to update. The FAA issues the vast majority of regulations[0]. [0]: https://www.federalregister.gov/documents/search?conditions%5Bagencies%5D%5B%5D=federal-aviation-administration https://www.federalregister.gov/documents/search?conditions%...
untog 10y ago
Apparently Warren Buffet has changed his mind in recent years and invested in airlines. Largely because of what you describe: consolidation means people have no choice but to use them.
- ryanmarsh 10y ago
  That kind of proves my point.
  - tanderson92 10y ago
    He's smart so he bought other airlines as well. As Matt Levine pointed out today, while Buffett lost money on UAL yesterday, he more than made up for it with gains in other airlines which were up on the news. He said: "Boycotting United to fly another airline is just what United's index-fund owners want you to do"
chrisper 10y ago
I don't think the FAA is bad. It's the companies that are. What disruptions do you need? Other airliners can provide service just fine even though they have to follow FAA rules when flying to and from the US.
- ryanmarsh 10y ago
  The FAA stands in the way of innovation and sees it's job as supporting a healthy industry. Which can only mean one thing... https://www.gpo.gov/fdsys/pkg/CHRG-113hhrg86618/html/CHRG-113hhrg86618.htm https://www.gpo.gov/fdsys/pkg/CHRG-113hhrg86618/html/CHRG-11...
jameskilton 10y ago
Flying is the safest form of transport because of the FAA. Yes there are a ton of rules and regulations, but the vast majority exist for a very good reason and the FAA is very good at cracking down on offenders. Why? Because the consequence of failure is so high that we can't afford not to. Get rid of the FAA and it's only a matter of time before what was illegal ends up taking down a full airliner, killing hundreds or even thousands of people and ruins flying for everyone.
- ryanmarsh 10y ago
  > but the vast majority exist for a very good reason I don't know how you can back that up. Who has done an analysis on the percent of them that have made a material impact on safety. > Get rid of the FAA I didn't say that. I just said they're in the way of innovation and customer satisfaction. Maybe we don't have to be extreme. Maybe we could just modernize them?

TerminalJunkie 10y ago

Isn't Berkshire Hathaway UAL's largest shareholder? http://www.marketwatch.com/story/warren-buffetts-big-bet-on-united-airlines-could-be-costing-him-millions-2017-04-11 http://www.marketwatch.com/story/warren-buffetts-big-bet-on-...

ryanmarsh 10y ago
You managed to google for Warren Buffet's investment in UAL but didn't manage to find any of his statements of how bad the airlines are? This still doesn't refute my primary argument.

yladiz 10y ago

There are a lot of regulations for airlines like American, but considering, for example, that there's nothing you can do at 35,000 feet in a giant metal machine if there's a mechanical failure, I'm much happier that there are a lot of regulations than not enough, in this case. There are a lot of things that suck about air travel in the states, but the FAA isn't one of them. As far as the companies being bad investments, it's most likely due to their extremely low margins and ROI.

ryanmarsh 10y ago
Safety and Regulation are two partially overlapping sets. The FAA regulates an immense amount of things that are trivial and those regulations are very hard to update. The FAA issues the vast majority of regulations[0]. [0]: https://www.federalregister.gov/documents/search?conditions%5Bagencies%5D%5B%5D=federal-aviation-administration https://www.federalregister.gov/documents/search?conditions%...

untog 10y ago

Apparently Warren Buffet has changed his mind in recent years and invested in airlines. Largely because of what you describe: consolidation means people have no choice but to use them.

ryanmarsh 10y ago
That kind of proves my point.
- tanderson92 10y ago
  He's smart so he bought other airlines as well. As Matt Levine pointed out today, while Buffett lost money on UAL yesterday, he more than made up for it with gains in other airlines which were up on the news. He said: "Boycotting United to fly another airline is just what United's index-fund owners want you to do"

chrisper 10y ago

I don't think the FAA is bad. It's the companies that are. What disruptions do you need? Other airliners can provide service just fine even though they have to follow FAA rules when flying to and from the US.

ryanmarsh 10y ago
The FAA stands in the way of innovation and sees it's job as supporting a healthy industry. Which can only mean one thing... https://www.gpo.gov/fdsys/pkg/CHRG-113hhrg86618/html/CHRG-113hhrg86618.htm https://www.gpo.gov/fdsys/pkg/CHRG-113hhrg86618/html/CHRG-11...

jameskilton 10y ago

Flying is the safest form of transport because of the FAA. Yes there are a ton of rules and regulations, but the vast majority exist for a very good reason and the FAA is very good at cracking down on offenders. Why? Because the consequence of failure is so high that we can't afford not to. Get rid of the FAA and it's only a matter of time before what was illegal ends up taking down a full airliner, killing hundreds or even thousands of people and ruins flying for everyone.

ryanmarsh 10y ago
> but the vast majority exist for a very good reason I don't know how you can back that up. Who has done an analysis on the percent of them that have made a material impact on safety. > Get rid of the FAA I didn't say that. I just said they're in the way of innovation and customer satisfaction. Maybe we don't have to be extreme. Maybe we could just modernize them?