19 ms·

America's bailed-out airlines are not 'playing fair' with customers

136 points by Alupis 7y ago

jdsully 7y ago
If you were flying to europe they should be reimbursing per EU261. So far its been hit or miss actually getting the refunds with the people I’ve helped. Its amazing how when the contract of carriage is in the customer’s favor somehow it no longer applies.
- cbanek 7y ago
  Despite not having any information on American Airline's website, I was able to get my money for a cancelled flight last year from Europe to the US (due to technical problems on the plane) by just doing the contact us form and putting in all the info. But of course, they didn't have any of this info listed on their website in a way that told me I needed to do that. The check was mailed on time, and I was actually pretty surprised. Definitely try to get your money under the EU regulations! It's worth the time.
  - jdsully 7y ago
    In normal times you should also get 600EUR in additional compensation although they fight hard against that. Obviously this doesn’t apply here.
llampx 7y ago
Serious question: does anyone actually expect the government (at least the current administration, of the US) to do what's right for the little guy?
- macintux 7y ago
  As much as I'd love to pile on to this question, HN isn't a place for general political arguments, and this isn't a productive discussion for this site.
  - dvtrn 7y ago
    “HN isn't a place for general political arguments” I wish we’d stop lying to ourselves about this.
    - thedance 7y ago
      "we" aren't lying about it to ourselves. It's enforced from the top down because VCs (such as the benefactors of this site) strongly prefer that their founders ignore culture and society to focus 100% on business. The lack of politics on HN is not some kind of community consensus.
      - macintux 7y ago
        Or perhaps because political arguments online are 99.9999% ineffective at changing anything, and 99.9999% effective at causing discord. I assume someone, somewhere was once swayed by a random stranger to change their mind, but it doesn't happen often enough to outweigh the costs.
      - dang 7y ago
        HN has plenty of political, cultural, and social threads. I'm surprised you haven't noticed them. See https://news.ycombinator.com/item?id=22714705 https://news.ycombinator.com/item?id=22714705 and https://news.ycombinator.com/item?id=17014869 https://news.ycombinator.com/item?id=17014869 for more explanation. Political topics take over everything if you let them, so we have to moderate HN to prevent it from becoming all-politics-all-flamewar-all-the-time. Do you think we should just let it burn? Nobody's trying to "enforce" anyone to "focus 100% on business". I do worry whether users' addictions to sites like this keep them from doing better things.
    - Der_Einzige 7y ago
      Yeah that rule is extremely stupid. Please do what you can to make the mods and admins realize that this rule should be removed. Politics is fascinating. HN is absolutely a good forum for it and it already is basically unenforced.
- lonelappde 7y ago
  Lucky for you, this crisis is going to last until the next administration (which might be the same as this one, depending on election results). So far we've got $1200 checks going to all the little guys and $500 to their little children.
  - SomeHacker44 7y ago
    Which hardly seems like much. Maybe if you are unemployed, but if you are earning $75,000 a year how exactly does this help? There is not much to spend it on now anyway.
orthecreedence 7y ago
If we give bail outs, we should get stock/control. End of story. All bailed out companies should be nationalized to some extent, depending on the value of their stock and how much the government buys. A board/council of nationally elected representatives should manage whatever share of these companies the government owns. It's time the citizens started getting a return on their tax dollars if they're being used for private investment.
- JumpCrisscross 7y ago
  > A board/council of nationally elected representatives should manage whatever share of these companies the government owns This has succeeded practically zero times in the history of nationalisation. Transitioning a culture from private ownership to public is highly value destroying. And putting electeds in charge of companies goes about as one would expect in terms of venality and competence. The better strategy is to have a board appointed by elected representatives with a finite term and mandate to return the assets to private ownership.
  - orthecreedence 7y ago
    > Transitioning a culture from private ownership to public is highly value destroying You know what else is value-destroying? Giving money to failed companies for free. Everyone's a capitalist until something bad happens, then they go running to Free Money Center to pick up their welfare check. > And putting electeds in charge of companies goes about as one would expect in terms of venality and competence. Yes, failing companies are a paragon of competence.
    - JumpCrisscross 7y ago
      > You know what else is value-destroying? Giving money to failed companies for free. We agree on this. I think companies should be allowed to fail. If we can’t afford that, their shareholders (and managements’ parachutes) should be wiped out, and the public should get economic upside. Bailouts should be a painful last resort. But the public should not get control. Particularly not open-ended control by a board of politicians.
caseyf7 7y ago
Yes, the bailout should've required all flights scheduled during shelter-in-place to be refunded. Millions of consumer dollars tied up in airline credits is a net drag on economic stimulus.
Reedx 7y ago
The government is failing badly at every level. That's more clear now than ever. Serious question: Why would you want to give them more to fail at?
- pgsbathhouse2 7y ago
  >The government is failing badly at every level. Just the executive branch, which was elected by a certain segment of our society. Thankfully (hopefully) it only lasts 4 years, and not 20.
  - evv 7y ago
    Just the executive branch? You should look into the corporate manipulation of the legislative branch- buying elections with PACs, gerrymandering, voter suppression, the filibuster, extreme partisanship on every topic except the protection of wealthy donors...
    - smoyer 7y ago
      Senators and Congressmen selling off their stock after private briefings about COVID-19 is a pretty good example of how the legislative branch is no better. They probably could have weathered the storm pretty well ... those of us in the middle class have taken a material hit to our retirement prospects.
  - Reedx 7y ago
    There's no assurance at this point it'll be improved the next 4 years, and who knows what's after that. It could be even worse for all we know. So it's not wise to increase what they might be in charge of. Anyway, let's be real, it goes into the state and city levels too. NYC health leaders encouraged people to go to parades in Feb, in defiance of Coronavirus. Their mayor was encouraging people to go to bars and theaters into March. March! Example from March 2nd: "Since I’m encouraging New Yorkers to go on with your lives + get out on the town despite Coronavirus, I thought I would offer some suggestions." https://twitter.com/BilldeBlasio/status/1234648718714036229 https://twitter.com/BilldeBlasio/status/1234648718714036229 Do they not bear any responsibility for that? And for not generally ensuring their health system could handle a surge? We knew of this specific problem back in January. We knew pandemics would be a problem generally. It's not exactly a surprise.
iso1210 7y ago
Privatize the profits, Socialize the losses, that's the American Dream.
- hkmurakami 7y ago
  They often result in solid financial returns for the government holder of equity.
  - phkahler 7y ago
    The parent post was talking about the current practice of bailouts.
    - jdsully 7y ago
      The government took equity stakes during the 2008 bailouts, it was widely regarded as a successful program among economists. The government got repaid and jobs were saved.
      - Retric 7y ago
        The government got shafted by vastly below market returns. Economists are looking at the big picture but tend to ignore people picking your pockets as insignificant. Loss aversion means people actually care about these things, it’s just the simplified economic models that are ignoring them.
        jdsully 7y ago
        The government wasn't looking to maximize their return, if they were they wouldn't have included such huge protections for GM union workers. I don't think return maximization in a micro sense was the right approach anyways. The government got its pound of flesh through the increased tax revenue it generated by not having the economy implode.
        7y ago
Merrill 7y ago
The airline industry needs to be resized as well as bailed out. Business travel will be permanently impacted by the shift to digital communications that is being forced upon business now. Leisure travel will not come back until there is a Covid-19 vaccine, which is 12 to 18 months at least. Even then, higher ticket prices due to the lack of the more profitable business travelers, combined with a lack of consumer expendable income, will curtail demand for another year or two.
jliptzin 7y ago
The pandemic is not their fault, but it is their fault for not being prepared for something like it. It’s even listed as a risk factor in investor disclosures, so it’s not totally unforeseen. An electrical fire can burn your house down through no fault of your own, and that’s why you have homeowner’s insurance. How about keeping cash in reserves instead of doing huge stock buybacks the last 10 years? How about having a plan to wind things down and “hibernate” until the business can be spun back up again? No sympathy for them. No bailout. Let them fold, let them sell the planes so new management can manage them better.
- wpasc 7y ago
  Keeping large cash on hand for highly rare black swan events is a pretty inefficient allocation of capital. If all companies kept enough cash to not earn revenue for months and pay all expenses for a once in a hundred year event, then a significant portion of money in all the U.S. economy would just sit as cash and not be allocated to investment, hiring, etc. Just a counter argument.
  - skannamalai 7y ago
    This is true in theory. But in practice that revenue/profit often is allocated inefficiently anyway in the form of excessive exec compensation and stock buyback programs when valuations are high. Such as when your stock is trading at a high multiple. So the company is trading cash (which has a book value) for stock (which also has a book value but is probably overvalued) which juices the stock price in the short term. But stock assets vs cash are far more volatile to shock and thus provides less operating flexibility for big companies. Imagine if you had that substantial cash reserve. This would be an opportune time to buy back shares on the open market after taking care of operating expenses. One reason cash reserves don't often exist is "activist" investors and private equity who calculate (book value - market cap) as their potential upside from buying undervalued shares and stripping the cash assets before dumping the remains. Anyway it's an complicated mix. I'd like there to be more emphasis on sustainable valuation growth from some adminstration and the SEC, but I don't know enough to suggest solutions to improve governance.
  - 7y ago
godzillabrennus 7y ago
We (the Tax payers) did earn billions bailing out the banks. https://money.usnews.com/investing/articles/2017-01-19/financial-crisis-bailouts-have-earned-taxpayers-billions https://money.usnews.com/investing/articles/2017-01-19/finan... We should still have seen banksters going to jail over their clearly crooked and irresponsible behavior.
- viklove 7y ago
  That article does not conclusively show the taxpayer benefited from the bailout. All it shows is that the stock price went up. If the money is then used to subsidize airlines, telecom companies, etc. and ultimately used for stock buybacks, exec bonuses, etc. then the taxpayer is never seeing any of that money.
tyingq 7y ago
Hard problem. They are working with < 12 percent load factors when 60% s break even is reality. I expect a lot of adjustments this week.
throwawaymanbot 7y ago
DUH!!! this is American Capitalism.
aczerepinski 7y ago
I don't understand why we can't let them go bankrupt. Presumably at least a couple of the airlines could raise money by selling more stock or getting acquired by somebody like Berkshire. The rest would go through chapter 11 and come out of it being owned by somebody else. We could use the 2 trillion to support the employees. What am I missing?
- ahelwer 7y ago
  What you're missing is that both political parties in the states are beholden to capital interests, and so the reason "we" can't let them go bankrupt is it would work against those interests. This isn't a conspiracy theory, there don't even need to be conspirators for it to work this way. With very few exceptions you are only capable of getting elected if you believe in the supremacy of the needs of capital. The only thing that can really stand against this is a strong organized worker's movement, which has been systematically dismantled over the past 70 years.

136 points by Alupis 7y ago

If you were flying to europe they should be reimbursing per EU261. So far its been hit or miss actually getting the refunds with the people I’ve helped. Its amazing how when the contract of carriage is in the customer’s favor somehow it no longer applies.

cbanek 7y ago
Despite not having any information on American Airline's website, I was able to get my money for a cancelled flight last year from Europe to the US (due to technical problems on the plane) by just doing the contact us form and putting in all the info. But of course, they didn't have any of this info listed on their website in a way that told me I needed to do that. The check was mailed on time, and I was actually pretty surprised. Definitely try to get your money under the EU regulations! It's worth the time.
- jdsully 7y ago
  In normal times you should also get 600EUR in additional compensation although they fight hard against that. Obviously this doesn’t apply here.

llampx 7y ago

Serious question: does anyone actually expect the government (at least the current administration, of the US) to do what's right for the little guy?

macintux 7y ago
As much as I'd love to pile on to this question, HN isn't a place for general political arguments, and this isn't a productive discussion for this site.
- dvtrn 7y ago
  “HN isn't a place for general political arguments” I wish we’d stop lying to ourselves about this.
  - thedance 7y ago
    "we" aren't lying about it to ourselves. It's enforced from the top down because VCs (such as the benefactors of this site) strongly prefer that their founders ignore culture and society to focus 100% on business. The lack of politics on HN is not some kind of community consensus.
    - macintux 7y ago
      Or perhaps because political arguments online are 99.9999% ineffective at changing anything, and 99.9999% effective at causing discord. I assume someone, somewhere was once swayed by a random stranger to change their mind, but it doesn't happen often enough to outweigh the costs.
    - dang 7y ago
      HN has plenty of political, cultural, and social threads. I'm surprised you haven't noticed them. See https://news.ycombinator.com/item?id=22714705 https://news.ycombinator.com/item?id=22714705 and https://news.ycombinator.com/item?id=17014869 https://news.ycombinator.com/item?id=17014869 for more explanation. Political topics take over everything if you let them, so we have to moderate HN to prevent it from becoming all-politics-all-flamewar-all-the-time. Do you think we should just let it burn? Nobody's trying to "enforce" anyone to "focus 100% on business". I do worry whether users' addictions to sites like this keep them from doing better things.
  - Der_Einzige 7y ago
    Yeah that rule is extremely stupid. Please do what you can to make the mods and admins realize that this rule should be removed. Politics is fascinating. HN is absolutely a good forum for it and it already is basically unenforced.
lonelappde 7y ago
Lucky for you, this crisis is going to last until the next administration (which might be the same as this one, depending on election results). So far we've got $1200 checks going to all the little guys and $500 to their little children.
- SomeHacker44 7y ago
  Which hardly seems like much. Maybe if you are unemployed, but if you are earning $75,000 a year how exactly does this help? There is not much to spend it on now anyway.

orthecreedence 7y ago

If we give bail outs, we should get stock/control. End of story. All bailed out companies should be nationalized to some extent, depending on the value of their stock and how much the government buys. A board/council of nationally elected representatives should manage whatever share of these companies the government owns. It's time the citizens started getting a return on their tax dollars if they're being used for private investment.

JumpCrisscross 7y ago
> A board/council of nationally elected representatives should manage whatever share of these companies the government owns This has succeeded practically zero times in the history of nationalisation. Transitioning a culture from private ownership to public is highly value destroying. And putting electeds in charge of companies goes about as one would expect in terms of venality and competence. The better strategy is to have a board appointed by elected representatives with a finite term and mandate to return the assets to private ownership.
- orthecreedence 7y ago
  > Transitioning a culture from private ownership to public is highly value destroying You know what else is value-destroying? Giving money to failed companies for free. Everyone's a capitalist until something bad happens, then they go running to Free Money Center to pick up their welfare check. > And putting electeds in charge of companies goes about as one would expect in terms of venality and competence. Yes, failing companies are a paragon of competence.
  - JumpCrisscross 7y ago
    > You know what else is value-destroying? Giving money to failed companies for free. We agree on this. I think companies should be allowed to fail. If we can’t afford that, their shareholders (and managements’ parachutes) should be wiped out, and the public should get economic upside. Bailouts should be a painful last resort. But the public should not get control. Particularly not open-ended control by a board of politicians.

caseyf7 7y ago

Yes, the bailout should've required all flights scheduled during shelter-in-place to be refunded. Millions of consumer dollars tied up in airline credits is a net drag on economic stimulus.

Reedx 7y ago

The government is failing badly at every level. That's more clear now than ever. Serious question: Why would you want to give them more to fail at?

pgsbathhouse2 7y ago
>The government is failing badly at every level. Just the executive branch, which was elected by a certain segment of our society. Thankfully (hopefully) it only lasts 4 years, and not 20.
- evv 7y ago
  Just the executive branch? You should look into the corporate manipulation of the legislative branch- buying elections with PACs, gerrymandering, voter suppression, the filibuster, extreme partisanship on every topic except the protection of wealthy donors...
  - smoyer 7y ago
    Senators and Congressmen selling off their stock after private briefings about COVID-19 is a pretty good example of how the legislative branch is no better. They probably could have weathered the storm pretty well ... those of us in the middle class have taken a material hit to our retirement prospects.
- Reedx 7y ago
  There's no assurance at this point it'll be improved the next 4 years, and who knows what's after that. It could be even worse for all we know. So it's not wise to increase what they might be in charge of. Anyway, let's be real, it goes into the state and city levels too. NYC health leaders encouraged people to go to parades in Feb, in defiance of Coronavirus. Their mayor was encouraging people to go to bars and theaters into March. March! Example from March 2nd: "Since I’m encouraging New Yorkers to go on with your lives + get out on the town despite Coronavirus, I thought I would offer some suggestions." https://twitter.com/BilldeBlasio/status/1234648718714036229 https://twitter.com/BilldeBlasio/status/1234648718714036229 Do they not bear any responsibility for that? And for not generally ensuring their health system could handle a surge? We knew of this specific problem back in January. We knew pandemics would be a problem generally. It's not exactly a surprise.

iso1210 7y ago

Privatize the profits, Socialize the losses, that's the American Dream.

hkmurakami 7y ago
They often result in solid financial returns for the government holder of equity.
- phkahler 7y ago
  The parent post was talking about the current practice of bailouts.
  - jdsully 7y ago
    The government took equity stakes during the 2008 bailouts, it was widely regarded as a successful program among economists. The government got repaid and jobs were saved.
    - Retric 7y ago
      The government got shafted by vastly below market returns. Economists are looking at the big picture but tend to ignore people picking your pockets as insignificant. Loss aversion means people actually care about these things, it’s just the simplified economic models that are ignoring them.
      - jdsully 7y ago
        The government wasn't looking to maximize their return, if they were they wouldn't have included such huge protections for GM union workers. I don't think return maximization in a micro sense was the right approach anyways. The government got its pound of flesh through the increased tax revenue it generated by not having the economy implode.
        7y ago

Merrill 7y ago

The airline industry needs to be resized as well as bailed out. Business travel will be permanently impacted by the shift to digital communications that is being forced upon business now. Leisure travel will not come back until there is a Covid-19 vaccine, which is 12 to 18 months at least. Even then, higher ticket prices due to the lack of the more profitable business travelers, combined with a lack of consumer expendable income, will curtail demand for another year or two.

jliptzin 7y ago

The pandemic is not their fault, but it is their fault for not being prepared for something like it. It’s even listed as a risk factor in investor disclosures, so it’s not totally unforeseen. An electrical fire can burn your house down through no fault of your own, and that’s why you have homeowner’s insurance. How about keeping cash in reserves instead of doing huge stock buybacks the last 10 years? How about having a plan to wind things down and “hibernate” until the business can be spun back up again? No sympathy for them. No bailout. Let them fold, let them sell the planes so new management can manage them better.

wpasc 7y ago
Keeping large cash on hand for highly rare black swan events is a pretty inefficient allocation of capital. If all companies kept enough cash to not earn revenue for months and pay all expenses for a once in a hundred year event, then a significant portion of money in all the U.S. economy would just sit as cash and not be allocated to investment, hiring, etc. Just a counter argument.
- skannamalai 7y ago
  This is true in theory. But in practice that revenue/profit often is allocated inefficiently anyway in the form of excessive exec compensation and stock buyback programs when valuations are high. Such as when your stock is trading at a high multiple. So the company is trading cash (which has a book value) for stock (which also has a book value but is probably overvalued) which juices the stock price in the short term. But stock assets vs cash are far more volatile to shock and thus provides less operating flexibility for big companies. Imagine if you had that substantial cash reserve. This would be an opportune time to buy back shares on the open market after taking care of operating expenses. One reason cash reserves don't often exist is "activist" investors and private equity who calculate (book value - market cap) as their potential upside from buying undervalued shares and stripping the cash assets before dumping the remains. Anyway it's an complicated mix. I'd like there to be more emphasis on sustainable valuation growth from some adminstration and the SEC, but I don't know enough to suggest solutions to improve governance.
- 7y ago

godzillabrennus 7y ago

We (the Tax payers) did earn billions bailing out the banks. https://money.usnews.com/investing/articles/2017-01-19/financial-crisis-bailouts-have-earned-taxpayers-billions https://money.usnews.com/investing/articles/2017-01-19/finan... We should still have seen banksters going to jail over their clearly crooked and irresponsible behavior.

viklove 7y ago
That article does not conclusively show the taxpayer benefited from the bailout. All it shows is that the stock price went up. If the money is then used to subsidize airlines, telecom companies, etc. and ultimately used for stock buybacks, exec bonuses, etc. then the taxpayer is never seeing any of that money.

tyingq 7y ago

Hard problem. They are working with < 12 percent load factors when 60% s break even is reality. I expect a lot of adjustments this week.

throwawaymanbot 7y ago

DUH!!! this is American Capitalism.

aczerepinski 7y ago

I don't understand why we can't let them go bankrupt. Presumably at least a couple of the airlines could raise money by selling more stock or getting acquired by somebody like Berkshire. The rest would go through chapter 11 and come out of it being owned by somebody else. We could use the 2 trillion to support the employees. What am I missing?

ahelwer 7y ago
What you're missing is that both political parties in the states are beholden to capital interests, and so the reason "we" can't let them go bankrupt is it would work against those interests. This isn't a conspiracy theory, there don't even need to be conspirators for it to work this way. With very few exceptions you are only capable of getting elected if you believe in the supremacy of the needs of capital. The only thing that can really stand against this is a strong organized worker's movement, which has been systematically dismantled over the past 70 years.