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The downside of that development is that it created an unsustainable market. So you have an industry that periodically starts a fare war that requires federal
by Spooky23 3y ago
The downside of that development is that it created an unsustainable market.
So you have an industry that periodically starts a fare war that requires federal bailouts.
- nradov 3y agoThere is no requirement for federal bailouts. Large airlines have at times been allowed to go bankrupt, and that's fine.
- Spooky23 3y agoThey've also been allowed to consolidate to the point that they are too big to fail.
- nradov 3y agoBankruptcy doesn't mean failure for large airlines. The shareholders get wiped out and bondholders take a haircut but the airplanes keep flying during the bankruptcy resolution so it's fine.
- missedthecue 3y agoWhy would an airline be too big to fail? They don't have counterparty risk like banks. The airline would go bankrupt, the shareholders would lose their investment, the bondholders would own the new corp, and perhaps the aircraft fleet would get a new livery.
- Spooky23 3y agoPolitical factors - even in these times, the obvious impact on pricing that the failure of Delta, American or United would bring isn’t tenable.
- JumpCrisscross 3y ago> an industry that periodically starts a fare war that requires federal bailouts American airline tickets contain a 7.5% excise tax, $5.60 per-trip September 11th fee and another excise tax of $4 per flight segment. (That's in addition to the usual sales, payroll and corporate taxes.) Taking just the former, I'm curious what the net give/take ratio is. Because it might be argued that we run our airlines as an indirect tax on high earners to fund the jobs program that is the TSA.