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Why does any of this imply they should become a regulated utility? This seems like a textbook case of the free market pushing prices down to cost. Having altern
by gizmo686 5mo ago
Why does any of this imply they should become a regulated utility? This seems like a textbook case of the free market pushing prices down to cost. Having alternative revenue streams pushed that minimal price down; but even without that, there is no reason to think the market would have done anything other than push prices to the lowest level possible in that environment as well.
- gruez 5mo agoCompany makes too much money: "they're extracting monopolist rents! They need to be a regulated utility!" Company makes too little money: "there's no money in this industry! They need to be a regulated utility!"
- hilariously 5mo agoCompany is valuable to us as a society in a fundamental way but is fucking us up in all sorts of unique ways: They might need to be a regulated utility.
- parineum 5mo agoHopefully we can regulate them like California electricity and let one airline be active per airport and let them charge more than triple national rates.
- hilariously 5mo agoI am not trying to be flip - I am just saying the two sides are not bad regulation ripping us off and bad private companies ripping us off, we can instead do good things and attempt to do them well, we can hold people accountable and have integrity; these are choices we make every day.
- lostlogin 5mo agoCompany, always: "We need government subsidy". Then hell yes to regulating what they do.
- filoleg 5mo agoSpirit wasn't asking for a government subsidy to get saved from bakruptcy. They were asking to be allowed to get merged with JetBlue (which could've saved them from bankruptcy) and got denied by the government. Those two things aren't the same.
- rogerrogerr 5mo agoMy understanding is that the Spirit/JetBlue merger was blocked by the Biden DOJ. Were they asking for that again, or was it a different thing that failed in negotiations with the feds recently?
- gizmo686 5mo agoThe negotiations that were occuring directly prior to Spirit's shutdown were not merger related; but a direct government bailout.
- wallst07 5mo agoBiden/Warren backed/forced the DOJ to sue Jetblue/Spirit to block the merger for antitrust. This doesn't seem to be a antitrust issue at all, it looks like it was one company bailing out another. https://www.justice.gov/archives/opa/pr/justice-department-statements-jetblue-terminating-acquisition-spirit-airlines https://www.justice.gov/archives/opa/pr/justice-department-s... “Our win in court is a victory for U.S. travelers who deserve lower prices and better choices,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “We fought this case to protect consumers who, as the court recognized, ‘otherwise would have no voice.’ I am incredibly proud of the Antitrust Division’s team and our state law enforcement partners’ tireless advocacy.”
- happyopossum 5mo ago[flagged]
- eru 5mo agoTwo wrongs don't make a right.
- mysecretaccount 5mo agoEven with your uncharitable framing I agree with both quotes.
- jmalicki 5mo agoCan you educate the rest of us by explaining your reasoning?
- bigyabai 5mo agoCompanies like John-Deere should be able to survive without abusing their downstream customers. Many farmers are importing tractors from China because they're cheap and not hostile to repair like JD is. Some people might call it a "smart business model" to sell interdependent services, but in the long-term it's suicide. Whether or not you solve this through regulation, that's up to you.
- throwawayqqq11 5mo agoBreaking down complex topics into binary black and white doesnt have to be wrong. The more important part is, how much wealth they extracted and how exactly. Was it market dominance with a superior product or amoral cost externalization. The angle of treating transportation as regulated utility shifts the business focus away from profit onto providing services, which sometimes can cost more than your income. Similarly, would you close schools, because they didnt make enough money? Airlines are highly subsidized anyway, treating them as regulated utilities falls short of taking public ownership as public institutions, where services just cost money/subsidies.
- devilbunny 5mo agoMeanwhile, first class today is not very much more than coach cost in the regulated era. Try flying Delta. It isn’t the cheapest option, but you really do get better service. If you want to feel special, do Aeromexico first class. The checked bags are waiting for you before you can even walk there on a domestic flight. Spirit was cheap. And if you’re poor, you need cheap. If you aren’t, buy better service and don’t complain that it’s just Greyhound on a plane.
- rogerrogerr 5mo agoAm I the only one who really doesn't care what kind of service I get on a plane? I don't drink alcohol, so I don't care about that. I bring my own water bottle, so I'm good on that. The little bags of pretzels are nice, but if they stood at the front and launched them out of a t-shirt cannon, I'd be good with that. As long as the required crew of flight attendants doesn't assault me, I've never really got off a plane thinking anything at all about the service. Just "where do I need to go next" or "I'm glad to be home".
- baq 5mo ago[dead]
- jhgorrell 5mo agoWhen your flights are delayed/resechduled there is a world of difference. "Get in line" vs "you are already rebooked". (my Air Canada experince.)
- rogerrogerr 5mo agoFair enough, I've been in those situations where the service on the ground side of the gate matters.
- alister 5mo ago> "Get in line" vs "you are already rebooked". (my Air Canada experince.) Which of the two was the Air Canada experience?
- themafia 5mo agoOkay, but the process of underwriting an airline now somehow involves operating a successful credit card company. Which, you know, are not typically successful based upon operating excellence but upon rapaciousness of interest rates and merchant fees. I'm not sure it's great to have important infrastructure operated this way. Other than regulation do you see a way out?
- sgerenser 5mo agoNo airline operates a credit card company. They just put their name on a card and sell miles at a discount in bulk to credit card companies like Chase or Citi.
- themafia 5mo agoOf course they do. Why do you think they get money in return? You don't think that's linked to performance? They just put their name on a card, get a fixed amount of monthly money, and that's enough to let them lead at a loss on airline tickets? Hacker News has become simple minded. It's embarassing.
- sgerenser 5mo agoMissed this so coming in very late, but wow this is unbelievably off the mark. The airlines do not operate a credit card company, full stop. They sell airline miles, at a fixed rate per mile, to the credit card companies. That’s it. Citi, Chase, CapitalOne, etc. are the ones that operate the credit cards.
- gorgoiler 5mo agoA more fair assessment would be: company runs a utility => they need to be a regulated utility! The core part of air travel doesn’t really feel any different to a bus or metro or train. Off the tarmac then yes it absolutely feels like a Verizon store, as does some of the in-flight service, but there’s always been this weird feeling as a traveler that every carrier is basically the same thing but with different decals on it. Airline alliances are surely the ultimate example of this.
- dghlsakjg 5mo agoHave you ever flown spirit or any of the other ultra low cost carriers? It very much is a different experience than flying a legacy domestic mainline carrier. I’m not alone amongst people i know who will happily fly the cheap seats on United/Delta/AA but won’t even look at a ticket from Spirit or Frontier even at a significant discount. Compare it to a flag carrier like Singapore air and it is a shockingly different product. All that’s an aside: we know what regulated airlines look like since we already tried it, much more expensive, with airlines competing not on price but on amenities.
- tshaddox 5mo agoI’ve flown Spirit and Frontier several times, and Southwest many times (I know they’re not quite in the same category, especially after their recent changes). I genuinely don’t know what you’re referring to regarding the experience being wildly different. Other than a few quirks about what they do and don’t charge for and how they board and assign seats, I feel like there’s almost no meaningful difference between these and legacy carriers like United and American. I honestly don’t even feel like the prices are consistently that different.
- SOLAR_FIELDS 5mo agoThe two main differences are more armchair lawyering required to avoid fees (legacy carrier is often not going to put your bag in the dimension bin, but the Spirits and Frontiers of the world certainly will) and having to sit through three sales pitches instead of one on the legacy airlines. I think Delta is the only legacy carrier in the States that doesn't do obnoxious sales pitches - only the food cart upsell. Ryanair will come through with their hands out minimally three times since last time I rode them (though it's been several years, is it four now?) One other difference I can think of is that carry-ons are more rarely included in the base fare in the budget airlines than the legacy airlines, though maybe that has also gone away since the changes where bags must be included in the listed price that Southwest pushed for.
- throwaway2037 5mo agoI like the EU model. The regulators set a "bare minimum" set of requirements. They have much better minimums that North America, and the fares are (still) cheaper per kilometer travelled. Also, I love the penalty system when flights are late.
- wallst07 5mo ago"They have much better minimums that North America" Can you enumerate these? As far as I'm aware Ryan Air is basically more "Spirit" than Spirit Airlines.
- throwaway2037 5mo agoFor one, the penalty system for late arrivals. It is such a big business now, that there are whole businesses setup to advise you and do the work for the cut of the penalty paid. And that penalty system applies for trains too. Also, look at Ryan Air (and Wizz Air) fares. They are consistently the lowest cost per kilometer travelled anywhere in Europe. Sure, it is like a flying bus, but it gets the job done, much cheaper than anything the US.
- extraduder_ire 5mo agoSome of that lower cost in Europe is down to jet fuel being tax free, as well as the US having multiple mandatory taxes on plane tickets. The cost of EU passenger rights payouts is vanishingly small on the average ticket if almost all of them arrive as advertised.
- the_gipsy 5mo agoBottom line: there never really is any free market. Because it doesn't work.
- Humorist2290 5mo agoCompany offers a service that is considered essential to function in society, and the overwhelming majority of people _must_ pay for as if it were a tax: "this seems like something generally useful to the public! They need to be a regulated utility!"
- lyu07282 5mo agoIf it's basic essential infrastructure and in the absence of high speed rail it is, it shouldn't be a regulated utility it should be nationalized holistically. You have to 1) make sure nobody is profiting of a basic necessity because that will always eventually be unsustainable (profits need to rise always and forever like cancer), 2) holistically because the parts of it that are profitable need to be used to cushion the unprofitable parts (in contrast to privatization where the profitable bits get privatized and the unprofitable bits are subsidized like USPS vs. UPS/FedEx/Amazon)
- deleted 5mo ago[deleted]
- threethirtytwo 5mo agoChanging it to a utility? Like Bart in sf? We should have Bart authority run the airline!
- ericmay 5mo agoYea that's a good one. The problem is folks don't have patience. They see an airline fail and instead of waiting until a new competitor enters the market, as they inevitably will, they want to start regulating or look to other "solutions" but these things take time to work themselves out. It's a free market, not an instant free market.
- wat10000 5mo agoOr maybe a new competitor doesn't enter the market, and we're stuck with a mere four major, three mid-sized, and some smaller airlines in the US. It's still a highly competitive market even with Spirit gone.
- deleted 5mo ago[deleted]
- jasonmp85 5mo ago[dead]
- xnx 5mo agoAnd similar illogical arguments on regulated transportation: "the trains are too crowded! We need more money." "No one is riding the trains! We need more money."
- striking 5mo agoBecause the amount anyone would actually pay is substantially below cost for most routes, but it's still a service that many people depend on (either directly or by the indirect economic impact of travel). It's a genuine force multiplier that is unaffordable without being subsidized; making it a utility would just shift the subsidy from credit card points programs to the government.
- appreciatorBus 5mo agoIf airlines didn’t exist, people and goods would continue to move around the globe as they have done for thousands of years. There’s nothing magical about air travel (or any other transport mode) that makes it worthy of subsidy .
- hakunin 5mo agoWhen something is that drastically different, it becomes different in kind. For example, if you have high network latency, you cannot jam (play live music) with friends remotely. If you have low latency, you can. Just because the difference is in a single value (I.e. net speed) doesn’t mean it doesn’t change the fundamental nature of what’s possible. Air travel makes the kind of business, shipping, and attendance possible that wouldn’t have been possible otherwise, because our collective lifetimes and risk tolerances are limited.
- eru 5mo agoThat doesn't mean we should subsidise it.
- hakunin 5mo agoI’m responding to a claim that there’s nothing “magical” about air travel. It literally enables things otherwise impossible.
- rendaw 5mo agoI think you're saying that there are businesses that rely on cheap air transportation that are very valuable, but at the same time couldn't afford higher air fees. But that's a contradiction. If they are valuable, their customers would pay more for their services - that's the definition of valuable. And if their customers would pay more, they could afford higher air fees.
- willio58 5mo agoAirlines basically were a regulated utility until they were unregulated to the point where normal people can barely fit in a seat and there’s basically no amenities anymore. It used to be kind of nice to fly. That’s laughable now.
- eru 5mo agoNow you have to option to pay as much as you used to (inflation adjusted) for a ticket, and get first class service with all the leg room you want.
- wallst07 5mo agoWhat other things changed besides regulation? My guess is MANY more people fly and are able to afford to fly vs before. There are probably many others things that changed. It's also very nice to fly.... in first class.
- kelnos 5mo agoOn the other side of that coin, when airlines were heavily regulated, most people couldn't afford to fly at all. The "regulation vs. no regulation" stance is the wrong way to look at it. Airlines are still regulated, of course. Maybe some of the regulations we do have are unnecessary, some of the regulations we got rid of we should really bring back, and perhaps there are others that we never had that we need.
- komali2 5mo agoWe can't be sure whether cost came down because of removing regulation or improvements in technology. We can only guess.
- thrance 5mo agoIf we let the free market do its work, there'd be no airlines. Jet fuel is heavily subsidized, the State injects massive amounts of money into airports and plane manufacturers, etc. Honestly, with the looming climate crisis, we should probably just let them fail one by one and let alternatives (who can actually be profitable) take off.
- carlosjobim 5mo agoIn a free market, every working citizen could easily afford more expensive airline tickets, since they could keep their entire income with no taxes deducted.
- kelnos 5mo agoThat's a really cute idealized world, but it wouldn't work in practice. The structure of free-market capitalism all but precludes it.
- carlosjobim 5mo agoThe poster I replied to was already in the territory of idealized worlds. You can't just look at one side without looking at the other.
- deleted 5mo ago[deleted]
- komali2 5mo ago> every working citizen could easily afford more expensive airline tickets You mean every laboring slave. No free market means corporations are allowed to engage in slavery, chattel or otherwise. Let's be honest about what a free market actually is. Factory towns, lifetime debt bondage.
- carlosjobim 5mo agoAh yes, thank you for correcting me. That is exactly what I meant.
- SecretDreams 5mo agoWhen a necessary service is pushed towards being unprofitable / breakeven due to "free market pressures", it probably should have some kind of backstop to ensure the service doesn't completely fold - because it is necessary. I think the suggestion to treat it like a utility was trying to emphasize this. I'd also feel similar I'd my primary water, electricity, or internet provider was on the brink of failing due to "free market pressures".
- nilamo 5mo agoConsumer air travel is not a necessary service, though.
- SecretDreams 5mo agoHow do you feel about high speed internet vs dial up?
- sieabahlpark 5mo ago[dead]
- forgotaccount3 5mo agoNot necessary. But also, 'Not necessary' doesn't mean 'not worth subsidizing'. If you think the government finds value in having a connected population with easy access to information then there's value in subsidizing that. Assume the government valued it at $10 a month per person due to increased economic activity made possible from the information flowing, if the market price for it was $60 a month then you have expanded access to anyone who valued it at at least $50 a month. You can make the same argument for air travel by the way. Why does the government value consumers flying around the country? Why would the government want to encourage people to fly from Charlotte to Florida to go to disney instead of drive to Pidgeon Forge and go to Dollywood? Or fly to NY 3x a year to see grandma for a weekend instead of drive to NY and see grandma for a whole week 1x a year?
- pc86 5mo ago> Why does any of this imply they should become a regulated utility? Because the majority of the HN crowd defaults to "a massive government bureaucracy would do this better" unless it's even tangentially related to their industry in which case it's "regulations bad" and "move fast break things."
- rapatel0 5mo agoI'm definitely not this type of person. see other comment
- gwerbin 5mo agoIn this case prices are _below_ cost, no?
- rapatel0 5mo agoPower companies are the classic example. If power companies were forced to compete, their costs + competition tend to drive them out of business. As a result most power companies are forced to operate in really tight constraints with very limited but predictable margin. I'm not saying that this a better outcome (power companies have their problems too). I was just commenting that this issue parallels the historical solution that was applied to utility companies.
- granzymes 5mo agoPower companies are a classic example of a natural monopoly because they require a ton of extremely expensive physical infrastructure to connect every house to the grid that would be wasteful to duplicate for every competitor. The whole point of airplanes is that they require no physical infrastructure between point A and point B. You can have competing power companies generating the power if the grid is owned by the state (or a regulated monopoly). Coincidentally, that is a good mental model for airlines because airports are often state-owned or if not are highly regulated.
- rapatel0 5mo agoFair point and I don't disagree. The more meta point I would make is that airlines are still fairly capex heavy (even if there is no point-to-point infrastructure). Each incremental new route operating during standard hours still requires 90m+ on a new airplane. So if they tend to compete themselves into oblivion, or need to turn into banks to subsidize their product, then it might make sense that they should be regulated monopolies. Still you're probably right, if they can turn into banks and stay profitable, then maybe that's a better market outcome overall.
- allanca 5mo agoI'm starting to come around to seeing airports the same way. Airplanes need "a ton of extremely expensive physical infrastructure to connect every" city to the grid. That's why the creditors let Spirit die. Their airport slots and gates are more valuable than the rest of the company combined.