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Why should govnt bail out airlines?(22 posts)

Why should govnt bail out airlines?ClydeTri
Apr 3, 2003 6:54 AM
Why should the government, in reality, the TAXPAYERS, bail out the airlines? If they are flying at way less than capacity that tells me they have too many airplanes and routes. If one airline goes out of business, their flyers will fly with other lines thus helping those airlines out financially. Let the market work, we dont need subsidies...if the world situation turns around and airline business dramatically increases, somebody will step in and provide the service.
re: Why should govnt bail out airlines?MJ
Apr 3, 2003 6:57 AM

you should take that attitude to steel, agriculture and most manufacturing jobs in the US

if you think US business isn't a huge recipient of govt aid you're wrong - apparently it's more palatable to subsidise business than single black mothers...
re: Why should govnt bail out airlines?ClydeTri
Apr 3, 2003 6:59 AM
I am against the majority of subsidies..used to work with a guy who got an annual check from Uncle Sam to not plant a crop....what a joke...
re: Why should govnt bail out airlines?MJ
Apr 3, 2003 7:04 AM
a free market fundamentalist eh?

it'd be interesting to see free market theory ever actually used - at the moment it's only theoretical - we may not like the practical results...
re: Why should govnt bail out airlines?ClydeTri
Apr 3, 2003 7:18 AM
I look at it this way...rather than tax me some amount, say $200 and pay it to United Airlines, let me keep the money..and I might buy a ticket on United...they still get the money and I get to go somewhere..multiply that times millions of people in the US..let us decide by our spending which businesses make it and which dont..(will concede there are some cases where subsidies are required)
re: Why should govnt bail out airlines?MJ
Apr 3, 2003 7:26 AM
the problem with free market economies is that as no one has ever encountered them - we don't know what the effect is

the effect of a US style market forced on third world countries has repeatedly proved disastrous - as has (on a parallel point) the introduction of Wal-Marts in smaller towns and county seats throughout the US

it's nice to think that the consumer gets more choice and less tax with free market but it may not work like that - it may be more like - you can only fly United and you'll pay what they charge

I think believing that a free market is the answer is kinda like wanting everyone to be nice - it's not realistic and has never happened

the US/Euro govt's props up all kind of businesses which are money losers for any number of pork barrelesque reasons - but the US is every bit as socialist in this aspect as the main Euro democracies
re: Why should govnt bail out airlines?Alpedhuez55
Apr 3, 2003 7:22 AM
Actually we do subsidise agriculture and many other industries as well as single mothers.

THe airlines are hurting because of 9/11 and the threat of terrorism. Most airlines seem to be in or going into bankruptcy organizations. I would not give them free money, but low interest loans and bankruptcy protection would be very useful until the economy and travel industries turn around.

Mike Y.
Mike Y.
Apr 3, 2003 8:10 AM
A- The government regulates the hell out of airlines, driving prices up (despite deregulation).

B- Airlines are really a part of our infrastructure (like it or not, it is true- are you going to DRIVE from LA to NYC for business?).

C- Can you imagine if airlines only flew profitable routes? That there were no carriers linking to Omaha, for example? Or Tulsa?

D- I fly a lot... it is one of the few forms of welfare that will indirectly benefit me, a heavily burdened tax-payer... (maybe it is time to hatch some extra deductions?).
To support the overpaid pilotsCaptain Morgan
Apr 3, 2003 8:53 AM
Not all airlines need help. Southwest, even in this economy, has managed to post a profit. However, throughout the years the unions have managed to squeeze (by always threatening "strike") the airlines in order to overpay and underwork the labor. I read a WSJ article about two months ago that highlighted one pilot who made $210,000 per year for 35 hours of work per week (incuding time during flight delays). A Southwest pilot made $85,000. I'm not saying $85,000 is the magic number, but $210,000 (for 35 hours) makes it difficult to for the airlines to make money and stay afloat.
That's an inaccurate comparisonMatno
Apr 7, 2003 12:06 PM
Yes, Southwest pilots may make less than some other airlines, but every airline has a wide range of salaries based on seniority, aircraft, and sometimes location. Also, not all airlines have the same union affiliations. My father has been a captain for Continental Airlines for 20 years (and a first officer before that). He represented the airline to an international consortium of bankers following 9/11 to discuss both the physical and the financial security of the airline. His salary has fluctuated over the years (they don't always go up!) anywhere from less than $80,000 to just over $300,000. It's now down significantly since 9/11. Are they overpaid? Perhaps. But would you want anyone but the best qualified pilots taking your life into their hands? Personally, I'd rather pay a little extra to know that my pilot is one of the best. I've flown on very cheap airlines in 3rd world countries, and I can assure you that the stress level associated with that kind of travel is FAR greater than what we experience here in the states!

Perhaps there is a lot more to it than just pilot's salaries. For example, Continental went bankrupt in the 80's due to the pressures of ALPA (the Airline Pilot's Association) and was bought out by a little "puddle jumper" operation in Houston - Texas International. (My dad was a TI pilot). After their pilots went on strike and lost their jobs (3 cheers for a CEO who was willing to give them the boot!) they rehired all non-union pilots. Under that structure (they did eventually form their own pilot's union), Continental thrived and eventually became one of the most profitable airlines in the industry (the most profitable of the large airlines for several years - sometimes the ONLY profitable one). Unfortunately, due primarily to the efforts of younger pilots (who presumably didn't know any better) ALPA was again adopted to represent Continental's pilots last year. If you get the feeling that ALPA = BAD, you're catching on. The problem is that there is WAY too much of a conflict of interest. When Continental had it's own pilot's union, it represented their pilots. ALPA supposedly represents the pilots of almost all major airlines, which is utterly impossible and downright ludicrous in the scope of competing airlines. If two airlines had the same lawyers, that would not be allowed, but the same union, for some reason, is allowed. Kind of odd.

Anyway, thanks in part to ALPA, in part to the decreased passenger loads following 9/11, and mostly to the MASSIVE federal regulations/taxes imposed on them following 9/11, they are now hurting much like other airlines. Also, don't discount the effect of rising oil prices. I doubt there is a single industry in the country whose profits are more directly affected by oil prices than the airlines.

People who argue that free market principles don't work in the airline industry are just as blind as people who say the same principles can't apply to health care. Baloney. The problem is that the transition from our current systems would be too painful for some people to deal with (at least hypothetically), but in the long run, the outcome would be much better. Few people care about the long run any more. Fortunately, the free market is not completely absent from the airline industry. Right now, people seem to want lower priced flights, even if they give up things like in-flight meals. That's why Dave Nieleman has been so successful. (He's the guy who sold his start up airline, Morris Air, to Southwest for $130 million, then decided to do it again and now has the most profitable airline in the industry - Jet Blue). Some people will never get it though.
Joke of the DayCaptain Morgan
Apr 3, 2003 8:55 AM
Question: What is the easiest way to become a millionaire?

Answer: Invest a billion dollars in an airline.
Joke of the Daycycleaddict
Apr 3, 2003 12:03 PM
Now for an opinion from someone working for "the world's largest airline". Captain Morgan makes some good points but he gets his info from the WSJ and that is not exactly the most balanced source out there especially when unions are part of the topic.
I am an aircraft mechanic and did not get a raise for 11 years until last year. This is part of the story you will never read about in the mainstream media. We work all the holidays and on weekends and at night when the guys from the WSJ editorial page are sound asleep and cuddled up to the one they love. Sure, we knew this to be part and parcel of the career we chose. But to be continually singled out as the cause of the airlines misfortunes is demoralizing to say the least. It looks as though next week I will be taking a 30% cut in pay and benefits including a loss of three weeks vacation. I've been here at this company for 24 years and will have a grand total of 3 weeks vacation the first of which will be unpaid! Management, on the other hand is taking a 5% cut in pay/benefits and will not loose any vacation.
The inefficiencies are mind-boggling. For example, we fly our pilots an average of 39 hours/month and pay them for 75 hours! There are 1015 pilots sitting at home recieving full pay because of a clause in the agreement management made at the time of the purchase of a bankrupt airline two years ago!! These are two examples of the tremendous waste happening as we await the grim reaper and no one will make any changes!
So, I agree that not one penny of the taxpayers money should go into this money pit called "the airlines" even though I will soon be looking for a new job at 50 and will not see much of any kind of retirement.

Looks like I am going to get a pretty good GWB tax cut after all !!!!!!!!!
Thanks for your inputCaptain Morgan
Apr 3, 2003 12:41 PM
It helps a lot to hear a firsthand view. And although we can debate this on a macro level, at the end of the day it does adversely involve individuals, and that is unfortunate. I know I for one can lose sight of that sometimes. Good luck.
We shouldn't, we should nationalize them.czardonic
Apr 3, 2003 12:49 PM
Air travel is too critical to this country to be trusted to the "Market" (which brought us the deplorable security that made 9/11 possible).

As long as the taxpayers are paying for this necessary service, they may as well remove the middlemen.

More here:
We shouldn't, we should nationalize them.ClydeTri
Apr 3, 2003 1:01 PM
bet you want nationalized health care, food distribution, all transportation...geesh...we could just call ourselves the United Socialist States of America!
So you <i>don't</i> want a "socialist" nationalized military? nmczardonic
Apr 3, 2003 1:23 PM
How about 'Peoples Republic of the USA'? (nm)Dale Brigham
Apr 3, 2003 1:28 PM
Works for Boulder. . .js5280
Apr 3, 2003 1:47 PM
Wait, no it doesn't.

"Boulder: 25.37 square miles surrounded by reality"
Are you daft?filtersweep
Apr 4, 2003 6:28 AM
Airlines have been "socialized" by all sorts of nations- including that bastion of communism, Iceland.

Do your public utilities work in the free market? Hell no- and "free market" energy brokers usually end up like Enron.

The government so heavily regulates all of business (I couldn't even set up a hot dog stand without a Health Dept. license, a tax permit, zoning variances, etc.) that we are semi-socialized as is- and I'm not even talking about utilities and infra-structure. What percentage of your income ultimately ends up as taxes? (hidden costs imbedded in the prices you already pay- like in gas, in addition to the obvious taxes)
Are you daft?purplepaul
Apr 4, 2003 5:29 PM
Just because government requires certain minimum standards for setting up a hot dog stand does not make it socialist or, IMO, bad. Business, like a little child, has shown too many times that it needs a stern parent sometimes. The problem is where the balance point is placed. I think unions can be a very good and necessary thing as evidenced by the working conditions prior to their existence and the Ford riots in the 1930's. But some unions have too much power and some businesses do as well. Take drug companies. While I agree that they need a substantial profit motive to produce new drugs, they spend many, many times more on advertising than they do on R&D. In fact, almost all new drugs are developed by universities and government supported researchers. Then private industry licenses the technology. Why shouldn't they have some kind of obligation to the taxpayers who paid to develop the drugs that are so profitable? Not that they should have to give the stuff away for free. But to argue that lower prices would stifle progress, as drug companies have so sucessfully, is in this case, pure bunk.
Apr 4, 2003 10:45 AM
Have ALL professional sports figures (baseball, football, basketball, hockey, golf, cycling, etc.) donate all salary, bonuses, signing indorsements, revenue from commercial use of their names, etc., that is in excess of $1,000,000 per year, to the airline industry. Who NEEDS more than one mil. per year to live?
NO SOLUTIONpurplepaul
Apr 4, 2003 5:33 PM
I guess that's supposed to be tongue in cheek but if not, here's what's wrong with that solution: take away profit motive and progress grinds to a halt.

Who needs more than $1 million/year? I know several people and hope to be one some day. That's why I work so hard. If my final goal were suddenly cut off at the neck, I might not be so motivated.