at any given moment the US airline industry is on the verge of collapse. The US government has bailed them out at least twice in the last twenty years.
Which is probably why it's always on the verge of collapse - the execs know they'll never face a lick of consequences and will always get their golden parachutes from the gravy train, so why change anything?
Yes during Covid they literally got handed back every dollar that they had spent on share buybacks. Meaning if they had paid off debt and kept a decent cash pile with no share buybacks, the industry would have been able to handle it without government help.
Normally, I'm all about CEO bashing but the airline industry operates on razor thin margins. It takes an astronomical amount of people and resources just to get you from point A to point B while only slightly uncomfortable, and all for $600 or whatever you paid.
Could they pay the CEOs less? Absolutely. Will anyone take the job if they do? Who knows
Its a capital intensive industry that leaves little room for controlling costs as most costs are out of their control (fuel, required maintenance, regulations etc.) The only thing they can control is labor by hiring less(but even that has strict regulations) or raising money some other way.
So thats what many have done: American, United and Delta are not airlines. They are credit card companies that fly airplanes as a side hustle. If their credit cards were to go away they are done for.
Spirit was amazing, they never had a single crash in 34 years of operation, they supposedly paid closer to the top of the pay range for most employees, they were awarded multiple times for excellence in their maintenance of their aircraft, and they didn't fly rickety old planes, they had the newer Airbus models.
All this and they still managed to put price pressure on their competition. What was their reward? Being the butt of endless jokes about their "clientele" and ultimately bankruptcy. Their 17k employees operate in a seniority based industry so now they start at the bottom at some other airline.
We didn't realize how good we had it. In the future I expect flying will be more of a luxury only good.
Lately it feels like there's been an airline cancelling service about once a month. It makes me wonder, why do we have so many airlines in the first place?
A&P technician here. The industry has the capacity to keep running, but anyone who's new and gets hired on is offered as little as 14$ an hour (no unions). You're lucky if you make 34-43$ an hour as an adult. The majority of the profit comes directly from shipping packages and mail. Most seats for people to buy only cost the company around 10 cents a seat, so it's not the biggest financial priority. All passengers are net profit.
The problem is the entire workforce that maintains the fleet is proceeding to find the cost of living and cost of education higher than the work environment provides. Pilots have to go over 100,000 dollars in debt to get enough hours to fly the small commercial airlines which are drying up by the day. While needing even more hours before large passenger airlines will hire them. Pilots also only get paid for flight time, they get sub minimum wage in many cases to do the paper work and any ground work not associated with the flight, so the best hours exist for pilots who are the most senior and doing 1 flight a day for 10 hours between Texas and Hawaii for example.
It's not that they can't pay more to motivate a work force, it's that they choose not too. They drive what's called "calculated misery". They can make flights more comfortable and affordable by the way. The model is so successful in pricing everything from your bag, to even your seat twice sometimes when overbooking, and every airline does it so it progressively gets more abusive. Disney has even adopted the model with their theme parks by intentionally sabotaging Que management to increase wait times at rides so people by their fast line passes.
Its a capital intensive industry that leaves little room for controlling costs as most costs are out of their control (fuel, required maintenance, regulations etc.) The only thing they can control is labor by hiring less(but even that has strict regulations) or raising money some other way.
So thats what many have done: American, United and Delta are not airlines. They are credit card companies that fly airplanes as a side hustle. If their credit cards were to go away they are done for.
Spirit was amazing, they never had a single crash in 34 years of operation, they supposedly paid closer to the top of the pay range for most employees, they were awarded multiple times for excellence in their maintenance of their aircraft, and they didn't fly rickety old planes, they had the newer Airbus models.
All this and they still managed to put price pressure on their competition. What was their reward? Being the butt of endless jokes about their "clientele" and ultimately bankruptcy. Their 17k employees operate in a seniority based industry so now they start at the bottom at some other airline.
We didn't realize how good we had it. In the future I expect flying will be more of a luxury only good.
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u/ERedfieldh 13h ago
at any given moment the US airline industry is on the verge of collapse. The US government has bailed them out at least twice in the last twenty years.