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What is going on here? Corporations, in general, have become far more rapacious in the last couple of decades. I have a theory about this. The finance industry made it possible for ordinary people to become investors, but really only in places where investment frankly does very little actual good - after a company has essentially gone public. It has also given larger scale investors more money to essentially control the bulk of the dividends that are created, and increasingly, as these investors end up owning more and more of these companies, they have become more important to satisfy than customers. After all, it is far easier to keep a few (or even a few dozen) people satisfied than it is to improve the quality of the service to customers. So long as people were actively earning income, this generally worked out - companies were awash in cash, and they could satisfy both. However, as more of the boomers retired, this meant that all of those 401K investors started withdrawing from their investments, rather than contributing to them. This in turn means that the larger investors generally end up controlling even more of these companies, while airlines, which generally run most of their fleet through borrowing, are suddenly finding their interest payments on their debt climbing dramatically. They can't cut dividends, because this means their stock prices drop, so the only place they have left to cut are employees (reducing service quality and safety) and customers (raising baggage fees, charging higher prices, cutting amenities). This isn't just an airline problem - this is a problem all across the economy, in every sector, and it's going to get worse before it gets better, because roughly half of the boomers are still left to retire and things don't really change positively until around 2038. This is about the time that you see the next major cohort enter that period where they travel extensively. Other factors play here as well - oil prices (which likely are not going to be much lower than $60 a barrel moving forward) and an aging fleet overall, which means higher maintenance costs. Air capacity may be seriously compromised by 2030, as more marginal carriers continue to go under and large carriers end up with increasingly aged fleets through consolidation.

Big changes could be coming for US air travelers! The US Government is pushing forward a proposed rule that would require airlines to compensate passengers for controllable cancellations or delays of 3 hours. Expected as early as January 2025, this game-changing rule could make a huge impact on both passengers and the aviation industry. Under this proposal, airlines would be required to pay cash compensation to passengers affected by flight disruptions, along with coverage for meals and lodging. While the exact details are still being finalized, this could be a major step forward in passenger rights. Countries like Canada, India, Saudi Arabia, Turkey, Brazil, and China already have similar rules in place, with Australia set to follow soon. The US is now looking to join the global effort to better protect passengers. Read more here: https://ow.ly/F9XZ50Tlwp1 #AirTravel #PassengerRights #Aviation #TravelUpdates #BidenAdministration

The Headline is provocative (sorry it's behind a paywall). BUT - do we agree? The challenge is that the airlines do not need to make more money. They are providing a public service and it seems that there are so many times that their managements forget that obligation. It is time that the process of awarding licenses to operate an airline is not grandfathered automatically. What do you think? https://lnkd.in/gBmJpCRE #publicservice #airlines #Regulation

American Airlines is increasing checked baggage fees. Here's how other airlines stack up

Here's a new story from me and Hannah Erin Lang on MarketWatch: Airlines have made a billion-dollar business charging fees for seat selection, checked bags and other tiny conveniences. Some carriers are starting to overhaul these policies as the Biden administration cracks down on fees that it calls hidden and unnecessary, but these are the fees travelers on major airlines should STILL brace for ahead of the summer season, from carryon bags to basic seat selection. 

Another Airline Baggage Fee Increase. I just came across a CNN article discussing the new bag fees introduced by American and United Airlines. The article highlights the potential impact of these fees on both travelers and the airline industry. As someone who travels often, I believe airlines should maintain a balance between generating revenue and providing a satisfactory customer experience. The increased fees could lead to overcrowding in the overhead bins and potential delays during boarding as more passengers may choose to carry their bags onto the plane. Furthermore, if other airlines follow suit, this could lead to an industry-wide trend of charging more for checked bags. What are your thoughts on this topic? Please share your opinions in the comments below! ✈️🧳 #AirlineIndustry #TravelNews #CustomerExperience" Click the link below to read the article. https://lnkd.in/e_TwdNKn

US airlines increase checked baggage fees; here is why & how much more it will cost you

Big changes could be coming for US air travelers! The US Government is pushing forward a proposed rule that would require airlines to compensate passengers for controllable cancellations or delays of 3 hours. Expected as early as January 2025, this game-changing rule could make a huge impact on both passengers and the aviation industry. Under this proposal, airlines would be required to pay cash compensation to passengers affected by flight disruptions, along with coverage for meals and lodging. While the exact details are still being finalized, this could be a major step forward in passenger rights. Countries like Canada, India, Saudi Arabia, Turkey, Brazil, and China already have similar rules in place, with Australia set to follow soon. The US is now looking to join the global effort to better protect passengers. Read more here: https://ow.ly/tnfH50Tlwp0 #AirTravel #PassengerRights #Aviation #TravelUpdates #BidenAdministration

Great article, thanks. A few additional points: 1) Maturing (aging) ULCC workforces get costlier over time. At startup, they tend to have very young and cheaper workforces. To partly offset, the ULCCs historically rely (one lever among others) on fleet growth to spread fixed costs. But network matters, and leisure markets were overloaded. 2) WRT previous point, normally, best practice is to identify network opportunities in detail first, then bring fleet in to match that - not the other way around. The latter is higher risk and can get your balance sheet in trouble. 3) Not clear how profitable basic economy is for mainlines. I understand growth (revenue), but on a seat basis, it’s not clear what margin is being made (eg not offering a carry on bag, how quantifiable is that, or an unused change (fee))? Granted, the mainlines can add load factor, which does pad the top line. 4) There’s been a historical view that, in an economic downturn, people would choose to fly more on ULCCs. I don’t know if that theory is real anymore or would hold. Economic wealth growth is increasingly bifurcated; there’s a widening gap between upper and less fortunate classes. What would that mean in the next downturn for passenger demand trends?