"Because I'm not American, the US Department of Transportation stipulated I take some of my shares in Virgin America as non-voting shares, reducing my influence over any takeover. So there was sadly nothing I could do to stop it."
How is not allowing people to have influence over corporate decisions commensurate with the size of their investment not discouraging that sort of investment?
> Surely you can recognize the merit in keeping domestic control of transportation
That doesn't seem entirely self-evident, and that's part of the subject of this discussion thread.
There are already extensive regulations on the operation and safety of airlines, most of them likely for good reason. Why, above and beyond those regulations, do we additionally need to limit ownership?
If the answer is "handwave handwave safety handwave security", then I'd point out that there are dozens of other industries even more ingrained into the US where someone looking to do damage could do far more harm than they ever could with an airline, and none of those industries have prohibitions on foreign ownership.
well, you wouldn't want foreign airlines giving their governments information about military and VIP movements, letting their intelligence services intercept and tamper with shipped packages, maybe fit planes on interesting routes with surveillance equipment.
> you wouldn't want foreign airlines giving their governments information about military and VIP movements
Just how magical is the the extra 2% that takes one from an "OK/freiendly" 49% foreign shareholder to a 51% (or 50% +1?) "oh no, intel stealer!". I sort-of understand the control argument, but not the secrecy argument you are making doesn't hold up.
it was tongue in cheek, but yeah, that 2% (or .01%) to go from junior partner to running the show is pretty magical. (ask a game theorist, or Al Gore!)
Huh? I just transferred from a Kawasaki train car to a Canadian bus with an Isuzu Engine to board an Airbus that was routed to JFK via British flight controllers, fueled by imported oil.
Correct. But none of those entities are controlling transportation infrastructure in the United States. They're manufacturing vehicles or parts necessary for those vehicles, or controlling the air traffic on a completely separate continent.
The law's intent (not saying that I agree with it) is to ensure that the air transit infrastructure in the United States is controlled by U.S. citizens, not that every piece of transportation equipment worldwide is manufactured and controlled by the U.S.
> Surely you can recognize the merit in keeping domestic control of transportation
No, I really don't.
In times of true national crisis, emergency powers allow the US government to commandeer the civil air fleet for military uses.
The rest of the time, these foreign ownership restrictions prevent better operators from taking ownership stakes and fixing the efficiency problems that plague uncompetitive mainline US airlines.
I for one would LOVE to see what an ME3 carrier could do with, say, American Airlines.
I for one would LOVE to see what an ME3 carrier could do with, say, American Airlines.
Depends. Is that an ME3 carrier on its own, or an ME3 carrier with an unlimited government subsidy to keep it afloat no matter how much money it loses? Because the latter is what really exists -- those airlines aren't run as for-profit businesses, they're run as vanity projects by the backing governments.
I'm not sure the links between the government and the ME3 carriers are as clear as you think. And even if they were (and this is going sound scandalous): who cares?
If some Emirati government wants to subsidize my domestic travel within the US, they should feel very free to do so! I'll take the better service and cheaper prices in a heartbeat.
transitive verb
1 : to deprive of courage or confidence : dishearten <was discouraged by repeated failure>
2
a : to hinder by disfavoring <trying to discourage absenteeism>
b : to dissuade or attempt to dissuade from doing something <tried to discourage her from going>
To hinder by disfavoring. Foreign investors are disfavored -- they can invest, but under different (and less favorable, hence disfavored) terms. They are hindered in the process. You can make a case that this hindrance is a good thing, if you want to, I guess. But you're trying to do so while at the same time claiming it doesn't exist.
For those puzzled by the dictionary quote, the OP used the work discouraged correctly, but cwyers couldn't parse the OP's comment because of the negatives.
I wonder what makes USDOT think a foreign national is any more or less likely to follow the rules than an enormous multi-national corporation like United or Delta?
These foreign-ownership rules do strike me as counter-productive protectionism.
The airline industry is extremely protectionist. I'd rather fly on Qantas JFK-LAX (they do fly that route) but cabotage rules prevent them from selling tickets on it.
Because evidently if any competition comes to the domestic aviation industry, US airlines are doomed.
History has pretty much established that competition in the space is destructive.
Allowing international carriers transiting the US to do intra-city flights soaks up demand and lowers route profitability for busy routes.
Past practices were to balance demand across city pairs so as to avoid local monopolies (ie. Minneapolis and Delta/Northwest) and ensure universal service. Deregulation broke all of that, so we have price competitions at the cost of a race to the bottom in service and industry cycles of bankruptcy and consolidation. Long term, that means monopoly levels of service and pricing.
Huh? Airline deregulation since 1978 is one of the poster children for improved service to consumers. Any transportation business is inherently subject to the flux of fuel prices and demand as it varies with overall economic activity. If anything, difficulties airlines now face are compounded by the degree of regulation that is still in force.
The US isn't really alone in this; allowing foreign entities to own a controlling interest in a domestic airline is not super common outside of the EU (where the "foreign"-ness of a company headquartered in another EU member state is kind of blurry anyway).
See, for example, Etihad's 49% stake in Alitalia, Delta's 49% stake in Virgin Atlantic, etc. -- significant investment happens, but controlling share is a lot less frequent.
"The United States (U.S.) airline industry is unique among industries in being governed by
federal statutes requiring air carriers seeking to be certified in the U.S. to be “owned or
controlled” by a “citizen” of the U.S.1 This requirement is enforced by the Department of
Transportation (DOT) performing “fitness reviews” on applicant airlines to ensure they meet the
“citizenship” definition.2 Historically, the U.S. has limited ownership and control to U.S. citizens
for four primary reasons: the protection of a fledgling U.S. airline industry, the regulation of
international air service through bilateral agreements, concern about allowing foreign aircraft
access to U.S. airspace, and military reliance on civilian airlines to supplement airlift capacity.3"
Of Particular interest to this Virgin America deal:
Voting equity up to 25 percent and nonvoting equity up to 49 percent by a foreign entity is allowed, and any equity
above these levels must be held in trust or converted to debt. Foreign holdings will be counted
cumulatively towards these totals. (page 24)
Thank for listing the rational of why foreign ownership is treated differently for airlines than most other industries. Two of these reasons are difficult to overcome.
First the way international flight agreements are negotiated between countries. Changing this would essentially require all nations with airlines to agree to these changes at the same time. A difficult task. Maybe this is occurring within European Union context?
Second, most nations see their airlines as a source of transportation in times of national emergency. The government can demand that the commercial air fleet be used for the military (or other agencies). I believe that this has only occurred once in the USA, during the first Gulf War. In the USA, the government officially "contracts" with the airlines to provide their fleet on demand. Some have argued that these contracts are a hidden form of subsidy. In any case it is hard to see how any government will allow foreign ownership of airlines due to this military use.
Which two do you think are hard to overcome when considering a British national as a controlling owner? Looking at the list, the military reliance issue is the only one that seems concerning.
A significant part of the US heavy lift into Afghanistan was flown in Russian owned and operated An-124 cargo aircraft.
Participation in CRAF program has been voluntary (& fairly profitable) for the airlines. CRAF was activated twice, as part of Gulf War (1991) & Iraqi Freedom (2003). If the USAF was concerned about airlines "foreign control" during wartime, they'd go to the boneyard and grab extra C-5s and standard 747/767 passenger and freighter aircraft.
There are dozens of large aircraft in the boneyard that could be made serviceable in less 48-72 hours if rushed back to service. The aircraft may require heavy maintenance to stay in service long term, but still safe for short term operations. The downside is the USAF would have to pay for for the aircraft maintenance, whereas CRAF maintenance is paid by the operator.
Have his relationships with the majority shareholders deteriorated that much? It sounds like there was more going on than we know, and the non voting ability was a convenient scapegoat. That or they all wanted to cash out and bank a nice payday.
I follow the airline industry, and this offer is $600 million more than the most recent rumors ($2 billion even). I'd assume this accounts for a lot of the bump (and simple "the deal is further along than it was last week" progression accounts for the rest).
Why? The direct from the founder's mouth article is a Hacker News tradition, practically. It's also a much more honest sounding piece than the PR approved version above.
Agree, I think the tone of this piece is really interesting. It's sadness, laced with evangelism; a hope that the new acquirers will recognise what makes Virgin great, and absorb those qualities rather than replace them. But mostly sadness. Not what you would necessarily expect.
If anyone is taking over or merging with Virgin America, I'm glad it's Alaskan. I've never been unhappy with flying with them.
A couple examples of little things they do that are clever and should be copied by everyone else: check your bag at the gate 30 minutes before boarding and you can board early; a guarantee that your checked luggage will be in your hands 20 minutes after landing, or you get $20.
They are an airline that are trying things, experimenting.
> A couple examples of little things they do that are clever and should be copied by everyone else: check your bag at the gate 30 minutes before boarding and you can board early; a guarantee that your checked luggage will be in your hands 20 minutes after landing, or you get $20.
It isn't "gate checking" as your bag will show up in baggage claim with the other checked bags. They'll sometimes do real gate checking for people in first but it usually isn't necessary.
Yes. They make an announcement asking for anyone willing to check their bag at the gate rather than carrying it on, and anyone who does so gets priority boarding (at the same time as the "families with small children and anyone who needs more time to board")
I don't see why anybody is anxious to board early unless they are jockeying for a bin for their carry-on or have a seat in a luxurious first or business class. First class already gets to board early, so I'm not sure what appeal this policy is supposed to have.
> so I'm not sure what appeal this policy is supposed to have.
I've never flown Alaskan, but it's pretty obvious what the appeal is: it's a small optimization to make flying a little more convenient and enjoyable for some people. It seems like it would be nice not to have to wait in the boarding line and manhandle my carry-on. Plus, the policy creates some goodwill because they're passing up an opportunity to nickle-and-dime you.
I'd pay good money for the ability to exit the plane early after the flight is over. I really don't care about boarding early, especially if I'm not looking for bin space.
> I'd pay good money for the ability to exit the plane early after the flight is over.
Apparently not good enough money, first class customers get that privilege. Beyond that, the crew is required to finish certain landing procedures before allowing customers to disembark off the plane.
The problem is that the amount of "good money" a consumer has to spend to get slightly better service is a lot. But for a business traveler with an expense account it is not a lot and can be expensed.
> Apparently not good enough money, first class customers get that privilege.
Airlines like Southwest have no first class. And Southwest lets you pay for priority boarding, so it stands to reason they could cook up a scheme for letting people pay for priority exiting.
right, so in other words, you're still flying the cheapest possible airline, yet claiming you'd pay good money for well-established privileges that are already available for good money on the open market on pretty much any non-budget carrier.
when it comes to luxury, you have to pay to play, and those who don't pay, don't play. end of story. you're competing with humans for space and time, it's going to be expensive if you want to be given special treatment.
Charge people by the order in which they exit the plane. First person pays $100, second person pays $95, etc. So the first 20 people have an early exiting surcharge, and then everyone else is free to take their sweet time putting on their jackets and rearranging their suitcases whilst standing in the aisle.
Southwest gives you priority boarding (with open seating) for like $30 (if you ask for it at the gate). I opt for this a lot. You get a better seat, have to stand around for less time waiting to board, and get off the plane first. It's a great deal, I think.
I've never understood that. Boarding early and having to have the entire plane trudge past you with their luggage is just not pleasant.
Is there a reason airlines don't board from the back of the plane first? As a first class customer you are assured of your overhead bin space anyway and you would spend the least amount of time on the plane. You would be the last on and the first off. But this would actually be thinking outside the box, not something you would expect of this ridiculous industry. What's the last time an airline did anything innovative?
So this will likely be one of the first things that Virgin gets rid of along with 1 free checked bag.
It never ceases to amaze me that the airlines refuse to abandon this absurd policy of charging for a piece of checked luggage. When you look at when this practice was introduced of charging for checked luggage, the time it takes to board and un-board a plane has increased by about 20 minutes due to everyone trying to shove as much as possible into overhead bins. Perhaps this time axis doens't carry much weight for carrier? Although that would be hard to imagine. It seems like false economy to say charging $25 per luggage checked make sense when you have now added 40 minutes to each flight. I can count the number of times on one hand that my flight has left at its scheduled time even though it boarded on time.
> It seems like false economy to say charging $25 per luggage checked make sense when you have now added 40 minutes to each flight.
It makes sense to the airlines. For them, it probably doesn't matter that much if you leave a bit late. The cost of the flight doesn't change with how much time it takes to board, so they're making more money by charging for bags (even if not that many people check bags). There might be 2nd order effects, like shifts being affected because flights take a bit longer, but I can't imagine that overwhelms the additional income from charging for bags.
How can you make that claim? One of the largest costs for an airline are the union labor costs associated with their operations. So another 40 minutes should very much matter to an airline. The longer a plane stays at a gate the less gates are available for other flights. Its not uncommon to have to wait for a gate or a jetway now after landing. It happened to me last week and we sat on the tarmac. You can't tell me this sort of inefficiency doens' contribute to labor costs - unionized labor costs at that.
Reread the comment you are replying too. They are talking about the increased time to turn a aircraft around. There are lots of direct and indirect costs associated with keeping a airplane on the ground stuck at a gate.
"It never ceases to amaze me that the airlines refuse to abandon this absurd policy of charging for a piece of checked luggage."
They do it because it works, and the reason that it works is that passengers (and flight-booking web sites) tend to sort the list of available flights by base price. Only.
It would be nice if the travel sites let you enter preferences: "How important is a decent meal to you?" "How important is a free checked bag to you?" and so on, but I haven't seen any sites like that. There's an opportunity for someone. :-)
Passengers almost always choose price over anything else. RouteHappy [0] does most of what you ask, and Google Flights has partnered with them - but I don't think the average customer really cares. Profits at the ultra low cost carriers like Spirit and Frontier are extraordinarily high for a reason.
People always make this claim, but the differentiating features are extraordinarily difficult to find. Nobody has heard of RouteHappy. There is no easy transparency of information required to draw conclusions about a free market acting in a certain way.
It's only when I go directly to carriers like Air France or Lufthansa that they specifically flag - for example - flights on an A380, which I am absolutely willing to pay a bit more for.
Holy cow as a frequent flier, I wish I knew which plane I would be getting when I book the ticket. There is a difference between an MD-88 and a Boeing 717 and when I'm flying three times a month, that difference really does matter. Milwaukee to Chicago, I'll put up with whatever plane you give me, but Chicago to Atlanta, I would pay a bit more for the newer plane.
You can see what aircraft is operating the flight you're booking on most airline's websites. Makes a huge difference in what flight I book.
For example, I just booked ORD-SFO on UA in business, which is a completely different experience on the upper deck of a 747 (UA1213) than the usual 737 :)
Huh, I've always booked on my company's booking tool, which AFAIK does not list the plane. Maybe I should start comparing to other sites to see what plane the route will be running.
They do what because it works? Airlines did not start charging for checked luggage because of sites like Priceline and Orbitz - those site are just aggregating the fares that are set by airlines(which themselves look price fixing.)
Charging for checked bags didn't start until 2008, the better part of a decade after travel sites began. There is zero correlation between charging for checked bags and travel websites.
Prior to this awful and cheap practice the assumption was that you bought a ticket that covered the cost of getting you and a bag to a destination.
"I can count the number of times my flight has left at its scheduled time on one hand even though it boarded on time."
This has not been my experience. Flying AA on the east coast regularly, the folks at the door generally seem to be super on top of eyeballing bags and giving out the red checked-at-gate tags liberally.
Agreed. Alaskan was one of the first to have check in kiosks and app base checkin. They just released a pre-print bag check tag as well. Best experience of any airline I have flown people and technology wise. ( I'm a former Delta Platinum miles member )
Isn't "20 minutes or you get $20" out of their hands? I thought all baggage handling was completed by airport contractors, not by the airlines. Is Alaskan putting their faith in these employees?
I've had the reverse. My experience with them is always miserable.
Honestly, they seem an airline stuck in the 1980s. For example, after we married, my wife changed her name & got a new ID. She realized she also needed to change a name on a future flight back home to Seattle.
Alaskan charged her $100 to change her name.
$100.
To update a field in a database. For a flight over a month out.
By contrast, she also had to change a Southwest flight. $0 & she was off the phone in 10 minutes.
Example 2: I actually tried to take advantage of the 20 minute guarantee at LAX. I was literally sent to SIX different people. My bags had taken 25 minutes to arrive.
It took another 30 minutes to get my $20 vouchers. (Because, damnit, I wasn't giving up on principle! To the chagrin of my wife.)
And those $20? It expired in 2 months.
And despite being delayed for for six bags for 3 people, I could only use one $20 voucher.
The boarding process is bizatine based on some complex rubric of status.
Half the Alaskan personal I've encountered are nice. The other half are pretty miserable. They clearly hate their job. Or hate the customers. Possibly both.
Their fees and even basic pricing is overly complex. Their planes tend to be older.
The only defense I ever hear comes from either 1) people who have status or 2) people who say other airlines are just as bad.
(2) just isn't true. I've flown Korean Air, Emirates, Jet Blue, etc. and they are FAR better.
There is part of me that wishes we had let United, American, & the others go bankrupt in 2001, so better companies would have emerged.
Anyway, I hate Alaska.
(Source: Me. I typically travel on different airlines once or twice a month.)
As far as I know, Virgin is pretty much a franchised brand. Their trains are run by other transport companies, their cable TV is run by another telecoms operator, their banks are run by another institution etc.
I still think JetBlue was a better fit. Alaska's a west coast, all 737 fleet. Now they own another west coast airline (i.e. they overlap) with a ton of Airbus. Alaska's probably getting something good for their $2.6b, but I haven't figured out what exactly.
One of the main reasons speculated why Alaska is doing this is to make it significantly more difficult for another airline (primarily Delta) to take them over.
Apparently Virgin only owns 8 of those planes and the rest are leased, so the speculation I read is Alaska is just likely to change them all over to 737s eventually. And if they have the capital to operate that same system using purchased planes and not leased planes, then they'll be running the same routes with more favorable finances than Virgin was able to.
Agreed. JetBlue has what Alaska is missing: An east coast network and a very solid trans-continental product to compete on the SEA/SFO/LAX-JFK flights. And they both operate comparable Airbus equipment where Alaska is an all-Boeing shop. That's going to make finding technical cost reductions difficult.
According to the investor slide deck [0], it's to get into the California market, which they're not dominant in. This acquisition will mean that Alaska will be #2 at SFO, and a major player at LAX.
Virgin America's aircraft are almost all leased, so they'll be easy to get rid of and consolidate into Boeing aircraft.
I wonder what will happen with that letter of intent for the investment in that boom sonic plane startup. Was that investment announcement somwthing legally binding? (I didn't follow that closely)
The deal with Boom appears to be with Virgin Atlantic, which it a different company from Virgin America, due to the ownership laws that are causing Branson to bail on Virgin America.
It is 51% owned by Branson (or an interest over which he has control), however. As a _very_ frequent Virgin Atlantic and Delta flyer, I can assure you there is nothing about Virgin Atlantic which approaches the terribleness that "Delta UK" implies.
There was a Tumblr that had a list of things that are cheaper than Whatsapp's $16B acquisition. It's pretty insane how much bigger of an industry some things are over others.
Haha! Well if you compare that way, there are numerous examples of a piece of software doing well(or have more market cap) than a physical company with many machines and thousands of employees!
What you are seeing is that, even though Virgin is huge and expensive and provides a lot of value, the industry is competitive and very little of that value is profit to the owner. Whereas Minecraft has a niche and is very profitable.
It's a really profitable industry these days. Low oil prices reduce costs. Plus, ticket prices haven't gone down because routes are consolidated to reduce competition between airlines.
"Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down." – Warren Buffet, who invested in US Airways in the early '90s, on airlines in 2008
Just a few days ago there was a fantastic article on the lack of competition in the economist. It pointed to the recent consolidation of the airline industry. Kind of amazed that there will be one less player.
Sad, but not surprising. It seems like good customer service just doesn't scale for airlines. Back to being stuck with being treated like crap by your airline, or paying less to be treated slightly crappier by your airline.
Ehh, I wouldn't despair just yet - Alaska itself is not a particularly big airline. I've flown with them lots and they are heads and shoulders above the legacy turdbucket of United/Delta/American.
If VX had to be sold to anyone, I'm glad it's to Alaska.
Good to hear. I honestly hope they just treat the employees well. I flew six? times on Virgin, and the experience was always made excellent by the staff. They must be treating them very well for them to be as good at what they did.
I wouldn't group United/Delta/American together. From my experiences and those of most travelers I talk to, Delta is certainly a step above the other two, and American is probably second. United completely mishandled the Continental merger, and has had a host of reliability and service issues. My main gripe with Delta is their continually devaluing (without warning) miles program. Alaska, meanwhile, has one of the most widely useable miles with their many airline partners for earning and redeeming.
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[ 0.29 ms ] story [ 197 ms ] thread- Sir Richard Branson, Virgin founder.
Surely you can recognize the merit in keeping domestic control of transportation, which is the reason these regulations exist.
Not OP, and not trying to be glib, but I think you're skirting the major objection by assuming agreement here.
Differential privilege due to happenstance of birth location seems a pretty arbitrary line to me, in need of justification.
We also have programs that will give you citizenship if you commit to investing money long term and taking an allegiance to the United States.
That doesn't seem entirely self-evident, and that's part of the subject of this discussion thread.
There are already extensive regulations on the operation and safety of airlines, most of them likely for good reason. Why, above and beyond those regulations, do we additionally need to limit ownership?
If the answer is "handwave handwave safety handwave security", then I'd point out that there are dozens of other industries even more ingrained into the US where someone looking to do damage could do far more harm than they ever could with an airline, and none of those industries have prohibitions on foreign ownership.
i.e. the stuff the US does.
Just how magical is the the extra 2% that takes one from an "OK/freiendly" 49% foreign shareholder to a 51% (or 50% +1?) "oh no, intel stealer!". I sort-of understand the control argument, but not the secrecy argument you are making doesn't hold up.
Glad we got it nailed down.
The law's intent (not saying that I agree with it) is to ensure that the air transit infrastructure in the United States is controlled by U.S. citizens, not that every piece of transportation equipment worldwide is manufactured and controlled by the U.S.
No, I really don't.
In times of true national crisis, emergency powers allow the US government to commandeer the civil air fleet for military uses.
The rest of the time, these foreign ownership restrictions prevent better operators from taking ownership stakes and fixing the efficiency problems that plague uncompetitive mainline US airlines.
I for one would LOVE to see what an ME3 carrier could do with, say, American Airlines.
Depends. Is that an ME3 carrier on its own, or an ME3 carrier with an unlimited government subsidy to keep it afloat no matter how much money it loses? Because the latter is what really exists -- those airlines aren't run as for-profit businesses, they're run as vanity projects by the backing governments.
If some Emirati government wants to subsidize my domestic travel within the US, they should feel very free to do so! I'll take the better service and cheaper prices in a heartbeat.
And yet we're almost completely dependent on foreign countries for oil, without which most of our transportation methods would crumble.
Full Definition of discourage
dis·cour·aged dis·cour·ag·ing
transitive verb 1 : to deprive of courage or confidence : dishearten <was discouraged by repeated failure> 2 a : to hinder by disfavoring <trying to discourage absenteeism> b : to dissuade or attempt to dissuade from doing something <tried to discourage her from going>
To hinder by disfavoring. Foreign investors are disfavored -- they can invest, but under different (and less favorable, hence disfavored) terms. They are hindered in the process. You can make a case that this hindrance is a good thing, if you want to, I guess. But you're trying to do so while at the same time claiming it doesn't exist.
These foreign-ownership rules do strike me as counter-productive protectionism.
Government does not care about outcome it cares about the show they need to put up to convince people they are doing something good.
Because evidently if any competition comes to the domestic aviation industry, US airlines are doomed.
Allowing international carriers transiting the US to do intra-city flights soaks up demand and lowers route profitability for busy routes.
Past practices were to balance demand across city pairs so as to avoid local monopolies (ie. Minneapolis and Delta/Northwest) and ensure universal service. Deregulation broke all of that, so we have price competitions at the cost of a race to the bottom in service and industry cycles of bankruptcy and consolidation. Long term, that means monopoly levels of service and pricing.
See, for example, Etihad's 49% stake in Alitalia, Delta's 49% stake in Virgin Atlantic, etc. -- significant investment happens, but controlling share is a lot less frequent.
"The United States (U.S.) airline industry is unique among industries in being governed by federal statutes requiring air carriers seeking to be certified in the U.S. to be “owned or controlled” by a “citizen” of the U.S.1 This requirement is enforced by the Department of Transportation (DOT) performing “fitness reviews” on applicant airlines to ensure they meet the “citizenship” definition.2 Historically, the U.S. has limited ownership and control to U.S. citizens for four primary reasons: the protection of a fledgling U.S. airline industry, the regulation of international air service through bilateral agreements, concern about allowing foreign aircraft access to U.S. airspace, and military reliance on civilian airlines to supplement airlift capacity.3"
Of Particular interest to this Virgin America deal:
Voting equity up to 25 percent and nonvoting equity up to 49 percent by a foreign entity is allowed, and any equity above these levels must be held in trust or converted to debt. Foreign holdings will be counted cumulatively towards these totals. (page 24)
Source: http://dailyairlinefilings.com/public/furlan.pdf
First the way international flight agreements are negotiated between countries. Changing this would essentially require all nations with airlines to agree to these changes at the same time. A difficult task. Maybe this is occurring within European Union context?
Second, most nations see their airlines as a source of transportation in times of national emergency. The government can demand that the commercial air fleet be used for the military (or other agencies). I believe that this has only occurred once in the USA, during the first Gulf War. In the USA, the government officially "contracts" with the airlines to provide their fleet on demand. Some have argued that these contracts are a hidden form of subsidy. In any case it is hard to see how any government will allow foreign ownership of airlines due to this military use.
More on Civil Reserve Air Fleet (CRAF) the US military use of airliners : http://fas.org/man/dod-101/sys/ac/craf.htm
Which two do you think are hard to overcome when considering a British national as a controlling owner? Looking at the list, the military reliance issue is the only one that seems concerning.
Participation in CRAF program has been voluntary (& fairly profitable) for the airlines. CRAF was activated twice, as part of Gulf War (1991) & Iraqi Freedom (2003). If the USAF was concerned about airlines "foreign control" during wartime, they'd go to the boneyard and grab extra C-5s and standard 747/767 passenger and freighter aircraft.
There are dozens of large aircraft in the boneyard that could be made serviceable in less 48-72 hours if rushed back to service. The aircraft may require heavy maintenance to stay in service long term, but still safe for short term operations. The downside is the USAF would have to pay for for the aircraft maintenance, whereas CRAF maintenance is paid by the operator.
Hence, the problem with the equities market, and why you should never go public if you can afford it.
https://www.virgin.com/news/alaska-air-group-acquire-virgin-...
A couple examples of little things they do that are clever and should be copied by everyone else: check your bag at the gate 30 minutes before boarding and you can board early; a guarantee that your checked luggage will be in your hands 20 minutes after landing, or you get $20.
They are an airline that are trying things, experimenting.
> A couple examples of little things they do that are clever and should be copied by everyone else: check your bag at the gate 30 minutes before boarding and you can board early; a guarantee that your checked luggage will be in your hands 20 minutes after landing, or you get $20.
Is that (gate check bag) for free?
20 minutes or $20 sounds like a great idea too.
Yes. They make an announcement asking for anyone willing to check their bag at the gate rather than carrying it on, and anyone who does so gets priority boarding (at the same time as the "families with small children and anyone who needs more time to board")
I've never flown Alaskan, but it's pretty obvious what the appeal is: it's a small optimization to make flying a little more convenient and enjoyable for some people. It seems like it would be nice not to have to wait in the boarding line and manhandle my carry-on. Plus, the policy creates some goodwill because they're passing up an opportunity to nickle-and-dime you.
I'd pay good money for the ability to exit the plane early after the flight is over. I really don't care about boarding early, especially if I'm not looking for bin space.
Apparently not good enough money, first class customers get that privilege. Beyond that, the crew is required to finish certain landing procedures before allowing customers to disembark off the plane.
Airlines like Southwest have no first class. And Southwest lets you pay for priority boarding, so it stands to reason they could cook up a scheme for letting people pay for priority exiting.
And of all the airlines that necessitate being drunk to cope, Southwest is fairly high on the list.
right, so in other words, you're still flying the cheapest possible airline, yet claiming you'd pay good money for well-established privileges that are already available for good money on the open market on pretty much any non-budget carrier.
when it comes to luxury, you have to pay to play, and those who don't pay, don't play. end of story. you're competing with humans for space and time, it's going to be expensive if you want to be given special treatment.
(i'm a frequent alaskan airlines flyer, and try to always sit in row 6, unless i'm upgraded).
Is there a reason airlines don't board from the back of the plane first? As a first class customer you are assured of your overhead bin space anyway and you would spend the least amount of time on the plane. You would be the last on and the first off. But this would actually be thinking outside the box, not something you would expect of this ridiculous industry. What's the last time an airline did anything innovative?
It never ceases to amaze me that the airlines refuse to abandon this absurd policy of charging for a piece of checked luggage. When you look at when this practice was introduced of charging for checked luggage, the time it takes to board and un-board a plane has increased by about 20 minutes due to everyone trying to shove as much as possible into overhead bins. Perhaps this time axis doens't carry much weight for carrier? Although that would be hard to imagine. It seems like false economy to say charging $25 per luggage checked make sense when you have now added 40 minutes to each flight. I can count the number of times on one hand that my flight has left at its scheduled time even though it boarded on time.
It makes sense to the airlines. For them, it probably doesn't matter that much if you leave a bit late. The cost of the flight doesn't change with how much time it takes to board, so they're making more money by charging for bags (even if not that many people check bags). There might be 2nd order effects, like shifts being affected because flights take a bit longer, but I can't imagine that overwhelms the additional income from charging for bags.
The cost of a plane is v. expensive. Sitting on the tarmac for 1/3rd longer is VERY expensive, just in deprecation/interest/lease payments.
However, it probably makes sense because I imagine some/all airports charge luggage handling fees per item/kg, that are probably quite expensive.
They do it because it works, and the reason that it works is that passengers (and flight-booking web sites) tend to sort the list of available flights by base price. Only.
It would be nice if the travel sites let you enter preferences: "How important is a decent meal to you?" "How important is a free checked bag to you?" and so on, but I haven't seen any sites like that. There's an opportunity for someone. :-)
[0] https://www.routehappy.com
It's only when I go directly to carriers like Air France or Lufthansa that they specifically flag - for example - flights on an A380, which I am absolutely willing to pay a bit more for.
For example, I just booked ORD-SFO on UA in business, which is a completely different experience on the upper deck of a 747 (UA1213) than the usual 737 :)
Charging for checked bags didn't start until 2008, the better part of a decade after travel sites began. There is zero correlation between charging for checked bags and travel websites.
Prior to this awful and cheap practice the assumption was that you bought a ticket that covered the cost of getting you and a bag to a destination.
Advertise a low base fare and add extra fees/cut add-on services to make up the difference.
The checked bag fee is just one of the more recent ploys in a process that's been going on for decades.
This has not been my experience. Flying AA on the east coast regularly, the folks at the door generally seem to be super on top of eyeballing bags and giving out the red checked-at-gate tags liberally.
I've had the reverse. My experience with them is always miserable.
Honestly, they seem an airline stuck in the 1980s. For example, after we married, my wife changed her name & got a new ID. She realized she also needed to change a name on a future flight back home to Seattle.
Alaskan charged her $100 to change her name.
$100.
To update a field in a database. For a flight over a month out.
By contrast, she also had to change a Southwest flight. $0 & she was off the phone in 10 minutes.
Example 2: I actually tried to take advantage of the 20 minute guarantee at LAX. I was literally sent to SIX different people. My bags had taken 25 minutes to arrive.
It took another 30 minutes to get my $20 vouchers. (Because, damnit, I wasn't giving up on principle! To the chagrin of my wife.)
And those $20? It expired in 2 months.
And despite being delayed for for six bags for 3 people, I could only use one $20 voucher.
The boarding process is bizatine based on some complex rubric of status.
Half the Alaskan personal I've encountered are nice. The other half are pretty miserable. They clearly hate their job. Or hate the customers. Possibly both.
Their fees and even basic pricing is overly complex. Their planes tend to be older.
The only defense I ever hear comes from either 1) people who have status or 2) people who say other airlines are just as bad.
(2) just isn't true. I've flown Korean Air, Emirates, Jet Blue, etc. and they are FAR better.
There is part of me that wishes we had let United, American, & the others go bankrupt in 2001, so better companies would have emerged.
Anyway, I hate Alaska.
(Source: Me. I typically travel on different airlines once or twice a month.)
https://www.alaskaair.com/travelinfo/destinations
Also, they've recently put in for a route to Cuba, if I remember right.
http://www.rdu.com/press-release/alaska-airlines-to-launch-s...
Virgin America's aircraft are almost all leased, so they'll be easy to get rid of and consolidate into Boeing aircraft.
[0] http://phx.corporate-ir.net/External.File?t=1&item=VHlwZT0yf...
~ Richard Branson
Edit: Didn't see the same quote below!
http://www.economist.com/news/briefing/21695385-profits-are-...
If VX had to be sold to anyone, I'm glad it's to Alaska.
I enjoyed flying Virgin America, but losing this part of their culture will not be a bad thing.
They had an ugly crash involving failure to do Mx on jack screws in the past.