As I’ve answered elsewhere: burning fuel (and sustaining other operating costs) while they squat on slots ultimately ensures that squatting on too grand a scale and/or for too long will result in bankruptcy and thus ensures that the system is self-correcting (by limiting incumbent advantage).
Excellent idea! So now you only have two more problems: lobbyists being paid to influence the fines (so that they don’t cause their clients so much harm as to make their anti-competitive strategies unprofitable); and regulatory capture (where regulatory bodies become beholden to those whom they regulate).
Those are already problems with aviation, so that's nothing new. The existing rules didn't emerge from primordial ooze, they were also influenced by lobbyists and have certain effects.
If they buy up all of the slots and then fly them, customers can take the flights. The goal isn't to (necessarily) to ensure that competitors can operate, it's to ensure that passengers have flights they can travel on.
Because on the flip side, airlines could keep canceling flights on less popular routes when they're not at full capacity (i.e. not/less profitable). That would inconvenience passengers. Under this regulation they could lose that route to a competitor that is more willing to service customers (or can operate at a lower cost).
Yes — because such behaviour results in losses for the company and, if sufficiently extreme (i.e., pushing them to bankruptcy) is self-correcting (they leave the market and vacate the slots).
Because (as is argued elsewhere in this thread), large airlines could buy up all slots and then not operate flights on them, starving their would-be competitors of opportunity to create a basis for themselves.
But they could just do the same with the current ruling - the only difference would be whether they spend their money on more expensive slots or on wasting fuel.
Internationally the rule is that you can have "slots" if your airport is busy enough. IATA classifies airports into three levels with only the busiest class 3 "Co-ordinated" airports having slots. A relatively small number of generally very globally important airports qualify, very few of them in the US - but of course these seem notable because you've heard of them. My local airport (which is a ghost town because the airline that ran most flights from there recently collapsed) does not have slots. If you had told them last year you wanted to take off and land six planes a day there they'd just say that sounds great, let us know when to expect them and where to send the bills. London Heathrow on the other hand obviously doesn't have capacity to just have you show up with six extra planes and not cause chaos.
But, the international rule doesn't say how you get slots. IATA organises conferences to discuss strategy, but it's completely legal for, say, Russia to decide that all slots in its major airports are for Russian companies. The EU has its own regulations which say if you're a EU member state with an airport that gets slots, you must meet certain EU criteria that aim to create a competitive marketplace, keep unsafe carriers out of European airspace and make everything efficient.
The UK implements those regulations through a private company because of course it does the Tories (party presently in government) love private companies, and that's what Airport Coordination Limited is for.
Anyway, the EU level regulation means you can't "just" buy more slots, you need to qualify to even be allowed them. If Big Airline A buys Small Airline B, it would not be unusual for the rules to say that too bad, the resulting company still named Big Airline A doesn't get all the resulting slots, some of them must be auctioned off to competitors.
There is such a market. It's just that in some cases, it can be economical for an airline to hang on to an unused slot at cost in the short term if it expects the slot to be profitable in the longer term.
Fines are not a solution. When you hear about fines, it is typically some government trying to save face on the media:
- The collected fine will not be used to undo the damage to the market/competitors.
- The fine won't ever exceed the profits gained by the company because of the infringement. Or else the company will contest it as unfair.
That's why you read "EU fines Google with 5 billion" and Google doesn't really care. They will go through the moves of pretending they care, maybe try to shave off part of the fine, but at the end of the day, it's business as usual.
The whole point of the rule is that it's more expensive to not run the flights than to run them with few passengers. So the fine would need to be higher than the cost of operating the flight resulting in the exact same outcome.
Mandating flights seems like a bad solution to carriers canceling flights unilaterally. Why not just force them to provide comparable alternate arrangements and/or pay the passengers financial compensation?
If that's really the issue, why are they constantly making ghost flights? Surely there are places to park planes in bulk (eg. same place where they're parking all the 737 MAX)
It involved flooding various airports (especially in Canada) with planes that were already in the air destined to USA, others ended up diverting inside USA, generally lots of congestion and abnormal parking.
Slots are used to regulate congestion in normal conditions.
We ended up having to do this during 9/11. I don't know if there are relatively more or fewer planes than then now, but I do remember that many/most airports had Jets parked on the runways and we're nearly all of their taxi- and runways for storage.
The flights aren't mandated, the airlines can not fly them if they want. But if they don't they may lose them to another airline willing to fly them. If nobody wants to fly the route, then there's no threat of losing it to a competitor.
> Because on the flip side, airlines could keep canceling flights on less popular routes when they're not at full capacity (i.e. not/less profitable).
This would lead to them getting fewer customers as they got a name for awful reliability, like Alaska Airlines have a reputation for being assholes from top to bottom, or United have a reputation for destroying musical instruments.
If you want to more directly disincentivise cancelling flights when people have booked already set a minimum payment to the affected passengers, as in the V EU.
Alaska Airlines have a reputation for being assholes from top to bottom, or United have a reputation for destroying musical instruments
As a frequent flyer on both airlines, I'm not sure that either of those reputations exist, at least I've never heard them. I vaguely remember some incident with a broken guitar (?) But I couldn't tell you which airline.
Another reason springs to mind: if airports are congested - as they probably are - if an airline continually wastes allocated take-off/landing slots by not actually using them, the whole airport becomes less efficient and those precious slots could have been better used by someone else. This disincentivizes doing that. I'll leave why someone would hog slots they have no intention of using as an open question.
This is a stupid rule. This is not an unforeseeable case. Just sell the slots. You can sell them once and forever or you can auction them yearly or every two, three, five years, whatever. Demanding planes run for no one’s benefit is just setting money, and more importantly resources, on fire.
I don’t think you understand the problems associated with the “just sell the slots” idea. The problem is that big airlines could buy up slots and then not use them. They wouldn’t necessarily have an incentive to sell them, either, because the buyers could be small, regional, or low-cost companies that could leverage them to build up a small but profitable business and later take on the bigger airlines (as happened with Europe’s budget airlines, most notably EasyJet and Ryanair).
That means one of two things; the slots aren’t worth that much or they were sold for less than they were worth. If they’re almost worthless, as not using them suggests their not being used is no great loss. If they are worthwhile then either they’ll be used, someone else will buy them or the owner is setting money on fire by not using a valuable asset, in much the same way as someone who uses a vacant lot in Manhattan as a planning lot instead of building a skyscraper on it.
If you want a slot to go to its most valuable use sell it to the entity that values it most, whether permanently or by auctioning it yearly.
If you're an established player, keeping essential assets out of the hands of new competition has value in itself. Example: when the Vons and Kmart from my hometown got together and opened a new shopping complex together, they both retained their prior leases for years, knowing that those locations were the only real estate in town large enough to house a real competitor. The fact that neither could utilize that real estate didn't make it worthless, and in this case actually made it more valuable to them: the town couldn't support multiple large retailers simultaneously, so any competition ran the risk of putting them out of business.
The same concept easily applies to airline slots, an established player that is at capacity on how many slots they can profitably use still has some incentive to keep other airlines out, because any new players will be tapping into their existing market.
The objective is not fairness among companies. The objective is to keep the market competitive for the benefit of the consumers.
If you can afford a 5 year lease on a slot you won't actively use, you're still stifling the competition. And since EU prohibits EU-governments to subsidy airlines, this paves the way for non-EU countries with deep pockets to eventually control the EU air travel market.
“Big“ airlines buying up slots and not using them is a non-problem. Most airlines go bust over thirty years because the entire industry is so awful to be in. Flying busses don’t have that much better profit margin than the kind on the roads and the customers shop almost solely on price. That’s why Delta, Pan Am etc. are in and out of Chapter 11 or actual bankruptcy. You think companies in those kinds of financial straits won’t sell assets they’re not using, like slots?
I don’t understand this. Can’t we put rules in place to prevent this? How hard can it be to take the slots back from the big airlines if they are not using them?
"Ok, we're offering a $300 voucher to the airline willing to give up this slot... $300... ok, United, we're bumping you, you can pick up your voucher at the information desk."
American Airlines pushed United out of JFK for competitive reasons. Scott Kirby, president of United, but formerly of American:
> You can probably personally blame me, at least to some degree, for the fact that United pulled out. When I was at American Airlines, we were consciously trying to push United out of JFK. That was our goal.
Once you give up those slots at an airport like JFK, good luck getting them back.
Unforeseen? Only because the people who created this rule couldn't be bothered or allowed to spend a few extra minutes thinking of edge cases. This is just one example of many blunt rules and laws we have on the books. Maybe in 100 or 500 years we'll implement governance systems that can serve us better.
It is difficult to write a rule that works perfectly all the time. It is even more difficult to write a concise rule that does so. And complex rules potentially increase the cost for everyone. I think this particular behavior isn't as bad as people make it out to be. I would assume this increases overall airline industry's carbon emission in tiny fraction while the rule probably prevented the tragedy of the commons for those slots.
The rule is under review for temporary suspension following a nudge from the EU and/or IATA. People are not always totally stupid, but bureaucracies work slowly.
Doesn't it depend on whether the people are then on additional trips, or transferred from other trips. If they're taking ghost planes instead of other modes of transport, then they may be reducing environmental damage?
They are currently auctioned almost nowhere. Instead, they are permanently owned by incumbent airlines who never paid for them. Additionally, incumbent airlines lobby against slot auctions, see e. g. https://airlines.iata.org/analysis/the-dangers-of-slot-aucti...
The fact that slots are not available to newcomers is a valuable moat for incumbents.
They probably just need a temporary way for the airlines to pay to keep their slots directly, versus having a minimum number of payments tied to takeoffs and landings.
Are you just mindlessly trolling here or do you have a point? Climate change is a thing that concerns people. Waste is a thing that concerns people. Is any of this surprising?
Equating “what people are concerned about” with “what people vote on” is unwise. It’s not as if we all get a direct vote on “should we tackle climate change?”
But hey: “For Democrats, climate change is now one of the two most important issues in politics, according to a new poll.”
Not a lot of people vote primarily on issues regarding criminal justice or technology (e.g. backdoor encryption) and yet I do think we should care about those things.
Used to be you couldn't even incorporate unless you could make the case that granting the writ of incorporation would have a tangible benefit to the community granting it at large.
It was not a right, but rather a privilege. While it is rarer to see a refusal nowadays, it is still a possibility, and the corporate death sentence is a thing; even if we haven't exercised it in a long while.
Maybe not your corporation per se. But the fact that corporations, which are legal fictions, can be created is because many societies have deemed them to be, on balance, beneficial. Once the balance goes the other way, things should, and are likely to, change.
Also, you are exhibiting all the signs of a troll. Please reconsider the way you are presenting your opinions.
Crime or antisocial behavior can be treated as an isolated situation, but if it is profitable and leads to more of the same, it becomes a cancer.
Why would anyone want any organization to exist that on balance harms society? Profitability is one constraint that promotes welfare, but it's far from the only one.
Yes, fuel should be more expensive, but in order to take in all the externalities it would probably be so expensive that all airlines would immediately have to close down.
Maybe that's where we need to get to, all jet fuel based air journeys stopping, but it's not going to please the many rich people - who control the regulations - who wish to use air travel.
If we could properly price in externalities then yes, we'd probably have a better system.
There is a proviso to that, should monetary wealth dictate access to resources like 'ability of the planet to sink carbon' or should that be a separate thing, like access to water. Shouldn't we share such natural resources rather than hand them over to those who already own everything else? In which case, you'd need to price in externalities, and pay to acquire carbon credits (or whatever) if they were available: under such a system people might choose to not "spend" their share of carbon credits in order to faster reduce planetary decline.
The cost of oil has plummeted (which is worrying, but not unexpected, because it’s a leading indicator of economic health and the consensus seems to be that we’re six months away from the next global recession anyway).
Covid 19 is a good opportunity for extremely sensible change. Lets all stop needlessly flying, lets all work from home (if your just doing an office job anyway), lets use local products and not stuff from half way across the world.
Your statement isn't true in the US. The wealthiest in this country don't really do any work.
In fact, the wealthier you are, the less you actually have to work.
The people who are working for a wage are the ones who are working to live, and the wealthiest don't have to do that. Often, people who work the hardest make the least.
I reject your premise that that people will have a reduced quality of life. These taxes will go to public services and increase the quality of life for the masses instead of for the few.
> Hoarded? Jeff Bezo’s billions are tied up in Amazon. That’s providing no value?
Yes, hoarded. You're really bringing up Amazon?
You're talking about the same Amazon that paid no federal taxes last year? I paid more taxes than Amazon did.
The same Amazon that encourages a work environment where their warehouse employees wear diapers [0]?
The same Amazon that forces its employees to work around a dead body [1]?
Amazon itself started by exploiting USPS.
Amazon is a leach on society. Amazon gets tax breaks to build warehouses where their employees face horrendous working conditions. Tax money that could be used to provide better services not only to their workers, but to the rest of us.. You know, real value.
Please stop spreading misinformation. Amazon paid $1.2B in taxes.[1] The net negative tax number was an estimate that doesn't capture their actual payments.
So that means Amazon didn’t spend any money on income taxes in 2018?
No. Even though Amazon’s “current provision” number for 2018 was negative for federal taxes, Amazon said it made income-tax payments totaling $1.2 billion during that year, more than from 2011 through 2016 combined.
Non-productive work can't fund anything. It can be an arrangement used to move wealth (generated by actually productive work) around, but it's obviously a glaringly inefficient way to do so. The only reasons why it's preferred are cultural and political, not economic.
"...lets use local products and not stuff from half way across the world."
That ship sailed 70 years ago. We could maybe go back to the brief era of limited international trade in the inter-war era, aka the Great Depression, but it won't be fast or easy.
Airlines (and other businesses with very high fixed costs) can be profitable if there’s enough consolidation in the industry. Otherwise they get into price war death spirals with no way out.
Railways are also often unprofitable, even when a monopoly (because of inflexible ticket pricing and high amortisation, depreciation, and maintenance costs).
Further, it acts as a multiplier. Which is why I believe rail travel should be nationalised—very few people take a train for the sake of being on a train, people take trains to work or to spend money somewhere else. It makes no economic sense to insert competition into a natural monopoly whose main purpose is to multiply people’s productivity. Everyone loses out.
The only benefit and rationale for competition there is to prevent bureaucratic sclerosis. Its easy for any monopoly to become top heavy with corrupt or incompetent chair warmers who just extract from it and barely do their job.
Generally speaking, I'd hope it wouldn't be "Everything consolidates without bound."
Doing that just sets the stage for a monopoly to form, just add time. The price war should be won by the airline that can most efficiently manage resources and adapt different business models to provide stable service with fewer inputs. That is what the Market is purportedly for, no?
Consolidation is not good. High variety distributes society's eggs across many baskets, creating fault tolerance. Consolidation leaves us one black Swan away from a potentially unrecoverable calamity.
> The price war should be won by the airline that can most efficiently manage resources and adapt different business models to provide stable service with fewer inputs.
And then what? Is that not a monopoly? I know the classic response to this is newcomers will come up with lower prices, but what if there's economy of scale, and newcomers just can't compete?
The answer is to look at who controls the pilot's union: very senior pilots. The airline management is mostly interested in what percentage of its revenues are paid out to pilots; the distribution of the money among the pilots does not affect profitability. The very senior pilots on the other side of the table say "We need the most senior pilots to get $300,000 in pay and benefits." The airline's response is "The only way that could work is if we pay the new pilots $16,000 per year." The group of senior pilots responds "We can live with that."
Who is blaming anyone? Link above is just observation. Senior pilots don't have less of a moral right to enrichment than e.g. airline stock investors. If anything the hope would be that the senior pilots might share more equitably with the junior pilots...
The people downvoting you actually have never paid any attention to airline profits. In USA the deals with pilots' unions are set up to transfer all profits to senior pilots. In many other nations it's more important that the "flagship" airline appear impressive than that taxpayers not be fleeced.
Tangential question: is there a significant reduction in flights over the US? Is it my imagination or are we having more blue skies like the days after 9/11?
Mentioning the heavily slot controlled airports would make more sense. The airlines aren't really at fault here. The airports that take your slot when they don't get their takeoff/landing fees are.
Is this article being slightly over-dramatic? I would've thought most of these planes carry a significant amount of cargo, which likely has increased since there are fewer passengers and more room, and there might also be more remote/online purchasing as of recent.
Passenger carriers do use extra weight/space for LTL shipments, but bear in mind that shipping in general is down due to supply-side effects (c. 25% reduction at Long Beach, the West Coast's busiest commercial port[0]) so there will be significant reductions in demand for LTL freight as a knock-on effect.
I feel like there's a short-term solution to this:
You can keep your slot and not fly the plane, as long as you pay some large percentage* of the cost of each ghost trip to the organisation that'd resell your slot. Your 'flight' must be fully crewed.
That way the carbon isn't emitted, (some) jobs are kept secure, and the airline recoups a little of the money they would have otherwise lost.
Right, I guess it just seemed like a huge non sequitur. While we're expanding welfare, why not do it in a more principled and efficient way than "whoever happens to work for an airline right now"
As a halfway answer to this, I ask if specific plane types are required on these routes. If not then swap out current craft for smaller vehicles so that your pilots can maintain proficiency time while still moving cargo and the reduced number of passengers. Flying isn’t like riding a bike and pilots can’t sit in simulators ground-side indefinitely. You won’t be swapping in a Dash 8 for an A380 in every case but smaller Embraer jets in lieu of the Airbus heavies could help keep the training/proficiency side going.
Most anything over 12500 lbs (about 5500 kg) max takeoff weight or powered by jet engines requires the pilots to have a rating specific to the type. This means anything used in commercial service larger than a medium-sized (~8+1 seat) King Air.
A pilot type rated in an A320 isn't necessarily going to have a current type rating in a Dash-8 or ERJ/CRJ. (This is both a regulatory and an actual safety hurdle.)
(And of course, many of the trans-Atlantic routes can't be covered by significantly smaller equipment, though I'd expect that those routes are not flying literally empty anyway.)
My father was a Navy pilot during the Cold War. He told me fuel budgets were based on the last period’s consumption. If their actual use was below what was considered their predicted amount, they would put planes on a schedule where they would take off fully loaded, fly to 30k (or whatever made sense) and dump all of their fuel into the atmosphere.
They would then land, empty, and repeat the process.
That was a shitload of avgas dropped into the atmosphere but hey, military bureaucracy...
I’ve been waiting for airlines to give up on scheduling altogether and move to JIT routing. Maintaining schedules seems fragile, and I think demand would increase dramatically if customers didn’t have to plan ahead. This will definitely happen when the industry gets disrupted by cheap autonomous and electric mini-planes, but it seems that schedules are so broken already that the biggest thing keeping up the facade are FAA rules (e.g. massively unnecessary runway intervals).
> I think demand would increase dramatically if customers didn’t have to plan ahead
I think customers won't be a fan of showing up and waiting 17 hours or whatever until the next flight has enough people to fly.
> This will definitely happen when the industry gets disrupted by cheap autonomous and electric mini-planes
Battery energy density is a looooong way from matching jet fuel, especially since the weight of the carried jet fuel doesn't have to include the oxygen to react with. And smaller planes are less efficient. I don't see this happening.
Sure. Inter-city electric is a no-go. Autonomous, however, is way past due, and the price of aircraft could easily drop by an order of magnitude. That means an oversupply of planes waiting for passengers. Anything that grows addressable passenger demand above the lowered cost basis will take over the industry.
Except there won’t be money available when they ask for it. When the dollar collapses after the Fed cuts rates, the interest rate will rise very high. The government will be forced to cut spending, and there will be no bailouts this time.
If you doomsay about everything that could possibly cause a crisis, you may eventually be right about one of them causing a crisis. Does it make their articles in 2018 about how the economy has about to collapse more accurate?
>When the dollar collapses after the Fed cuts rates, the interest rate will rise very high.
As long as the dollar denominated debt outstanding continues to dwarf the amount of dollars in circulation (claims on future dollars far exceeds the amount of dollars that exist), I don't see the dollar collapsing. Interest rates can also rise due to credit risk. Fake interest rates set by FRBNY cant fix credit risk, they cant make corporations/goverments with severely stressed/ no cash-flow solvent.
> The government will be forced to cut spending
This is the usually the opposite that happens during credit busts, they increase deficits. If you doubt a governments ability to generate cashflow, then one should worry.
> and there will be no bailouts this time.
For whom? Some banks merely have to go to the discount window and keep rolling over their loan with any illiquid asset they have as collateral with FRBNY, JPM is doing this now[0].
A few other banks[1] can go to the FRBNY repo market for either a daily/term bailout with their rehypothicated UST/MBS collateral at fake interest rates.
I'd be more worried about the corporates (and the assets they may be holding that will have to get liquidated) who were engaging in bank like activities without the access to these facilities.
The airlines that are stockpiling capacity at our expense will come hat in hand for a bailout at our expense.
Yep. The same airlines that today are crying because of their "razor-thin margins" are the same ones that recorded billions of dollars in profit just a few months ago.
Ironic. I had heard tales of the old Soviet Union about trains running empty to fill distance quotas. It was presented as the ultimate proof of how messed up their system was.
In authoritarian states you frequently get situations where you're punished for not meeting certain bureaucratic metrics. For example, in China word is factory output is used as a proxy for productivity, so they're allegedly running factories without producing anything just to raise the power bill to appear productive.
Face is ingrained in Chinese culture partly because in an authoritarian state where your behavior must fall within rigidly defined qualitative and quantitative metrics, appearances are everything.
The American model for government funding is also a bit messed up ( at least what I remember from high school civics in the 1980s) where each department must spend what they are allocated or the department is guaranteed to get less money in the next fiscal year budget. I could be wrong but this creates a disincentive for saving money as most states and the federal government work on the same model.
It seems reasonable at first: if you weren't able to spend all the money you've got that means you've got too much of them. But you're right, that does create the incentive to needlesly spend.
Also, it is not limited to gorvernment: a Director in a Fortune 100 company that I'm working for right now is buying 40 16"
MacBook Pros for a team of .Net developers, because:
a) he had spare $100k in his budget.
b) it is easier to get VPN access approved for external contractors if they are using Macs
Current client wrote-in a stupid policy into intermediate vendor's contract that I have to use a Mac.
Nothing, absolutely nothing that is used in the company is related to the Mac. In fact, a lot of the tools we use would work better on Windows, and many people use Windows. The Macs for direct employees are used as perks.
As much as I've seen people complain about use-it-or-lose-it I've never actually seen an alternative that seems to work better for the amount of effort put into it
AIUI, it isn't exactly that it is enshrined into law that if you don't use it, you won't get it next year. It's just that there's never enough money to give everybody what they want, and not using all your money is a primo-grade signal that you don't need it, so of course you lose it. I believe you'll find this isn't an "American" phenomenon at all.
With some kind of award for not using all your money, it's hard to justify it for the people spending it... and "rewards for not spending all the money" are also really easy to cut out of next year's budget...
Certain patterns just naturally emerge with budgeting at scale, and if you've got some brilliant idea about how to fix it I can assure you that with just some minimum business acumen you can become a very rich person.
so.. if I don't need $100 i.e. I can do all my work with $80. Then my budget for next year becomes 80. You have given a scenario where budget of one team is decreased.
So, where did that $20 go ? To some other team, right ?
What about the reverse scenario? If I cannot do all my work with $80, I ask for more, say $100. Then my budget for next year becomes 100.
I don't see a problem with this. Budgets are fluid and change from year to year. Because I saved the company $20 in year 6, I will be rewarded with $20 in year 7 if I ask for it.
It's actually even less efficient than that. On top of keeping spending high, every project that involves contractors must have at least 3 bidders [0]. So for smaller projects people often spend substantially more time modifying contract details and finding contractors than the project itself takes. (By playing with project requirements, you can increase the pool of contractors). At an unnamed national lab, 6-week projects typically took 6-18 months of hunting down contractors until the start of work.
[0] not sure if this is still true, but certainly was in 80s-early 00s.
It was common that quotas were created by leadership who were often not close enough to the need to properly design the quota. That got passed down through multiple layers of management, all of whom could care less if the trains were full and were more interested in meeting the quota so could advance in their career.
People complain about unethical behavior in capitalist systems, but that's not a property of capitalism, that's a property of humans.
Same reason large corporations do redundant things and ignore their own best interests; bureaucratic hierarchies just don't scale well. A few layers removed from object reality, all that's left is loyalty politics and meeting your metrics.
I think communism can work, but the Soviet version with a giant state-controlled bureaucracy can't.
This is just another instance of the classic Soviet problem. A scarce resource is allocated by a government bureaucracy instead of a market, and the bureaucracy's design is imperfect, so nonsensical incentives fall out of it sometimes.
There's no irony. It's just kind of quirky for the West to manage flight/landing slots this way, instead of an auction (as the FCC does with spectrum).
To be fair, the auction model doesn't seem to work well when it comes to spectrum. What you end up with is a few big players delivering awful service while having enough money to outbid anyone, essentially preventing any competitor from ever breaking into the market to provide better service.
I would consider that an anti-trust problem, not an scarce-resource-allocation-system problem. The concept of an auction is predicated on having a liquid market—both that there are replacement goods available from other sellers, and that there are many buyers "at the top" with enough bidding power to compete fairly between themselves, such that they'll "pick their battles" by buying only what matters most to them.
The government can only give away slices of a fixed resource for so long. Eventually it runs out.
You literally can't start an airline from scratch. You have to first buy one that already has landing slots, then figure out how to dispose of the planes/staff/operations/debts that come with the package. Is that really better for competition than just having a market for slots?
Only for them to immediately be gobbled up by 1 or 2 big players.
How about a market for destinations? Oh wait that will be immediately controlled by one player.
Hm it seems consolidation is the natural path we prefer towards solving a problem. Why not let the bureaucracy manage it then?
Give up the pretense. This is all market capture of finance by low effort grifters who will throw a fit when they don’t get privilege for nothing but being an obnoxious talking head.
Freakonomics did a good episode related to this [1]
One of the takeaways was that as organizations grow they become more married to spending resources to maintain their existing system which comes at the cost of innovation. So they “innovate” by buying other firms/ideas and it eventually leads to consolidation of an industry.
They won’t be gobbled up if they aren’t offering a better service. Then that just clears the way for yet another competitor to come in and offer better service again until the large airline improves enough to make entering the market unprofitable.
Big companies buying small companies is good. It’s a reward for improving the market. Big companies preventing smaller companies from even starting via government regulation (i.e. regulatory capture) is what’s bad.
Giving it to the government is just skipping to the worst possible outcome. Nobody has any incentive to compete.
> You literally can't start an airline from scratch.
Gonna need a citation on this one. I would guess the actual reason airlines are hard to start from scratch is the massive capital required, but would be interested in having this guess proven incorrect.
Porter Airlines in Canada (which presumably has a very similar regulatory regime) was started from scratch about 20 years ago.
* The parent comment didn't caveat "large airline".
* Porter is the third-largest airline in Canada. Canada has 10% of the population of the US, so our airlines will be accordingly smaller.
* American Airlines is the largest airline in North America [1], serves the entire country + international. Really not a reasonable comparison to a regional domestic airline.
> That speaks to the lack of airlines in Canada if the third largest has 74 max people and 29 planes.
No, it speaks to the population of Canada... Porter still comes in at 18th largest in North America [1]
(It might also be because each of the two large carriers, Air Canada and WestJet, has a number of subsidiaries/wholly owned sub brands which would each be larger than Porter - eg Air Canada Rouge, WestJet Encore)
> Porter Airlines appears to have started in an entirely unique regulatory regime, actually
I did a quick skim of that wiki article (skimmed a couple sections, ctrl+f'd for "regulat" and "monopoly"), but couldn't find anything about a unique regulatory regime. There has been regulatory issues with the Toronto Island Airport (where porter wants to extend the runway to allow jets to land, but no one* else wants this), but I don't see where they required a unique regulatory regime?
No one wanted it because it would have meant more flights. That's precisely my point. There is no such thing as new traffic capacity anymore. You can only take it from someone else.
> There is no such thing as new traffic capacity anymore. You can only take it from someone else.
JetBlue started in the late 90s, and according to the wiki [0], "was awarded 75 takeoff/landing slots".
Sunwing Airlines [1] started about 15 years ago, with departures from Toronto Pearson. They targeted the southern vacation niche. I don't know the details of the traffic capacity at Pearson, but they didn't get their landing slots by buying some other airline.
I'm not disagreeing with your comment about the limitations of dividing up a limited resource - many airports in North America are at capacity, and there's no room there for new competition to start up. But you followed it up with an absolute "You literally can't start an airline from scratch", which I took issue with because there are several examples that disprove it.
Porter tried to go around the problem by partnering with the government to revive a disused island airport, accessible only by ferry. Part of the deal was going to be a bridge.
The community organized vigorously against the prospect of new flights, and succeeded in kneecapping Porter by killing the bridge.
What I don't like is the DoD keeping the best 5G spectrum to themselves (3GHz-4Ghz) while the rest of the world is using it, putting our future lead in communiciations industry at risk.
Lead? Telecom in the US is an oligopoly, with most of the major spending backed by government grants. Many areas are still supported by rotting copper and old 2g/3g towers because there's no incentive for providers to upgrade them. Unless you meant something else by "communications industry".
What's keeping our "lead in communications industry" at risk (and has been for decades) is the broken pricing model for mobile data. With that model, whether you have 4G, 5G or 9G wouldn't change anything because the limiting factor is never the speed but the usage quotas.
To be fair, it seems to work just fine. I can choose from at least 5 carriers in my city for cell phones alone, multiple of which offer unlimited data now. That’s only cell phone spectrum.
For other spectrum, it’s easy enough to acquire spectrum that microwave ISPs are able to get into local markets with very limited capital. I graduated with 2 folks who started an ISP together and the spectrum was cheaper than the hardware to transmit on it at the time.
I have seen multiple times cases where an establishment has parking spaces outside that are not paying to that establishment. The customer is basically tricked into parking on spots that seem to be free for customers, but is in fact not: those are further away. The only reason it seems is that this gives more fines, and more profit to the parking company. Neither customer nor the establishment benefit from this at all.
Or because there are no competitors. Allocating parking slots based only on bidding has the potential for one company to become a monopoly by purchasing all the slots, allowing them to charge ridiculous prices while providing bad service.
I used to work for a consulting company and heard similar stories for IT budgets. Companies nearing the end of financial year with budget to spare would scramble to get more consultants in to spend the remainder, otherwise the following year their budget would be scaled back to whatever they actually spent.
Don't forget that a company internally is run like a Soviet Style planned economy. 5 year plans, no way for people on the ground to adjust plans, inflexible leadership. I could also mention things like total disconnect between communication from leadership and reality or motivational posters. It's all there.
It's not surprising they create similar behaviors.
And yet, all of these companies that run like command economies have collectively out-competed all the companies that run like market economies. We know this, because the latter... Don't really exist. No company of any note operates like one.
Does that imply that command economies are actually more efficient than market ones?
The problem of command economies aren't related to being command economies, they tend to be related to communications.
A market is a form of communication, with various forces that are supposed to balance themselves. Many of them actually outside of market (the supposed anti-monopoly aspect heavily depends on externalities preventing concentration, like slow travel/shipping, non trade barriers, etc.)
I've thought about this for different reasons lately and concluded that companies that operate internally as a market would be vulnerable to second system syndrome, ie just becoming a poor imitation of the actual market. You could argue that some (rare) companies that act like markets are those with a safe income stream that insulate them from financial pressures enough to create a market of a second sort. The only sort I can think of is any sort of market of ideas where employees are reasonably free to invest their time as they see fit. Something like Google's 20% time (at least in the old days when that was apparently still a thing) or Valve, where they say the reason desks are on wheels is so you can move to join the team you think is doing the most important work. Whether that's how it works out is another matter...
It might be an issue of scale. Centralized control allows for faster decision making and exploitation of opportunity that outweighs inefficient resource allocation when you're a small organization, but once you get to a certain scale it's simply not feasible to make all the decisions at the top due to how opaque the view from the top becomes. Once you get to the largest of multinational companies, they try to mimic the competition in a market economy by using metrics to allocating more resources to profitable divisions.
That might also explain why centralized command was so common throughout history. The political entities of the past were much smaller than today and could be centrally organized, but they competed against their neighbors for resources in a regional market. It's only in the past 2 centuries that political entities have become large enough to encompass entire markets within themselves and have had to step back and let the market do the large scale economic allocation that they've become too large to do effectively.
The institution of rules that aren't suitable when unforeseen conditions arise isn't a purely government thing. It happens in private organizations all the time.
"Video evidence. In #Wenzhou, factory manager told they must consume 3000 kWh electricity by midnight, as the authorities use electricity usage as a criterion of re-open rate. Even this factory has not re-opened for lack of supply and manpower due to #COVID2019, manager had to.."
"Argh. A Wenzhou-based factory owner tells how district officials are telling him his closed factory (he has no workers) must turn on the machines and consume electricity or he’ll get “a visit”. Higher ups are watching the electricity numbers."
I wonder what this will do to the method of estimating Chinas economy via Electricity/Coal usage. What is next on the line that isn't being actively tampered with.
Im pretty sure that before this electricity usage was not the primary measure of productivity. I think the news is that this Is a new "easy" way of attemting to force ramp up
I think what he is trying to say is that the metrics were meant be a check, a measure of knowing, for whether we are going to meet our vision/target.
Just yesterday, at our dev team at a trading firm, we went through our OKR review for the quarter. The metrics were the target yesterday. It was all about clicking those check boxes and not about delivering the bigger picture.
No, they are supposed to measure progress in one dimension towards a target. They are often misused, but it’s not necessary to conflate the improper use case with the original intent.
They used the wrong metric, but an easy one to measure. The right metrics (are the factories producing things correctly? Are those making it to consumers? Are the consumers paying for them?) are too difficult to measure discretely. And so we end up here.
Reminds me of "the 'return 200' health-check endpoint is working; how can the site be down?"
You need to look up China mining operations. They pop up “data centers” anywhere there is free or cheap electricity. Sounds like a perfect operation for factories that must use electricity
Not also in the US. They're entirely different situations with entirely different goals by the people doing it.
Microsoft was trying to avoid a penalty for itself, one company.
The businesses in China (not all obviously) are conspiring with the bureaucracy to fake economic activity on a massive scale, to put on a veneer for the outside world. This is about appearances to the world, because China is very scared right now.
You're literally just agreeing with me, but in a condescending tone. My point is that not literally every Chinese person is "conspiring" to "fake" a "veneer" because they're "scared", because people != government. It's GP who needs to learn the difference.
I think the thrust of the comment above was that this is not a class of behavior restricted to China or to communist states.
Microsoft was secretly wasting electricity to avoid fines -- gaming an economic system designed to encourage efficiency under bureaucrat-designed rules that make sense within market capitalism, and Chinese companies are secretly wasting electricity to avoid a loss in confidence, ie. business, under the direction of bureaucrats -- gaming a larger economic system designed for efficiency, but here specifically for efficiency of labor to product spend, versus efficiency of product sale.
Curiously, the need to maintain this appearance of productivity is only likely for the sake of capitalist clients who buy the services -- c.f. the classic entrepreneurial slogan, "fake it till you make it!"
Some people are saying in response to this, "only under communism", and in the specifics of who and how and why they may be correct, but waste to satisfy bureaucratic systems is not unique to any economic or social system. People are going to juke the stats under every regime, at all scales, under all circumstances.
This is similar, but different. We have an system that works in the normal case, that is struggling with an exceptional case. Could it be improved? Sure. Is it a sign that western civilization is doomed? No.
I heard they were running heavily loaded (= not empty) trains back and forth without any purpose other than meeting ton-km quotas, but I wasn't able to find a source...
I read that some types of track require stressing every so often otherwise it loses its properties (in context of Polish railway laying new track then not running heavy trains on it and in consequence track had to be replaced again).
A slightly related issue is that airline pilots need to fly certain amount of time/operations to remain in current training.
Part of the big problem with reactivating MiG-29 squadrons in Poland after the "aftermarket mods" resulted in grounding was that even the instructors lost the legal right to examine training level.
I think I recall reading not too long ago about how in isolated cases recently, the price of electricity can go negative. This presumably would mean that people are being paid to waste it. But really, they're being paid to help keep the grid stable and running.
Most utilities don't have any way to store large amounts of energy, and it's non trivial to start up most energy generation. To me the grid looks like something between wizardry and a house of cards.
Any large organisation will tend to run into exactly the same issues that the socialist centrally planned economies did. Centrally planning an economy simply can’t work and the inefficiency gets worse with scale. They have the politburo (the executive team), and apparatchiks (middle management). Large organisations are just a smaller version of a centrally planned economy.
Market forces have very limited opportunity to influence the micro-level internal resource allocation decisions of a large organisation. There’s some things you can to do mitigate this within an organisation, but having efficiency decrease with organisational complexity and scale is inevitable. There’s only two reasons I can see that this doesn’t devolve into soviet style catastrophe. Firstly, some of the lost efficiency is offset by the economies of scale. Secondly, if an organisation becomes too inefficient, their market position can (usually) be usurped by competition. Shareholders can also fire insufficiently competent management, but usually not before the damage is done, and they can’t exactly guarantee the replacements will be any better.
I mean the norm of flying empty planes when there is no demand. If there is no demand to travel but planes fly regardless how do we ever beat climate change. Does that make more sense?
This is just our typical air travel fuel usage. These flights are the norm. Our solution to climate change can't be to count on a black swan virus pandemic to reduce global demand.
Busses run empty at odd hours, because its necessary to have a regular schedule to keep customers? Not so crazy...its a fact of scheduled transportation.
Does anyone have any reliable information on the risks of flying right now? I took a couple flights this week, seemed to be status quo. People of all ages flying with no one practicing any special hygiene measures.
Are you referring to the risk of getting infected on board? I've read about a German case where a passenger was found to be infected. They tried to trace everyone who sat within 2 rows of him. Not sure if this is a very thorough approach and really represents the "danger zone". Might even depend on the plane model and quality of air conditioning.
This formula gives you the odds someone on a plane is infected:
1-(1-IR)^N
N is the number of seats.
IR is the infection rate.
Takes a lot of assumptions to get the odds someone on the plane is infected, and even more to get the answer you want. The biggest assumption would be how likely you are to get the virus just because someone on your plane has it.
You could replace the N with total number of people at an airport. Again, not that helpful because it takes a lot of assumptions and only gives you half the picture.
The other thing to note is that an oil price crash is going on. It had started before the outbreak, was accelerated because of it, and accelerated further by the OPEC+ talks failing yesterday.
Cheaper aviation fuel will incentivize airlines to keep their planes in the sky.
The oddity I've personally had, is I had been planning a summer trip to Germany for the Euro 2020 tournament (assuming they don't get cancelled.) However, I hadn't bought plane tickets yet. Due to the virus, I figured I might get cheaper rates. The opposite has been true. The round trip went from ~$1200 up to ~$1800 in just a month or two. I'm still tracking flights, but so far I haven't seen a good dip in pricing. I don't know if airline pricing isn't reacting to supply/demand, or if there hasn't been that big of a dip in US to Europe passenger traffic.
I've also seen this! I went casually looking at the route I fly most often (but I'm not flying myself at the moment) and both economy and business fares seem to have gone up very substantially.
What's going on?
The airlines have changed their rebooking policy to make it much more lenient for the next few months. Maybe this is making the tickets more valuable and pushing up the price?
I think that if passenger numbers go down and fixed costs stay the same, and if passengers aren't very price sensitive (their company is paying their fare) then it makes sense to raise prices.
The trouble is that this will drive out the holiday flyers and leave them dependent on business flyers whose companies can turn off the tap on a whim. And will have every incentive, and excuse, to do so.
I don't think that's a joke - I think that's exactly what's happening.
It's only going to work for customers who have to fly - which is a fairly small number. So instead of making up a shortfall, it's more likely to be a money-losing strategy.
I checked our local carrier and prices are down a lot. I was considering a flight at the end of April and prices are between a half and a third of what they were when I checked them in January.
That's opposite of my experience, although I am not flying until September. I booked a flight from JFK to Athens and back for around $400. The day after I booked (earlier this week) alerts were almost 2x as high. I wonder if I just got lucky.
You might be buying too far out. People are assuming the virus will be contained by then.
I just looked at prices for a round trip ticket from San Francisco to Montreal for Monday. It was $389. I've never seen such a low price for buying two days in advance.
Prices cycle up and down when you are that far in advance. Lately airlines are changing rates multiple times per day and using ML to maximize their profit. It's much harder to predict when to buy. Many articles about ideal days and months to purchase are becoming obsolete.
United States has only 3 Class 3 Airports (same number as Poland), only one of them on official IATA list. Unless you fly to/from/through NYC or D.C., your domestic flight doesn't touch any slot, and thus avoids the reason for flying empty.
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[ 3.1 ms ] story [ 316 ms ] threadDoes it?! Why would you ever want to motivate an airline to fly just for the sake of it? Whether there's a pandemic or not it seems like a bad thing.
EDIT: I found the EU page outlining the regulation here: https://ec.europa.eu/transport/modes/air/airports/slots_en
EDIT 2: This appears to be a global practice: https://www.iata.org/en/policy/slots/
Internationally the rule is that you can have "slots" if your airport is busy enough. IATA classifies airports into three levels with only the busiest class 3 "Co-ordinated" airports having slots. A relatively small number of generally very globally important airports qualify, very few of them in the US - but of course these seem notable because you've heard of them. My local airport (which is a ghost town because the airline that ran most flights from there recently collapsed) does not have slots. If you had told them last year you wanted to take off and land six planes a day there they'd just say that sounds great, let us know when to expect them and where to send the bills. London Heathrow on the other hand obviously doesn't have capacity to just have you show up with six extra planes and not cause chaos.
But, the international rule doesn't say how you get slots. IATA organises conferences to discuss strategy, but it's completely legal for, say, Russia to decide that all slots in its major airports are for Russian companies. The EU has its own regulations which say if you're a EU member state with an airport that gets slots, you must meet certain EU criteria that aim to create a competitive marketplace, keep unsafe carriers out of European airspace and make everything efficient.
The UK implements those regulations through a private company because of course it does the Tories (party presently in government) love private companies, and that's what Airport Coordination Limited is for.
Anyway, the EU level regulation means you can't "just" buy more slots, you need to qualify to even be allowed them. If Big Airline A buys Small Airline B, it would not be unusual for the rules to say that too bad, the resulting company still named Big Airline A doesn't get all the resulting slots, some of them must be auctioned off to competitors.
Better yet, institute a proper carbon tax and either a carefully thought-out market for slots and/or fines.
- The collected fine will not be used to undo the damage to the market/competitors.
- The fine won't ever exceed the profits gained by the company because of the infringement. Or else the company will contest it as unfair.
That's why you read "EU fines Google with 5 billion" and Google doesn't really care. They will go through the moves of pretending they care, maybe try to shave off part of the fine, but at the end of the day, it's business as usual.
5 billion might be an acceptable loss for Google. 50 billion might not be.
You not taking off means someone else can't land.
No, there aren't for airliners. Most are in the air at any given time.
There's boneyards and mfg. airports, and that's about it.
A possibility would be a non-operating airport in a friendly country - thinking about the new Berlin airport.
Boeing likely finally stopped making the 737 MAX after they ran out of parking space, which forced a decision.
To park even one airliner long-term requires prior permission and monthly payments.
Slots are used to regulate congestion in normal conditions.
Not if the 737 MAXes are hogging all those spots, of course.
This would lead to them getting fewer customers as they got a name for awful reliability, like Alaska Airlines have a reputation for being assholes from top to bottom, or United have a reputation for destroying musical instruments.
If you want to more directly disincentivise cancelling flights when people have booked already set a minimum payment to the affected passengers, as in the V EU.
As a frequent flyer on both airlines, I'm not sure that either of those reputations exist, at least I've never heard them. I vaguely remember some incident with a broken guitar (?) But I couldn't tell you which airline.
https://en.wikipedia.org/wiki/United_Breaks_Guitars
United Breaks Guitars
What they do do though is hold onto slots at congested airports that they perhaps don't have a use for until a few weeks/months down the line.
If you want a slot to go to its most valuable use sell it to the entity that values it most, whether permanently or by auctioning it yearly.
The same concept easily applies to airline slots, an established player that is at capacity on how many slots they can profitably use still has some incentive to keep other airlines out, because any new players will be tapping into their existing market.
If you can afford a 5 year lease on a slot you won't actively use, you're still stifling the competition. And since EU prohibits EU-governments to subsidy airlines, this paves the way for non-EU countries with deep pockets to eventually control the EU air travel market.
The airlines bought them. They're property. Just like the car dealer can't take your car back if you're not using it.
The big airlines already do that. It's why the smaller airlines are forced into the smaller, outlying airports.
"Ok, we're offering a $300 voucher to the airline willing to give up this slot... $300... ok, United, we're bumping you, you can pick up your voucher at the information desk."
> You can probably personally blame me, at least to some degree, for the fact that United pulled out. When I was at American Airlines, we were consciously trying to push United out of JFK. That was our goal.
Once you give up those slots at an airport like JFK, good luck getting them back.
It's not like having those planes full of people results in less environmental damage.
The fact that slots are not available to newcomers is a valuable moat for incumbents.
https://iea.org.uk/in-the-media/media-coverage/put-airport-s...
The first step on this long path is raising public awareness, which this article is doing.
But hey: “For Democrats, climate change is now one of the two most important issues in politics, according to a new poll.”
https://www.theatlantic.com/science/archive/2020/02/poll-us-...
Used to be you couldn't even incorporate unless you could make the case that granting the writ of incorporation would have a tangible benefit to the community granting it at large.
It was not a right, but rather a privilege. While it is rarer to see a refusal nowadays, it is still a possibility, and the corporate death sentence is a thing; even if we haven't exercised it in a long while.
https://en.m.wikipedia.org/wiki/Corporation
https://en.m.wikipedia.org/wiki/Judicial_dissolution
Also, you are exhibiting all the signs of a troll. Please reconsider the way you are presenting your opinions.
Why would anyone want any organization to exist that on balance harms society? Profitability is one constraint that promotes welfare, but it's far from the only one.
Maybe that's where we need to get to, all jet fuel based air journeys stopping, but it's not going to please the many rich people - who control the regulations - who wish to use air travel.
If we could properly price in externalities then yes, we'd probably have a better system.
There is a proviso to that, should monetary wealth dictate access to resources like 'ability of the planet to sink carbon' or should that be a separate thing, like access to water. Shouldn't we share such natural resources rather than hand them over to those who already own everything else? In which case, you'd need to price in externalities, and pay to acquire carbon credits (or whatever) if they were available: under such a system people might choose to not "spend" their share of carbon credits in order to faster reduce planetary decline.
I think that would be a sensible change.
Unless people are willing to take a massive decrease in quality of life to fund such a system, it will never happen.
In fact, the wealthier you are, the less you actually have to work.
The people who are working for a wage are the ones who are working to live, and the wealthiest don't have to do that. Often, people who work the hardest make the least.
I reject your premise that that people will have a reduced quality of life. These taxes will go to public services and increase the quality of life for the masses instead of for the few.
Take away any return on capital and that capital goes elsewhere.
Currently, this capital is going to the überwealthy where it remains there and is hoarded there, providing no "value" to society.
No wealthy people are keeping their cash under their mattress. It’s actively invested and providing capital for future growth.
Yes, hoarded. You're really bringing up Amazon?
You're talking about the same Amazon that paid no federal taxes last year? I paid more taxes than Amazon did. The same Amazon that encourages a work environment where their warehouse employees wear diapers [0]? The same Amazon that forces its employees to work around a dead body [1]?
Amazon itself started by exploiting USPS.
Amazon is a leach on society. Amazon gets tax breaks to build warehouses where their employees face horrendous working conditions. Tax money that could be used to provide better services not only to their workers, but to the rest of us.. You know, real value.
[0]: https://www.theverge.com/2018/4/16/17243026/amazon-warehouse...
[1]: https://www.theguardian.com/technology/2019/oct/17/amazon-wa...
So that means Amazon didn’t spend any money on income taxes in 2018? No. Even though Amazon’s “current provision” number for 2018 was negative for federal taxes, Amazon said it made income-tax payments totaling $1.2 billion during that year, more than from 2011 through 2016 combined.
[1]https://www.wsj.com/articles/does-amazon-really-pay-no-taxes...
There's no reason to have half of the workforce participating in work that makes them seem busy but does not have any real usefulness.
That ship sailed 70 years ago. We could maybe go back to the brief era of limited international trade in the inter-war era, aka the Great Depression, but it won't be fast or easy.
Doing that just sets the stage for a monopoly to form, just add time. The price war should be won by the airline that can most efficiently manage resources and adapt different business models to provide stable service with fewer inputs. That is what the Market is purportedly for, no?
Consolidation is not good. High variety distributes society's eggs across many baskets, creating fault tolerance. Consolidation leaves us one black Swan away from a potentially unrecoverable calamity.
And then what? Is that not a monopoly? I know the classic response to this is newcomers will come up with lower prices, but what if there's economy of scale, and newcomers just can't compete?
Doesn't change that the union screws over the new guys in favor of the more senior members.
Or is that not really a factor here?
[0] https://www.wsj.com/articles/port-of-los-angeles-sees-corona...
You can keep your slot and not fly the plane, as long as you pay some large percentage* of the cost of each ghost trip to the organisation that'd resell your slot. Your 'flight' must be fully crewed.
That way the carbon isn't emitted, (some) jobs are kept secure, and the airline recoups a little of the money they would have otherwise lost.
> (some) jobs are kept secure
"Paying people" seems like a good way to define "crewed"
A pilot type rated in an A320 isn't necessarily going to have a current type rating in a Dash-8 or ERJ/CRJ. (This is both a regulatory and an actual safety hurdle.)
(And of course, many of the trans-Atlantic routes can't be covered by significantly smaller equipment, though I'd expect that those routes are not flying literally empty anyway.)
My father was a Navy pilot during the Cold War. He told me fuel budgets were based on the last period’s consumption. If their actual use was below what was considered their predicted amount, they would put planes on a schedule where they would take off fully loaded, fly to 30k (or whatever made sense) and dump all of their fuel into the atmosphere.
They would then land, empty, and repeat the process.
That was a shitload of avgas dropped into the atmosphere but hey, military bureaucracy...
I think customers won't be a fan of showing up and waiting 17 hours or whatever until the next flight has enough people to fly.
> This will definitely happen when the industry gets disrupted by cheap autonomous and electric mini-planes
Battery energy density is a looooong way from matching jet fuel, especially since the weight of the carried jet fuel doesn't have to include the oxygen to react with. And smaller planes are less efficient. I don't see this happening.
The fact that ZH speculates about conspiracies does not mean that everything on their site is BS.
CNN and Fox also misrepresent news regularly - that doesn't mean they have nothing useful to report.
It's exactly that reason why they are a useless source for information.
I do follow zerohedge since they often report on things others won't, but I take their analysis with a grain of salt.
As long as the dollar denominated debt outstanding continues to dwarf the amount of dollars in circulation (claims on future dollars far exceeds the amount of dollars that exist), I don't see the dollar collapsing. Interest rates can also rise due to credit risk. Fake interest rates set by FRBNY cant fix credit risk, they cant make corporations/goverments with severely stressed/ no cash-flow solvent.
> The government will be forced to cut spending
This is the usually the opposite that happens during credit busts, they increase deficits. If you doubt a governments ability to generate cashflow, then one should worry.
> and there will be no bailouts this time.
For whom? Some banks merely have to go to the discount window and keep rolling over their loan with any illiquid asset they have as collateral with FRBNY, JPM is doing this now[0]. A few other banks[1] can go to the FRBNY repo market for either a daily/term bailout with their rehypothicated UST/MBS collateral at fake interest rates.
I'd be more worried about the corporates (and the assets they may be holding that will have to get liquidated) who were engaging in bank like activities without the access to these facilities.
[0] https://www.bloomberg.com/news/articles/2020-02-25/jpmorgan-...
[1] https://www.newyorkfed.org/markets/primarydealers
Yep. The same airlines that today are crying because of their "razor-thin margins" are the same ones that recorded billions of dollars in profit just a few months ago.
Evey yearly numbers don't tell the full story - you have to look at multi-year trends in profitability.
...and, indeed, they aren't great for the industry as a whole. Most nations operate a national carrier at a loss.
You need a ton of signals to actually interpret the condition of an airline.
Began charging for basic provisions that used to be included in the ticket price
Began cramming people into narrower and more uncomfortable seats
Added yet more fees
Reduced the frequency of flights on many routes so planes are more crowded
Fought to keep foreign carriers(competition) out of the domestic market
Face is ingrained in Chinese culture partly because in an authoritarian state where your behavior must fall within rigidly defined qualitative and quantitative metrics, appearances are everything.
Also, it is not limited to gorvernment: a Director in a Fortune 100 company that I'm working for right now is buying 40 16" MacBook Pros for a team of .Net developers, because:
a) he had spare $100k in his budget.
b) it is easier to get VPN access approved for external contractors if they are using Macs
Nothing, absolutely nothing that is used in the company is related to the Mac. In fact, a lot of the tools we use would work better on Windows, and many people use Windows. The Macs for direct employees are used as perks.
With some kind of award for not using all your money, it's hard to justify it for the people spending it... and "rewards for not spending all the money" are also really easy to cut out of next year's budget...
Certain patterns just naturally emerge with budgeting at scale, and if you've got some brilliant idea about how to fix it I can assure you that with just some minimum business acumen you can become a very rich person.
So, where did that $20 go ? To some other team, right ?
What about the reverse scenario? If I cannot do all my work with $80, I ask for more, say $100. Then my budget for next year becomes 100.
I don't see a problem with this. Budgets are fluid and change from year to year. Because I saved the company $20 in year 6, I will be rewarded with $20 in year 7 if I ask for it.
[0] not sure if this is still true, but certainly was in 80s-early 00s.
It happens often enough in corporations. Which arguably are authoritarian... (with rare exceptions).
It was common that quotas were created by leadership who were often not close enough to the need to properly design the quota. That got passed down through multiple layers of management, all of whom could care less if the trains were full and were more interested in meeting the quota so could advance in their career.
People complain about unethical behavior in capitalist systems, but that's not a property of capitalism, that's a property of humans.
I hope this pun doesn't fly over everyone's heads
I think communism can work, but the Soviet version with a giant state-controlled bureaucracy can't.
There's no irony. It's just kind of quirky for the West to manage flight/landing slots this way, instead of an auction (as the FCC does with spectrum).
You literally can't start an airline from scratch. You have to first buy one that already has landing slots, then figure out how to dispose of the planes/staff/operations/debts that come with the package. Is that really better for competition than just having a market for slots?
How about a market for destinations? Oh wait that will be immediately controlled by one player.
Hm it seems consolidation is the natural path we prefer towards solving a problem. Why not let the bureaucracy manage it then?
Give up the pretense. This is all market capture of finance by low effort grifters who will throw a fit when they don’t get privilege for nothing but being an obnoxious talking head.
According to[1], the average number of competitors per US domestic city-pair is 3.5 and has been increasing over the last few decades.
[1] http://darinlee.net/pdfs/airline_competition.pdf
One of the takeaways was that as organizations grow they become more married to spending resources to maintain their existing system which comes at the cost of innovation. So they “innovate” by buying other firms/ideas and it eventually leads to consolidation of an industry.
[1] https://freakonomics.com/podcast/in-praise-of-maintenance/
Big companies buying small companies is good. It’s a reward for improving the market. Big companies preventing smaller companies from even starting via government regulation (i.e. regulatory capture) is what’s bad.
Giving it to the government is just skipping to the worst possible outcome. Nobody has any incentive to compete.
Gonna need a citation on this one. I would guess the actual reason airlines are hard to start from scratch is the massive capital required, but would be interested in having this guess proven incorrect.
Porter Airlines in Canada (which presumably has a very similar regulatory regime) was started from scratch about 20 years ago.
* The parent comment didn't caveat "large airline".
* Porter is the third-largest airline in Canada. Canada has 10% of the population of the US, so our airlines will be accordingly smaller.
* American Airlines is the largest airline in North America [1], serves the entire country + international. Really not a reasonable comparison to a regional domestic airline.
[1] https://en.wikipedia.org/wiki/List_of_largest_airlines_in_No...
No, it speaks to the population of Canada... Porter still comes in at 18th largest in North America [1]
(It might also be because each of the two large carriers, Air Canada and WestJet, has a number of subsidiaries/wholly owned sub brands which would each be larger than Porter - eg Air Canada Rouge, WestJet Encore)
[1] https://en.wikipedia.org/wiki/List_of_largest_airlines_in_No...
I did a quick skim of that wiki article (skimmed a couple sections, ctrl+f'd for "regulat" and "monopoly"), but couldn't find anything about a unique regulatory regime. There has been regulatory issues with the Toronto Island Airport (where porter wants to extend the runway to allow jets to land, but no one* else wants this), but I don't see where they required a unique regulatory regime?
JetBlue started in the late 90s, and according to the wiki [0], "was awarded 75 takeoff/landing slots".
Sunwing Airlines [1] started about 15 years ago, with departures from Toronto Pearson. They targeted the southern vacation niche. I don't know the details of the traffic capacity at Pearson, but they didn't get their landing slots by buying some other airline.
I'm not disagreeing with your comment about the limitations of dividing up a limited resource - many airports in North America are at capacity, and there's no room there for new competition to start up. But you followed it up with an absolute "You literally can't start an airline from scratch", which I took issue with because there are several examples that disprove it.
[0] https://en.wikipedia.org/wiki/JetBlue
[1] https://en.wikipedia.org/wiki/Sunwing_Airlines
The community organized vigorously against the prospect of new flights, and succeeded in kneecapping Porter by killing the bridge.
https://en.wikipedia.org/wiki/Porter_Airlines#History
Australia's internet sucks because the conservative government nerfed the NBN plan.
For other spectrum, it’s easy enough to acquire spectrum that microwave ISPs are able to get into local markets with very limited capital. I graduated with 2 folks who started an ISP together and the spectrum was cheaper than the hardware to transmit on it at the time.
Slots at Heathrow can be sold for tens of millions of pounds.
https://simpleflying.com/flybe-heathrow-slots/
The proof is the fact that if they charged $100 per hour, they'd have no customers.
It's not surprising they create similar behaviors.
Does that imply that command economies are actually more efficient than market ones?
A market is a form of communication, with various forces that are supposed to balance themselves. Many of them actually outside of market (the supposed anti-monopoly aspect heavily depends on externalities preventing concentration, like slow travel/shipping, non trade barriers, etc.)
I think it's probably similar to politics. A well-run dictatorship can do better than a democracy but usually dictatorships deteriorate after a while.
Corporate leaders get sacked by the board rather quickly if they completely screw up. Most of them also don't blatantly steal from their firm.
Regime change in governments happens much slowly.
That might also explain why centralized command was so common throughout history. The political entities of the past were much smaller than today and could be centrally organized, but they competed against their neighbors for resources in a regional market. It's only in the past 2 centuries that political entities have become large enough to encompass entire markets within themselves and have had to step back and let the market do the large scale economic allocation that they've become too large to do effectively.
"Local companies and officials are fraudulently boosting electricity consumption and other metrics in order to meet tough new back-to-work targets"
https://asia.nikkei.com/Spotlight/Caixin/Lights-go-on-but-no...
"Video evidence. In #Wenzhou, factory manager told they must consume 3000 kWh electricity by midnight, as the authorities use electricity usage as a criterion of re-open rate. Even this factory has not re-opened for lack of supply and manpower due to #COVID2019, manager had to.."
https://twitter.com/jenniferatntd/status/1233793672497573894
"Argh. A Wenzhou-based factory owner tells how district officials are telling him his closed factory (he has no workers) must turn on the machines and consume electricity or he’ll get “a visit”. Higher ups are watching the electricity numbers."
https://twitter.com/You_Shu_China/status/1233535925185122305
"Empty trains on the modern Silk Road: when Belt and Road interests don’t align"
https://pandapawdragonclaw.blog/2019/08/23/empty-trains-on-t...
I think the causality goes the other way. I think that they are doing this because that is how their economy is measured.
Just yesterday, at our dev team at a trading firm, we went through our OKR review for the quarter. The metrics were the target yesterday. It was all about clicking those check boxes and not about delivering the bigger picture.
https://en.m.wikipedia.org/wiki/Goodhart%27s_law
Reminds me of "the 'return 200' health-check endpoint is working; how can the site be down?"
Microsoft was trying to avoid a penalty for itself, one company.
The businesses in China (not all obviously) are conspiring with the bureaucracy to fake economic activity on a massive scale, to put on a veneer for the outside world. This is about appearances to the world, because China is very scared right now.
People in China are actual human beings, not part of a hive mind. They react to individual incentives.
Also, you can criticize the Chinese government without having any issues with Chinese people. Learn the difference or life is going to be hard.
Microsoft was secretly wasting electricity to avoid fines -- gaming an economic system designed to encourage efficiency under bureaucrat-designed rules that make sense within market capitalism, and Chinese companies are secretly wasting electricity to avoid a loss in confidence, ie. business, under the direction of bureaucrats -- gaming a larger economic system designed for efficiency, but here specifically for efficiency of labor to product spend, versus efficiency of product sale.
Curiously, the need to maintain this appearance of productivity is only likely for the sake of capitalist clients who buy the services -- c.f. the classic entrepreneurial slogan, "fake it till you make it!"
Some people are saying in response to this, "only under communism", and in the specifics of who and how and why they may be correct, but waste to satisfy bureaucratic systems is not unique to any economic or social system. People are going to juke the stats under every regime, at all scales, under all circumstances.
Edit: Found an article mentioning this practice: https://mont.thesentinel.com/2019/10/03/one-imperfect-day-in...
Part of the big problem with reactivating MiG-29 squadrons in Poland after the "aftermarket mods" resulted in grounding was that even the instructors lost the legal right to examine training level.
Market forces have very limited opportunity to influence the micro-level internal resource allocation decisions of a large organisation. There’s some things you can to do mitigate this within an organisation, but having efficiency decrease with organisational complexity and scale is inevitable. There’s only two reasons I can see that this doesn’t devolve into soviet style catastrophe. Firstly, some of the lost efficiency is offset by the economies of scale. Secondly, if an organisation becomes too inefficient, their market position can (usually) be usurped by competition. Shareholders can also fire insufficiently competent management, but usually not before the damage is done, and they can’t exactly guarantee the replacements will be any better.
1-(1-IR)^N
N is the number of seats.
IR is the infection rate.
Takes a lot of assumptions to get the odds someone on the plane is infected, and even more to get the answer you want. The biggest assumption would be how likely you are to get the virus just because someone on your plane has it.
You could replace the N with total number of people at an airport. Again, not that helpful because it takes a lot of assumptions and only gives you half the picture.
Cheaper aviation fuel will incentivize airlines to keep their planes in the sky.
Or, perhaps take off, and separately land, a smaller plane such as a Cessna.
What's going on?
The airlines have changed their rebooking policy to make it much more lenient for the next few months. Maybe this is making the tickets more valuable and pushing up the price?
The trouble is that this will drive out the holiday flyers and leave them dependent on business flyers whose companies can turn off the tap on a whim. And will have every incentive, and excuse, to do so.
It's only going to work for customers who have to fly - which is a fairly small number. So instead of making up a shortfall, it's more likely to be a money-losing strategy.
I checked our local carrier and prices are down a lot. I was considering a flight at the end of April and prices are between a half and a third of what they were when I checked them in January.
I just looked at prices for a round trip ticket from San Francisco to Montreal for Monday. It was $389. I've never seen such a low price for buying two days in advance.