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Looks like it might be over for VA...
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Colonel Savage
Southern style...
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I'll bet there are some skeptics there now.
The Prussian
Stecknadelkopf
- Joined
- Oct 24, 2005
- Posts
- 671
Some thoughts...sorry if feelings are hurt...
Deregulation happened over 30 some odd years ago...
Too many competitors out there...
The "Great Products" out there need to be priced accordingly...cover the costs, and eak out a profit...or leave the marketplace...simple enough??
This industry needs to stabilize (yesterday wouldn't be soon enough), and pricing products below cost is not the path that's going to achieve that...
Understood...there are pilots out there with jobs in the balance,...but also out there is something that is scarier than these words, and tough medicine....it's reality....the real world.
The sooner this industry confronts reality...the sooner this industry achieves normalcy and stability.
Products need to be priced to cover costs.
Deregulation happened over 30 some odd years ago...
Too many competitors out there...
The "Great Products" out there need to be priced accordingly...cover the costs, and eak out a profit...or leave the marketplace...simple enough??
This industry needs to stabilize (yesterday wouldn't be soon enough), and pricing products below cost is not the path that's going to achieve that...
Understood...there are pilots out there with jobs in the balance,...but also out there is something that is scarier than these words, and tough medicine....it's reality....the real world.
The sooner this industry confronts reality...the sooner this industry achieves normalcy and stability.
Products need to be priced to cover costs.
The Prussian
Stecknadelkopf
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- Oct 24, 2005
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- 671
Rez O. Lewshun
Save the Profession
- Joined
- Jan 19, 2004
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- 13,422
contrail67
Well-known member
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- Oct 13, 2003
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- 954
The Prussian
Stecknadelkopf
- Joined
- Oct 24, 2005
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I think you need to open up your mind, and not limit yourself to those two (controlling) choices...and open up the possibility of failure...and success(!!!) Freedom (to put another name to it)...
bluesideup340
Well-known member
- Joined
- Sep 16, 2003
- Posts
- 150
Why Are There Restrictions on Airline Ownership?
The restrictions on international ownership of US airlines are a historical remnant of a different era. Their origins date back to the days of sailing ships in the 19th century. During the period of airline regulation they were of course extended, and since then these restrictions have been perpetuated primarily due to the political fact that US airlines are a very effective lobbying group, whereas international investors have virtually no lobbying clout in Washington.
There are actually two very different restrictions that prevent a full open market for airlines in the US at present. Opponents of an open market have tended to try and mix together the 'worst' of each issue as support for their opposition to the other concept. So let's clearly understand these two different concepts :
Cabotage or Eighth Freedom Rights
The so called 'Freedoms of the Air' spell out, by international treaty, how airlines based in one country can operate over and in other countries. The US does not currently allow this Eighth Freedom to international carriers, and it hides behind the bilateral concept of 'we will only let a foreign country's carriers participate in our market if the foreign country has a similar sized market and lets our carriers participate in their market, too'.
Foreign Ownership of US based Carriers
This is totally different to cabotage. The US limits the amount of foreign ownership in its domestic airlines to a maximum of 49%, with a maximum of 25% control.
Most other countries have similar protective provisions limiting ownership of their airlines, but there are some notable exceptions - for example, the Australian government. Australian law requires the airline to be staffed and managed by Australians, and has an Australian board of directors. The net result has been tremendously beneficial to the Australian public, while the major carrier (Qantas) does not seem to have been unduly harmed, either.
A number of myths and misunderstood half-truths have been offered as reasons to 'protect' the US carriers from fair free open-market competition. But most of these half-truths apply only to restrictions on cabotage, and have no relevance to allowing foreign ownership of domestic, US based, airlines.
None of these allegations stand up to scrutiny, so let's look at them.
Myth 1 : We Need US Carriers for National Security
As recently as 3 April 2003, Speaker Dennis Hastert used this argument to defend Congress' $3.2 billion airline aid plan. He said '[it is necessary that] we don't have a whole industry collapse at a time when maybe we need it most' (referring, presumably, to the Iraqi conflict).
It is true that there is a program (the CRAF - Civil Reserve Air Fleet) whereby US airlines hire planes to the military when needed, giving the military additional airlift capacity. But this program would apply equally to any US based, US incorporated airline, no matter where the shareholders were based.
A US corporation is bound by US laws, no matter who or where its shareholders are based.
Furthermore, the US airlines are generously remunerated in return for their military charters, indeed some recent study suggested it would be cheaper and better if the US government simply tendered for charters on the open market!
Myth 2 : Foreign Airlines Don't Have the Same Security Standards
Maybe foreign airlines do, maybe they don't have the same security standards as US airlines. But, who cares? This is a red herring argument, because we're not talking about foreign airlines. We're talking about a US airline, subject to all US regulations and controls.
Sure, the airline may be owned in part or by whole by off-shore investors, but it is a US airline, operated by US permanent residents and citizens, and following all US standards and procedures.
Myth 3 : Foreign Airlines Don't Have the Same Safety Standards
The answer to this myth is exactly the same as the answer to myth #2.
Myth 4 : Foreign Airlines Would Take Away Jobs from Americans
A US based carrier is subject to the same laws for who it can employ, no matter who its owners might be. All US carriers have to employ either lawfully admitted foreign nationals on special work visas, or US permanent residents, and indeed, for some jobs, they can only employ full US citizens. There is no difference in these laws if the airline is owned by people in London or Little Rock.
Myth 5 : A Foreign Airline would replace High Paying Jobs with Low Paying Jobs
Any company is free to set whatever terms of employment it can agree upon with its workers (and possibly the unions that represent them).
And, in case anyone hasn't noticed, all those 'high paying' airline jobs are under massive threat at present as the traditional carriers lay off staff and reduce the wages (and pension plans!) of those that remain.
Myth 6 : A Foreign Airline would 'cherry pick' only the Profitable Routes
This myth suggests that the foreign (owned) airline would only fly on the 'easy major routes that any airline can make a profit on'. By reducing the ability of the existing airlines to make profits on the major routes, the existing airlines would no longer be able to subsidize the other loss-making routes that they currently operate as a public service.
As recently as this week, a noted travel writer commented 'having a national airline protects the nation's transportation network from being at the mercy of foreign carriers to whom profits are more important than whether the country's capital has daily service from New York, Chicago, Tokyo, or Timbuktu.'
This myth is full of nonsense in several areas. Any start-up airline, no matter who or where their owners are, carefully works out a business plan that has them concentrating on some 'easy' routes that they think they can make a profit on. As the new airline grows, they build out from their core routes so as to grow their total network in an organic manner.
The second piece of nonsense is there is no such thing as an 'easy' major route that any airline can make a profit on! If there was, then all airlines would be on that route already, and more, totally US owned, airlines would be starting up to add more services to that route.
The third piece of nonsense is that none of the major airlines operate as a social charity. If they can't make money on a route, they will stop flying it. Plain and simple. All 'for profit' airlines work on the same basis, no matter where their shareholders sit.
Myth 7 - Profits will be Taken Offshore
Some people have made the ridiculous suggestion that allowing foreigners to own US airlines means that they'll take all the profits offshore and somehow harm the US economy in the process. Look around you. Exactly which US carrier is making so much profit that transferring some share of it offshore would harm the economy!?
Even in a very good year, shareholder dividends rarely exceed a very few percent of total revenue - repatriation of dividends is a negligible matter.
And such concerns haven't prevented foreign ownership of just about every other type of company (with the exception of media outlets and shipping companies). So let's allow foreign ownership of airlines, too.
The Reality
The so-called 'protection' of our domestic airline business is not helping anyone.
Who or what are we protecting, and against who or what?
Our entire society has been very successfully built on the premise of free enterprise, and the abolition of tariffs and trade barriers. Why should the failing airline industry be an exception to this cornerstone of capitalistic freedom?
The restrictions on international ownership of US airlines are a historical remnant of a different era. Their origins date back to the days of sailing ships in the 19th century. During the period of airline regulation they were of course extended, and since then these restrictions have been perpetuated primarily due to the political fact that US airlines are a very effective lobbying group, whereas international investors have virtually no lobbying clout in Washington.
There are actually two very different restrictions that prevent a full open market for airlines in the US at present. Opponents of an open market have tended to try and mix together the 'worst' of each issue as support for their opposition to the other concept. So let's clearly understand these two different concepts :
Cabotage or Eighth Freedom Rights
The so called 'Freedoms of the Air' spell out, by international treaty, how airlines based in one country can operate over and in other countries. The US does not currently allow this Eighth Freedom to international carriers, and it hides behind the bilateral concept of 'we will only let a foreign country's carriers participate in our market if the foreign country has a similar sized market and lets our carriers participate in their market, too'.
Foreign Ownership of US based Carriers
This is totally different to cabotage. The US limits the amount of foreign ownership in its domestic airlines to a maximum of 49%, with a maximum of 25% control.
Most other countries have similar protective provisions limiting ownership of their airlines, but there are some notable exceptions - for example, the Australian government. Australian law requires the airline to be staffed and managed by Australians, and has an Australian board of directors. The net result has been tremendously beneficial to the Australian public, while the major carrier (Qantas) does not seem to have been unduly harmed, either.
A number of myths and misunderstood half-truths have been offered as reasons to 'protect' the US carriers from fair free open-market competition. But most of these half-truths apply only to restrictions on cabotage, and have no relevance to allowing foreign ownership of domestic, US based, airlines.
None of these allegations stand up to scrutiny, so let's look at them.
Myth 1 : We Need US Carriers for National Security
As recently as 3 April 2003, Speaker Dennis Hastert used this argument to defend Congress' $3.2 billion airline aid plan. He said '[it is necessary that] we don't have a whole industry collapse at a time when maybe we need it most' (referring, presumably, to the Iraqi conflict).
It is true that there is a program (the CRAF - Civil Reserve Air Fleet) whereby US airlines hire planes to the military when needed, giving the military additional airlift capacity. But this program would apply equally to any US based, US incorporated airline, no matter where the shareholders were based.
A US corporation is bound by US laws, no matter who or where its shareholders are based.
Furthermore, the US airlines are generously remunerated in return for their military charters, indeed some recent study suggested it would be cheaper and better if the US government simply tendered for charters on the open market!
Myth 2 : Foreign Airlines Don't Have the Same Security Standards
Maybe foreign airlines do, maybe they don't have the same security standards as US airlines. But, who cares? This is a red herring argument, because we're not talking about foreign airlines. We're talking about a US airline, subject to all US regulations and controls.
Sure, the airline may be owned in part or by whole by off-shore investors, but it is a US airline, operated by US permanent residents and citizens, and following all US standards and procedures.
Myth 3 : Foreign Airlines Don't Have the Same Safety Standards
The answer to this myth is exactly the same as the answer to myth #2.
Myth 4 : Foreign Airlines Would Take Away Jobs from Americans
A US based carrier is subject to the same laws for who it can employ, no matter who its owners might be. All US carriers have to employ either lawfully admitted foreign nationals on special work visas, or US permanent residents, and indeed, for some jobs, they can only employ full US citizens. There is no difference in these laws if the airline is owned by people in London or Little Rock.
Myth 5 : A Foreign Airline would replace High Paying Jobs with Low Paying Jobs
Any company is free to set whatever terms of employment it can agree upon with its workers (and possibly the unions that represent them).
And, in case anyone hasn't noticed, all those 'high paying' airline jobs are under massive threat at present as the traditional carriers lay off staff and reduce the wages (and pension plans!) of those that remain.
Myth 6 : A Foreign Airline would 'cherry pick' only the Profitable Routes
This myth suggests that the foreign (owned) airline would only fly on the 'easy major routes that any airline can make a profit on'. By reducing the ability of the existing airlines to make profits on the major routes, the existing airlines would no longer be able to subsidize the other loss-making routes that they currently operate as a public service.
As recently as this week, a noted travel writer commented 'having a national airline protects the nation's transportation network from being at the mercy of foreign carriers to whom profits are more important than whether the country's capital has daily service from New York, Chicago, Tokyo, or Timbuktu.'
This myth is full of nonsense in several areas. Any start-up airline, no matter who or where their owners are, carefully works out a business plan that has them concentrating on some 'easy' routes that they think they can make a profit on. As the new airline grows, they build out from their core routes so as to grow their total network in an organic manner.
The second piece of nonsense is there is no such thing as an 'easy' major route that any airline can make a profit on! If there was, then all airlines would be on that route already, and more, totally US owned, airlines would be starting up to add more services to that route.
The third piece of nonsense is that none of the major airlines operate as a social charity. If they can't make money on a route, they will stop flying it. Plain and simple. All 'for profit' airlines work on the same basis, no matter where their shareholders sit.
Myth 7 - Profits will be Taken Offshore
Some people have made the ridiculous suggestion that allowing foreigners to own US airlines means that they'll take all the profits offshore and somehow harm the US economy in the process. Look around you. Exactly which US carrier is making so much profit that transferring some share of it offshore would harm the economy!?
Even in a very good year, shareholder dividends rarely exceed a very few percent of total revenue - repatriation of dividends is a negligible matter.
And such concerns haven't prevented foreign ownership of just about every other type of company (with the exception of media outlets and shipping companies). So let's allow foreign ownership of airlines, too.
The Reality
The so-called 'protection' of our domestic airline business is not helping anyone.
Who or what are we protecting, and against who or what?
Our entire society has been very successfully built on the premise of free enterprise, and the abolition of tariffs and trade barriers. Why should the failing airline industry be an exception to this cornerstone of capitalistic freedom?
FR8mastr
Well-known member
- Joined
- Mar 4, 2002
- Posts
- 803
Are you kidding me? Do you really believe that airline X that is tied neck deep with county Y that we happen to have a conflict with is going to transport our troops over to do harm to their friends?
I guess all the gang criminals will turn in their handguns as soon as the laws prohibits guns?
And swearing an oath to "uphold and defend the constitution" actually means anything to the braintrust in DC.
Yea I know let me guess, its a "global economy" right? That seems to be working out really well for our country.
Well at least we still have a right to voice our opinions. (for now)
The Prussian
Stecknadelkopf
- Joined
- Oct 24, 2005
- Posts
- 671
No...uh, uh,...didn't happen that way. WN sold their fourth airplane to keep operating. And they didn't use/abuse the bankrupcy courts a couple of times like another carrier I know of. And they didn't sign away their rights to operate out of an "exclusive use" airport, like all the others did.
Oh, yeh...and get your arm off from around me...
bluesideup340
Well-known member
- Joined
- Sep 16, 2003
- Posts
- 150
Give me one senario. Just for fun.
D--- right it is a global economy. BTW do you know who or what entity owns your aircraft, how about the insurance, guess what they are all multi national cooperations. Matter of fact, I am certain most aircraft operated by US Airlines are not owned by a purely US company. So why should we make our last stand against globalization when it comes to Airlines, when in reality most of the money is already in the global cash flow?
Chinese Money in our energy market has not much done to undermine your right of voicing your opinion, has it?
And how about the 9 Bil. from the UAE to Citibank. Now I am worried, I just realized Citi holds my mortage. Before I know it I will be called twice daily for prayer and non compliance will be punished with foreclosure.
Thanks for scaring me.
You are right. We need a time machine and go back to --- yah that is a problem. I guess the good old days. When the world was a better palce, do you remember the time, when we fought the Soviets, China was a third world contry, we had a real space program, and America was respected in the world. Yah lets go there.
Look the world has changed for better or worse and we have no choice but to move on.
International ownership might actually safe companies like UAL and USair and make them profitable so Pilots can continue employment and, how knows, they might actually become well paid jobs again.
General Lee
Well-known member
- Joined
- Aug 24, 2002
- Posts
- 20,442
Yeah, let's allow all of the banks in trouble to go out of business RIGHT NOW, along with GM, Ford, and anyone else who is struggling. Yeah, that's the ticket. Let's all buy axes and pitch forks and grab some land and babes while we're at it....
Bye Bye--General Lee
General Lee
Well-known member
- Joined
- Aug 24, 2002
- Posts
- 20,442
Obama inherited this problem. Paulson did a terrible job with the TARP stuff, and nobody can figure out where all that money went. But now you have to cover those industries, otherwise a run will take place on all of the banks, and our country will be in shambles. Sure, there has to be a plan, and I think Obama will hold them to it. Bush and Paulson didn't. Also, the dollar won't fall anymore because every other country is doing the same thing. If the US was the only one with a huge problem, then maybe. Over $50 Trillion has evaporated around the globe, and that is not Obama's fault.
Bye Bye--General Lee
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I meant: get your fourth airplane back.
I'm adverse to the free market schpeal from a WN type.
The WA was like a pre 1930s trust.
The Prussian
Stecknadelkopf
- Joined
- Oct 24, 2005
- Posts
- 671
Well, here's some more...
True "free market" is self balancing and self cleansing. Any time you prop up a failure, it corrupts the balance of a free market. All players then have to adjust to this new playing field. We've had more than a few propped up failures.
As this continues, where failure recieves preferred treatment,...success has less and less reward. All companies left on this hobbled playing field, with time, realize less success, and begin to "fail to succeed", and even "succeed to fail". Recognize it?...this is the same, mired playing field we been playing on for quite some time.
And though you may not agree with the free market, I'll go back to my original premise:...we pilots are going to continue to get squeezed until the product is priced to cover it's costs.
And consider your self lucky,...I'm kinda adverse to talking common sense to someone that doesn't display any....
AA717driver
A simpler time...
- Joined
- Mar 27, 2003
- Posts
- 4,908
Either nationalize the airlines (we're mass transit anyway) or remove all restrictions.
So little of this business has been deregulated, it's a joke.
If VA had started up in 2000, no one would have said a word. The LCC's were under the radar until 9/11 and then became the darlings and no one was on this board railing against JetBlue or AirTran (either pre- or post-ValuJet).
Foreign ownership? We have no problem with the Chinese buying our debt (and, therefore owning us) but God forbid a foreigner owning a small airline in the U.S. Barbarians at the gate!
If you're going to complain about foreign ownership, then you'd better step up and complain about global alliances. Oneworld is stealing AA jobs. Same with Sky Team and Star. Or, how about JetBlue and other good old U.S. carriers having their mx done off shore?
Sorry, but the economy is a big stew and the origins of the money and control are so intermingled that you can't know who owns what and who controls who.
TC
So little of this business has been deregulated, it's a joke.
If VA had started up in 2000, no one would have said a word. The LCC's were under the radar until 9/11 and then became the darlings and no one was on this board railing against JetBlue or AirTran (either pre- or post-ValuJet).
Foreign ownership? We have no problem with the Chinese buying our debt (and, therefore owning us) but God forbid a foreigner owning a small airline in the U.S. Barbarians at the gate!
If you're going to complain about foreign ownership, then you'd better step up and complain about global alliances. Oneworld is stealing AA jobs. Same with Sky Team and Star. Or, how about JetBlue and other good old U.S. carriers having their mx done off shore?
Sorry, but the economy is a big stew and the origins of the money and control are so intermingled that you can't know who owns what and who controls who.
TC
JungleJett
Well-known member
- Joined
- Feb 16, 2004
- Posts
- 1,111
Common sense and rational thought has little to no business on this site.
..otherwise...well said. :beer:
I love it when a LUV pilot talks about the need for a level playing field. Unless that field is Love Field.
clickclickboom
Well-known member
- Joined
- Nov 7, 2005
- Posts
- 1,081
Jetblue does not outsource maintenance to TACA AEROMAN in San Salvador along with Us airways. I have not flown planes down there, stayed in the radisson downtown with the awesome free breakfast, or jumpseated home on Delta. I have not bought delta crews cheap duty free liquor because I posess a ticket and crews are not allowed to buy the duty free in the airport.
Jetblue does not have full time inspectors that work there full time.
Monster Buck
Go bigger or die trying!
- Joined
- May 9, 2004
- Posts
- 766
Hold on a minute there, coming from a jet blue pilot you have a lot of nerve getting on a soap box talking about what other pilots at UsAir and United need to have to get well paid jobs again.
JungleJett
Well-known member
- Joined
- Feb 16, 2004
- Posts
- 1,111
JJET44
Well-known member
- Joined
- May 25, 2006
- Posts
- 689
Metro, These airlines' pop up and spread markets way too thin which drive down prices and profits. They also take advantage of a poor job market and offer jobs at substandard wages to top it off.
Any pilot that willing takes a job with these carriers knows what he/she's getting into and thinks of nobody but him/herself. They hurt us all and get what they deserve.
These Blow-Cost airlines are hurting the industry and not helping it.
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Rez O. Lewshun
Save the Profession
- Joined
- Jan 19, 2004
- Posts
- 13,422
Ryan Airlines in Europe.... you know the one the wants to charge to use the lavs inflight...
Corp HQ in one country, operating certificate issued by another, labor law and flight crews in yet another country.... that is the wave of the future...
The problem with globalization is the market is wide open, but there are minimal laws to keep it all together.
How is a pilot based in one country supposed to enforce labor law or civil air law against his company who is legal in another country, all while the operating certificate is issued by another country...
this is the end game..... foreign ownership is just the camels nose under the tent...
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With all due respect Rez, the ability of the Association to enforce CBA language in our own court of law is almost non-existent. Ask the MIDEX and ATA crewmembers how their language held up. Foreign ownership should not be as concerning as whipsaw and job security (scope), for if it is, where is (or was) the outrage towards past foreign investment such as NWA/KLM and current foreign investment such as Lufthansa/JetBlue? When you really think about it, is there much difference between foreign investors owning stock, vs. a foreign company such as Airbus or Embraer carrying the note (providing financing) or leases on new aircraft that are delivered to a U.S. carrier?
I think that most all corporate money is a mix of both foreign and domestic investment. That camel's nose has long been under the tent.
Alpa's focus needs to come full circle and protect all U.S. pilot jobs through better CBA language, and spend less time trying to control where the corporate investment comes from.
Fraternally,
Skipper
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