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#miles#airlines#airline#deregulation#companies#more#money#profit#goes#idea

Discussion (15 Comments)Read Original on HackerNews

bko•about 7 hours ago
> From its deregulation in 1978 to the end of 2025, the airline industry has cumulatively lost money: its net profit over those 47 years sits at negative $37 billion.

That was surprising. Goes against the idea that deregulation allows companies to squeeze consumers and earn excess profits. My understanding is that before regulation, routes were allotted by the government. So an airline might own New York to Boston, so they didn't have to compete. Obviously de-regulation changed that.

The article doesn't go into it, but unions are also a challenge. Much of the airline industry is unionized. So you have situations where pilots that have been there a while get a lot more money. You have people doing essentially the same job but some are getting paid 3x as much just because they've been there a long time. In most industries, there is higher pay for senior talent, but that's because they're more effective at their job, and produce higher output. In this case it's just a legacy cost that makes some airlines incredibly uncompetitive through structural features.

https://www.thrustflight.com/united-airlines-pilot-salary/

rayiner•about 2 hours ago
> was surprising. Goes against the idea that deregulation allows companies to squeeze consumers and earn excess profits.

That's because this assertion is economically illiterate. Deregulation can lead to increased profits where otherwise companies have monopoly power. But often, the regulation was there in the first place to ensure that companies had sufficient profit to invest in expensive infrastructure. (E.g. railroads).

triceratops•about 2 hours ago
> That was surprising. Goes against the idea that deregulation allows companies to squeeze consumers and earn excess profits

Sometimes it does and sometimes it doesn't. It depends on the industry, as the article goes into detail to explain.

rayiner•about 2 hours ago
Fascinating article. One sentence jumped out to me:

> So Chapter 11 is a relief valve for airlines struggling under the weight of their fixed costs; but it doesn’t really do much to help the system as a whole

The American founders writing a uniform federal system of bankruptcy was a stroke of genius that's been paying dividends for 250 years now.

flextheruler•about 2 hours ago
Chapter 11 bankruptcy as well as all modern corporate law has its roots in the tycoons of the late 19th century. They lobbied and wrote it which is why it's corrupt.
jmpman•about 1 hour ago
How much of this is related to the pilots union? It seems like they capture all excess profit in the system during the good times, and fight vigorously to keep their inflated earnings even during the bad times.
waswaswas•about 2 hours ago
It's a tough business. Capital intensive, operationally complex, commodity product, unionized workforce, highly regulated...
aworks•about 7 hours ago
This argues airlines are undifferentiated. In the aggregate, maybe that's true. Personally, I have a long list of airlines I try to avoid flying.
aworks•about 7 hours ago
Maybe not related but fascinating: "Annual spending on Delta-branded American Express cards comes out to about 1 percent of U.S. GDP. In 2025, this produced about $8 billion in revenue for Delta, accounting for more than the entirety of its profit."
Atheros•about 2 hours ago
New revenue model idea: Charge $40/month on a person's credit card; a subscription. This buys the customer miles. Whenever you want to go somewhere, you use your miles. I think it would work based on the fact that people are willing to pay much more money for services if it's spread out and predictable. The fact that it's pre-paid also creates a lock-in benefit for the airline that the 'pay later over time' schemes lack.
twoodfin•about 1 hour ago
Alaska Airlines apparently does or did this kind of thing: My sister in law had a “subscription” that was good for monthly tickets between San Diego and wine country.
anon7000•about 1 hour ago
I mean a lot of airline point credit cards do something like that. Many have a fee, and you earn miles by using the card & get mileage bonuses for certain things. But these programs only make sense to a consumer if A) you’re good at finding good value for your miles and B) you’re passively earning miles by doing things you’d normally do anyways. (With a bonus for airline loyalty perks, if you fly a lot.)

Thing is, buying miles is normally a really poor use of your money, because the redemption rate isn’t great, and airlines devalue miles all the time. For example, the lowest option at delta is to buy 2000 miles for $70. That’s 3.5 cents per mile, but you can only expect to get a value of 1.25 cents per mile when you redeem them. Which only comes out to $25 in value, loosing you $45 — and that’s assuming you wait to spend miles for a good deal. (Redemption rate is worse during more popular flights.)

Airline miles are just not worth much, which is why people chase like hundreds of thousands of miles at a time through credit card sign up bonuses.

aanet•about 3 hours ago
Great post. Thanks for sharing.

I always wondered why airlines were always running bankrupt… Now I know.