Alaska Airlines to Buy Virgin America for $2.6B
virgin.com
virgin.com
- Sir Richard Branson, Virgin founder.
Surely you can recognize the merit in keeping domestic control of transportation, which is the reason these regulations exist.
Not OP, and not trying to be glib, but I think you're skirting the major objection by assuming agreement here.
Differential privilege due to happenstance of birth location seems a pretty arbitrary line to me, in need of justification.
We also have programs that will give you citizenship if you commit to investing money long term and taking an allegiance to the United States.
That doesn't seem entirely self-evident, and that's part of the subject of this discussion thread.
There are already extensive regulations on the operation and safety of airlines, most of them likely for good reason. Why, above and beyond those regulations, do we additionally need to limit ownership?
If the answer is "handwave handwave safety handwave security", then I'd point out that there are dozens of other industries even more ingrained into the US where someone looking to do damage could do far more harm than they ever could with an airline, and none of those industries have prohibitions on foreign ownership.
i.e. the stuff the US does.
Just how magical is the the extra 2% that takes one from an "OK/freiendly" 49% foreign shareholder to a 51% (or 50% +1?) "oh no, intel stealer!". I sort-of understand the control argument, but not the secrecy argument you are making doesn't hold up.
Glad we got it nailed down.
The law's intent (not saying that I agree with it) is to ensure that the air transit infrastructure in the United States is controlled by U.S. citizens, not that every piece of transportation equipment worldwide is manufactured and controlled by the U.S.
No, I really don't.
In times of true national crisis, emergency powers allow the US government to commandeer the civil air fleet for military uses.
The rest of the time, these foreign ownership restrictions prevent better operators from taking ownership stakes and fixing the efficiency problems that plague uncompetitive mainline US airlines.
I for one would LOVE to see what an ME3 carrier could do with, say, American Airlines.
Depends. Is that an ME3 carrier on its own, or an ME3 carrier with an unlimited government subsidy to keep it afloat no matter how much money it loses? Because the latter is what really exists -- those airlines aren't run as for-profit businesses, they're run as vanity projects by the backing governments.
If some Emirati government wants to subsidize my domestic travel within the US, they should feel very free to do so! I'll take the better service and cheaper prices in a heartbeat.
And yet we're almost completely dependent on foreign countries for oil, without which most of our transportation methods would crumble.
Full Definition of discourage
dis·cour·aged dis·cour·ag·ing
transitive verb 1 : to deprive of courage or confidence : dishearten <was discouraged by repeated failure> 2 a : to hinder by disfavoring <trying to discourage absenteeism> b : to dissuade or attempt to dissuade from doing something <tried to discourage her from going>
To hinder by disfavoring. Foreign investors are disfavored -- they can invest, but under different (and less favorable, hence disfavored) terms. They are hindered in the process. You can make a case that this hindrance is a good thing, if you want to, I guess. But you're trying to do so while at the same time claiming it doesn't exist.
These foreign-ownership rules do strike me as counter-productive protectionism.
Government does not care about outcome it cares about the show they need to put up to convince people they are doing something good.
Because evidently if any competition comes to the domestic aviation industry, US airlines are doomed.
Allowing international carriers transiting the US to do intra-city flights soaks up demand and lowers route profitability for busy routes.
Past practices were to balance demand across city pairs so as to avoid local monopolies (ie. Minneapolis and Delta/Northwest) and ensure universal service. Deregulation broke all of that, so we have price competitions at the cost of a race to the bottom in service and industry cycles of bankruptcy and consolidation. Long term, that means monopoly levels of service and pricing.
See, for example, Etihad's 49% stake in Alitalia, Delta's 49% stake in Virgin Atlantic, etc. -- significant investment happens, but controlling share is a lot less frequent.
"The United States (U.S.) airline industry is unique among industries in being governed by federal statutes requiring air carriers seeking to be certified in the U.S. to be “owned or controlled” by a “citizen” of the U.S.1 This requirement is enforced by the Department of Transportation (DOT) performing “fitness reviews” on applicant airlines to ensure they meet the “citizenship” definition.2 Historically, the U.S. has limited ownership and control to U.S. citizens for four primary reasons: the protection of a fledgling U.S. airline industry, the regulation of international air service through bilateral agreements, concern about allowing foreign aircraft access to U.S. airspace, and military reliance on civilian airlines to supplement airlift capacity.3"
Of Particular interest to this Virgin America deal:
Voting equity up to 25 percent and nonvoting equity up to 49 percent by a foreign entity is allowed, and any equity above these levels must be held in trust or converted to debt. Foreign holdings will be counted cumulatively towards these totals. (page 24)
First the way international flight agreements are negotiated between countries. Changing this would essentially require all nations with airlines to agree to these changes at the same time. A difficult task. Maybe this is occurring within European Union context?
Second, most nations see their airlines as a source of transportation in times of national emergency. The government can demand that the commercial air fleet be used for the military (or other agencies). I believe that this has only occurred once in the USA, during the first Gulf War. In the USA, the government officially "contracts" with the airlines to provide their fleet on demand. Some have argued that these contracts are a hidden form of subsidy. In any case it is hard to see how any government will allow foreign ownership of airlines due to this military use.
More on Civil Reserve Air Fleet (CRAF) the US military use of airliners : http://fas.org/man/dod-101/sys/ac/craf.htm
Which two do you think are hard to overcome when considering a British national as a controlling owner? Looking at the list, the military reliance issue is the only one that seems concerning.
Participation in CRAF program has been voluntary (& fairly profitable) for the airlines. CRAF was activated twice, as part of Gulf War (1991) & Iraqi Freedom (2003). If the USAF was concerned about airlines "foreign control" during wartime, they'd go to the boneyard and grab extra C-5s and standard 747/767 passenger and freighter aircraft.
There are dozens of large aircraft in the boneyard that could be made serviceable in less 48-72 hours if rushed back to service. The aircraft may require heavy maintenance to stay in service long term, but still safe for short term operations. The downside is the USAF would have to pay for for the aircraft maintenance, whereas CRAF maintenance is paid by the operator.
Hence, the problem with the equities market, and why you should never go public if you can afford it.
A couple examples of little things they do that are clever and should be copied by everyone else: check your bag at the gate 30 minutes before boarding and you can board early; a guarantee that your checked luggage will be in your hands 20 minutes after landing, or you get $20.
They are an airline that are trying things, experimenting.
> A couple examples of little things they do that are clever and should be copied by everyone else: check your bag at the gate 30 minutes before boarding and you can board early; a guarantee that your checked luggage will be in your hands 20 minutes after landing, or you get $20.
Is that (gate check bag) for free?
20 minutes or $20 sounds like a great idea too.
Yes. They make an announcement asking for anyone willing to check their bag at the gate rather than carrying it on, and anyone who does so gets priority boarding (at the same time as the "families with small children and anyone who needs more time to board")
I've never flown Alaskan, but it's pretty obvious what the appeal is: it's a small optimization to make flying a little more convenient and enjoyable for some people. It seems like it would be nice not to have to wait in the boarding line and manhandle my carry-on. Plus, the policy creates some goodwill because they're passing up an opportunity to nickle-and-dime you.
I'd pay good money for the ability to exit the plane early after the flight is over. I really don't care about boarding early, especially if I'm not looking for bin space.
Apparently not good enough money, first class customers get that privilege. Beyond that, the crew is required to finish certain landing procedures before allowing customers to disembark off the plane.
Airlines like Southwest have no first class. And Southwest lets you pay for priority boarding, so it stands to reason they could cook up a scheme for letting people pay for priority exiting.
And of all the airlines that necessitate being drunk to cope, Southwest is fairly high on the list.
right, so in other words, you're still flying the cheapest possible airline, yet claiming you'd pay good money for well-established privileges that are already available for good money on the open market on pretty much any non-budget carrier.
when it comes to luxury, you have to pay to play, and those who don't pay, don't play. end of story. you're competing with humans for space and time, it's going to be expensive if you want to be given special treatment.
(i'm a frequent alaskan airlines flyer, and try to always sit in row 6, unless i'm upgraded).
Is there a reason airlines don't board from the back of the plane first? As a first class customer you are assured of your overhead bin space anyway and you would spend the least amount of time on the plane. You would be the last on and the first off. But this would actually be thinking outside the box, not something you would expect of this ridiculous industry. What's the last time an airline did anything innovative?
It never ceases to amaze me that the airlines refuse to abandon this absurd policy of charging for a piece of checked luggage. When you look at when this practice was introduced of charging for checked luggage, the time it takes to board and un-board a plane has increased by about 20 minutes due to everyone trying to shove as much as possible into overhead bins. Perhaps this time axis doens't carry much weight for carrier? Although that would be hard to imagine. It seems like false economy to say charging $25 per luggage checked make sense when you have now added 40 minutes to each flight. I can count the number of times on one hand that my flight has left at its scheduled time even though it boarded on time.
It makes sense to the airlines. For them, it probably doesn't matter that much if you leave a bit late. The cost of the flight doesn't change with how much time it takes to board, so they're making more money by charging for bags (even if not that many people check bags). There might be 2nd order effects, like shifts being affected because flights take a bit longer, but I can't imagine that overwhelms the additional income from charging for bags.
The cost of a plane is v. expensive. Sitting on the tarmac for 1/3rd longer is VERY expensive, just in deprecation/interest/lease payments.
However, it probably makes sense because I imagine some/all airports charge luggage handling fees per item/kg, that are probably quite expensive.
They do it because it works, and the reason that it works is that passengers (and flight-booking web sites) tend to sort the list of available flights by base price. Only.
It would be nice if the travel sites let you enter preferences: "How important is a decent meal to you?" "How important is a free checked bag to you?" and so on, but I haven't seen any sites like that. There's an opportunity for someone. :-)
It's only when I go directly to carriers like Air France or Lufthansa that they specifically flag - for example - flights on an A380, which I am absolutely willing to pay a bit more for.
For example, I just booked ORD-SFO on UA in business, which is a completely different experience on the upper deck of a 747 (UA1213) than the usual 737 :)
Charging for checked bags didn't start until 2008, the better part of a decade after travel sites began. There is zero correlation between charging for checked bags and travel websites.
Prior to this awful and cheap practice the assumption was that you bought a ticket that covered the cost of getting you and a bag to a destination.
Advertise a low base fare and add extra fees/cut add-on services to make up the difference.
The checked bag fee is just one of the more recent ploys in a process that's been going on for decades.
This has not been my experience. Flying AA on the east coast regularly, the folks at the door generally seem to be super on top of eyeballing bags and giving out the red checked-at-gate tags liberally.
I've had the reverse. My experience with them is always miserable.
Honestly, they seem an airline stuck in the 1980s. For example, after we married, my wife changed her name & got a new ID. She realized she also needed to change a name on a future flight back home to Seattle.
Alaskan charged her $100 to change her name.
$100.
To update a field in a database. For a flight over a month out.
By contrast, she also had to change a Southwest flight. $0 & she was off the phone in 10 minutes.
Example 2: I actually tried to take advantage of the 20 minute guarantee at LAX. I was literally sent to SIX different people. My bags had taken 25 minutes to arrive.
It took another 30 minutes to get my $20 vouchers. (Because, damnit, I wasn't giving up on principle! To the chagrin of my wife.)
And those $20? It expired in 2 months.
And despite being delayed for for six bags for 3 people, I could only use one $20 voucher.
The boarding process is bizatine based on some complex rubric of status.
Half the Alaskan personal I've encountered are nice. The other half are pretty miserable. They clearly hate their job. Or hate the customers. Possibly both.
Their fees and even basic pricing is overly complex. Their planes tend to be older.
The only defense I ever hear comes from either 1) people who have status or 2) people who say other airlines are just as bad.
(2) just isn't true. I've flown Korean Air, Emirates, Jet Blue, etc. and they are FAR better.
There is part of me that wishes we had let United, American, & the others go bankrupt in 2001, so better companies would have emerged.
Anyway, I hate Alaska.
(Source: Me. I typically travel on different airlines once or twice a month.)
https://www.alaskaair.com/travelinfo/destinations
Also, they've recently put in for a route to Cuba, if I remember right.
http://www.rdu.com/press-release/alaska-airlines-to-launch-s...
Virgin America's aircraft are almost all leased, so they'll be easy to get rid of and consolidate into Boeing aircraft.
[0] http://phx.corporate-ir.net/External.File?t=1&item=VHlwZT0yf...
~ Richard Branson
Edit: Didn't see the same quote below!
I enjoyed flying Virgin America, but losing this part of their culture will not be a bad thing.
If VX had to be sold to anyone, I'm glad it's to Alaska.
http://www.economist.com/news/briefing/21695385-profits-are-...
https://www.virgin.com/news/alaska-air-group-acquire-virgin-...
They had an ugly crash involving failure to do Mx on jack screws in the past.