Why airlines are always going bankrupt

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

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).

All US airlines have the same labor costs for pilots and it isn't their highest cost anyway. That would be fuel.

If you want to divvy up costs that way: Boeing is probably the biggest problem. Both them and Airbus eat up all possible excess profit on the back end via the cost for airliners. Break up Boeing, bring back competition in airliner manufacturing. People who want to screw over labor don't usually frame things in those terms for some reason.

Same thing happens in law, investment banking, etc... the hardest workers are often the youngest and least-paid. They do it because they know big money may come later.

It really depends on the market. In a potentially competitive market, deregulation can work as a function to drive down margins.

Air travel is such a market. Prior to deregulation, routes were set by government action and competition was limited. With deregulation, it's not that hard to setup a commercial scheduled airline, and new airlines popup relatively frequently to address routes where there is margin. It doesn't take that much capital to start an airline; you can lease the aircraft and contract out maintenance (might be part of the lease) and start with a single round trip per day. You don't need to start with a big network or a lot of aircraft. It's not so easy to get slots at busy airports, but you don't have to start there either.

Where deregulation ends up leading to outsized profits is where the market leads to natural monopoly and regulation provides an upper bound on margin, rather than a lower bound. Things like last mile utilities, where it's difficult to run multiple networks in the same space: ex water, sewage, electricity, telecom. In situations like that, to promote competition you want to do regulated unbundling, so there's one organization that runs the last mile and choices for service over the last mile: ex you pay the last mile for delivery of water per acre foot and also your water supplier who must deliver the same number of acre feet to the water network. (or probably a little more, water networks have shrinkage)

> Labor costs might seem variable, but they’re actually not: pilot, flight attendant, and mechanic compensation in the United States is governed by the Railway Labor Act of 1926 (which was extended to airlines in 1936), which stipulates that collective bargaining agreements don’t actually expire but rather remain in force until they’re replaced. So even your wage bill is more or less fixed over multi-year horizons.

> Chapter 11 bankruptcy protection—which allows a company to continue operating while it restructures its debts under court supervision—is practically the only mechanism by which an airline can renegotiate its rigid cost structure, from aircraft leases to collective bargaining agreements. Oftentimes this renegotiation takes on a rather predatory character. When United Airlines filed for bankruptcy in 2002 in the aftermath of the September 11th attacks, it terminated its pension plan...

> 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. For airlines, bankruptcy rarely culminates with liquidation; airlines that emerge from bankruptcy proceedings, having voided pension obligations and rejected aircraft leases, can operate at a fundamentally lower cost basis than their competitors. So bankruptcy doesn’t really restore the industry to a competitive equilibrium that can cover the cost of capital: it resets the floor at a lower level, from which a new round of ruinous competition can begin.

I've held the belief that an occasional bankruptcy is basically a sign of healthy competition within an industry: those companies going down literally didn't know how to be any more efficient or they could've survived.

Regarding airline business, a crapload of more people are flying now with better prices than before the industry was deregulated. Sure it must hurt someone at one end, eventually. Part of the business is standing through price wars because someone will always lose: the best companies can endure that. While airline industry probably fluctuates as described in the article there are plenty of other cyclic industries. Churn itself isn't anything new.

I think the bankruptcy process does tend to lead toward spectacular failure when the cost of operating is too far above the revenue from operating. Decreasing operations during bankruptcy makes the company less attractive and may not even significantly help the net revenue situation. You really need to be solvent or nearly solvent to have an orderly winding down. That said, wikipedia says they did reduce scheduled flights by 25% in Nov 2025, and I think they reducsd the size of their fleet in a similar time frame, so it could have been that much more confusion and delay.

Because fixed costs are what they are, I think, is the reason you can drive the business quite precisely to the brink of inoperation: it could literally come down to pure luck between how full your planes happen to be and how close you are to the next payment of some critical loan whether you can take off into the air for another month or so.

I have no reason to prefer it anymore other than if it’s the best on route and price. After all, it’s undifferentiated now.

It turns out that in-flight entertainment helps minimize unruly passengers, and flight attendants are there for safety, not just to serve passengers. Same for legroom requirements (egress).

Edit: I thought I recognized your name, I see we discussed pilot unions together on HN a few years back. Can I ask what you have against us? Out of genuine curiosity.

Do you realize you are infinitely closer to a pilot than a billionaire or a founder or whomever it is you seem to care more about than working people?

Class consciousness, solidarity, and workers literally fighting and dying earned you an 8 hour day, social security, and all the workplace protections you probably take for granted.