Starting an Airline
boeing.com
boeing.com
On a more serious note: there's a lot of talk on this page about the finance and logistics of starting a company like this - but I think the human factor is also worth mentioning. I fly a moderate amount, and whenever I have an hour or so to spare on a layover, I try to find interesting people to talk at the bar. While I've had varying levels of success, last layover at O'Hare, I spoke to a pilot who had been with a major airline for about a decade.
Having seen "Catch Me If You Can" and surmising that the situation must have changed, I asked him about his job. That was the most dismal response I've received from that question. We talked for about half an hour about how terribly pilots are treated, and how (maybe a bit of an exaggeration) a good number of beginner pilots for airlines are on food stamps because they're paid so poorly. I asked about benefits, and his response was, "just about every benefit you can think of is basically unusable." I asked him why he did it, and he told me that flying was like a drug.
Pilots are responsible for lives, and I'd feel a lot safer if my pilot was paid enough to survive. Yet, with dwindling margins and a thriftier consumer base, it's going to take a lot to disrupt this industry. In reality, I don't see anything major happening without some drastic innovation that cuts associated costs significantly in order to build up that margin.
He was so upset with the airlines that he quit (also trying to save his marriage). But he loves flying so much that he went back to the same airline, and had to start over again at the bottom of the seniority ladder.
He says that flying is so much fun that he just thinks it's great that he gets paid to do it instead of having to pay to do it, ha. Still, though, he's enrolled in classes again so that he won't have to pay off his student loans because he can't afford the payments.
P.S. Professional pilots are known to whinge quite a lot so you might want to take what he said with a little pinch of salt... try lurking on www.pprune.org for a few weeks and you'll see what I mean :)
P.P.S. Having said all of that, some shocking stuff really does occasionally go on (I've personally seen it happen) so there are genuine grievances out there.
They get paid per SBH (Scheduled block hour) which lands them - during the first few years, on average - a gross income of €4000. Since most of these pilots are contractors but technically have only one client they'll have to pay for everything themselves (social security, pension, medical insurances, liabilities, income races). Depending on the country your based in this may tax your income by up to 78%.
Not to much to live from, let alone pay for interest on a student loan. And don't even think about repaying that debt.
But like mentioned in earlier comments: flying is like a drug, it's a beautiful job.
Finally, most of the European States have funny regulations about building new house, so most of the cities are crowded and rents are way too expensive.
http://blogs.wsj.com/middleseat/2009/06/16/pilot-pay-want-to...
I know a guy who flies less than 20 hours a month but makes well over $100k/year. He's been a pilot for over 20 years and knows how to work the rules so he makes money even when he's not flying (being on standby and such).
(Actually, the regional carriers that employ newbie pilots are non-unionized.)
Unfortunately "The Market" optimizes for profit, which is almost never in my (and the consumers') best interest.
Like this: http://www.dailymail.co.uk/sciencetech/article-2324358/Welco...
Although one part of travel is about the physical experience of visiting different places, another major part has to do with connecting people. Here, the real disruption is the internet. I'm not saying flights will ever go away, because we'll always want to move around, but I am saying that we'll feel the need to travel less as connectivity improves.
Paramedics, who do even more, including being entrusted with cardiac drugs, narcotics, and skills up to and including cricothyrotomy, often fare barely better than said barista.
http://www.indeed.com/salary/EMT.html
Shows EMT-B salary at $19,000, and EMT-Paramedic salary at around $41,000.
Source Two: I worked as an EMT-B. Starting salary was $9.60/hr ($19,200), with 3% annual pay raises.
> Yet it is the peculiar genius of our society that its rulers have figured out a way, as in the case of the fish-fryers, to ensure that rage is directed precisely against those who actually do get to do meaningful work. For instance: in our society, there seems a general rule that, the more obviously one’s work benefits other people, the less one is likely to be paid for it.
I don't work in the airlines, but I'm a private pilot with lots of friends and family who do work or have worked in the airlines (and in the aviation industry in general).
Expenses are high and often unpredictable, and profits are low. A lot of airlines operate on incredibly thin margins, where only one problem could push them into bankruptcy. Back in 2008, Frontier Airlines had to go into bankruptcy (and was ultimately acquired by Republic) due to a dispute with its credit card processor. http://en.wikipedia.org/wiki/Frontier_Airlines#Bankruptcy_an...
Competition is also fierce and is almost entirely price-based. While there have been a few attempts at competing on other metrics (there were several attempts to start business-class only airlines in the late 90s and early 2000s) have almost universally failed. In fact, the only one I can think of currently is OpenSkies, and it is backed by a major airline (British Airways).
It's also (as you would expect) a very complex regulatory and legal environment. Simply getting off the ground can take years of work.
I have idly thought about a small airline that would connect a handful of smaller towns across the Southeast that lack affordable or convenient air service to larger airports, where they could interconnect with the majors. But when I even begin to look at the numbers, despite what an exciting idea I think it could be, I know there is no way it would be successful.
OpenSkies is three-class service now. And pretty much just boils down to the name of the BA route between NY and Paris-Orly without the need to connect via LHR. Pretty bizarre, if you ask me.
There are still business-catered offerings, they just tend to be a division of a parent (legacy) carrier. US Airways and Delta's "shuttle" offerings between major business destinations on the east coast stand out as an example.
A couple of the large airlines do still have all-business-class flights, too (BA's oddball little transatlantic A318, to take an example; Singapore's "longest flight in the world", which is about to be discontinued, is another one, using specially configured A340s). It's just that there doesn't seem to be enough demand to sustain an entire airline dedicated to the idea.
Yeah, this is kind of what I meant. The only people capable of doing this are the majors (and then only on a small handful of mostly-Transatlantic routes). Every attempt so far at building a whole airline around the idea of not competing on price has met with failure.
And, as a sidenote, I really want to take that BA JFK-LCY flight sometime, if for no other reason than it uses the old Concorde flight numbers.
P.S. Happy to see fellow aviation geeks here on HN
I'm not sure in the case of LCY<->JFK the connection network is really a factor, but I think the other two things sunk MaxJet, Eos and Silverjet. (It probably didn't help that they all launched around the same time as well!)
I was just on a Frontier flight a few months ago where nothing but water was free and they were being EXTREMELY strict about carry on size, which produced probably a dozen or so more $25 bag checking fees from people boarding. I have to expect these fees will only continue to grow in order to make up for lost profits on the original sale
http://www.skyscanner.net/news/best-wearable-luggage-jackets...
I suspect that the U.S. market will continue the race to the bottom, but elsewhere quality will continue to thrive.
Scandinavian Airlines' advertising is currently all about: "luggage: free. card fees: zero, online checkin, assigned seating: free, coffee, newspaper: free, breakfast on board: free, canceling fee: waived within 24 hrs" to capitalize on the passengers who have been burned by picking the cheapest option.
Also meanwhile in Asia, I don't think any of my flight searches have ever turned up Singapore Airlines as the cheapest, yet they're doing amazingly well.
Among the western nations, at least, passengers claim to ant all sorts of amenities -- checked bags, in-flight food and entertainment, etc. -- but all of those claims go out the window when presented with the price tag, which is ultimately the driving force.
The logical result of that is unbundling of all of those bits, such that you can get a bare-bones "just fly me from A to B" fare and then anything on top of it is charged as a separate fee. And that is overwhelmingly the fare people choose, because it's the cheapest one.
There are some airlines bucking that trend, many in Asia or the middle east, and one or two in the western world. But mostly the way they do that is by distinguishing themselves to international business travelers, who are far less price-sensitive than vacationing families.
I've thought of this as well. It's actually not very practical. Check out UPS shipping fees. Except in very edge cases, they are way more expensive than taking your bag with you.
Here’s an interesting article on a new airline that seems to be doing pretty well: http://www.bbc.co.uk/news/business-23959197.
Granted, it’s a very different kind of airline that Flohr is creating.
Renting in the main city airports is very expensive but the ones further out aren't so bad.
To organically grow, you'd need to find desirable and under served routes between smallish airports, build a loyal following, then maybe you take a risk, borrow money and attempt to move mainstream. Not impossible but it seems like you'd need just tons of money.
Is there much room for value add and innovation? The most obvious area I can think of off the top of my head would be an airline that did all their own security and skipped tsa but I don't know if that's allowed and I think the work would be akin to building your own airports.
When I stood there under the Eiffel Tower, I felt like I never had a grand thought in my life. To think that massive undertaking started in someone's head is just humbling.
So I feel you. I feel so small.
http://en.wikipedia.org/wiki/Aircraft_lease#Wet_lease
e.g. EasyJet started with 2 wet leased 737-200s:
Pivoting in the airline business is difficult, changing from planes to boats is cumbersome; scaling is the only option.
(And my planes scaled from toy size to 1:1)
Major commercial air travel is a commodity business. Where opportunity lies is perhaps in offering air travel solutions that bypass the hassle of airports. Shuttles between SF, LA or Houston and Dallas for example. These are heavily trafficked routes with mostly business travelers who would love to avoid long security lines and drive right up to a plane at a small airport.
Most definitely not.
You do need to rent or buy space (and ideally slots) at a bunch of airports. You can also lease planes.
A budget of "tens of millions" would be eaten by a small airport alone (estimates for extending and overhauling Plymouth's airport to link to international traffic and handle up to 115-seaters are 30m GBP)
And then the other day I saw someone point out that there are now hub-to-hubs on United Express regional jets.
It's an illustration of why banks and bank debt are so important in our economy! This capital-intensive sort of business doesn't happen by an entrepreneur writing a $1 billion check from funds he has on hand.
Edit: I think I need to dial down the subtly of my humour.
The interesting part is that once they lend the $1 billion, and it's spent on aircraft (etc) and ends up in the bank accounts of Boeing and its contractors and its employees and the raw materials companies... then there's $1.1 billion in the original bank's accounts and $1 billion in all the Boeing accounts and there you go, they've turned $1.1 billion into $2.1 billion. And Boeing-etc's banks' can loan out up to about $909 million with it, and so on and so forth. Which may be what you're thinking of.
Now, the bank can borrow some or all of that $1.1 billion. And sometimes they can borrow that from the Fed. But the Fed isn't too big on that, and in non-2008esque-crisis situations tries to discourage it.
'The capital ratio is the percentage of a bank's capital to its risk-weighted assets. Weights are defined by risk-sensitivity ratios whose calculation is dictated under the relevant Accord. Basel II requires that the total capital ratio must be no lower than 8%.'
http://en.wikipedia.org/wiki/Capital_requirement
With $1 billion in deposits a bank may lend upto $12 billion under Basel II assuming a risk weight of 1.0
With $1 billion in assets and $12 billion in liabilities the capital ratio is 8%.
Where does the bank get this extra $11 billion? They borrow it from the Federal Reserve, unless they are lending it to another of their accounts in which case they just credit the account.
You take the blue pill – the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill – you stay in Wonderland, and I show you how deep the rabbit hole goes. Remember, all I'm offering is the truth – nothing more.
Say someone deposits $100 cash (federal reserve notes) into Bank A. Let's say the reserve ratio is 20%. It takes $80 and loans it to someone, who deposits in the same bank. It then takes $64 of that and loans it to someone who deposits in the same bank. It then takes $51 of that and loans it to someone who takes out cash and holds it.
The bank has the following assets: $20 + $16 + $13 in reserve, plus loans of $80 + $64 + $51 = $244.
It has the following liabilities: $100 + $80 + $64 = $244.
Now, if those loans don't get repaid, the bank might not remain solvent, but that has nothing to do with fractional reserve banking. Any entity that is solvent on the books can be rendered insolvent by loans going bad.
The Basel regulations are, as the term "risk-weighted assets" which you quoted implies, about the riskiness of assets of the bank.
NB: Loans made by a bank are assets of the bank, and they are risky, that is why Basel regulations are relevant. The corresponding liabilities of the bank are the money that is created in the debtor's accounts when the loan is made. But those liabilities are not part of the Basel computations, because Basel is about risky things. Risks do not come from liabilities, because liabilities are known, certain quantities. Risk only comes from assets.
When a risky asset has to be written off (e.g. loan goes bad), then the asset side of the bank's balance decreases. This is offset by an equal decrease on the liability side of the bank's balance. To be precise, the bank's capital is reduced (yes, capital is a liability).
This makes sense because capital represents the "liability" that the bank has towards its owners. When the bank makes bad decisions, the owners are supposed to pay for it in properly implemented capitalism.
When capital goes below zero, the bank goes bankrupt. Therefore, the ostensible goal of the Basel regulations is to ensure that capital never goes below zero (or, at least, that a lot has to go wrong before that happens).
This is why a risk-weighted sum of the bank's asset (the things that can go bad) is compared to capital (the only liability that can be legitimately decreased).
This is a required ratio between accounts of clients of the bank and money that the bank itself has in its account at the Fed (or as cash in its vaults). As such, it does not even have anything to do with loans in the first place.
The only way it has anything to do with loans is that as a loan of e.g. $1000 million is created, the bank creates a new account or marks up an existing account to the extent of $1000 million.
The minimum reserve requirement then increases by 10% of the newly created money, i.e. by $100 million. If the bank does not already have a sufficient amount of central bank money in its accounts, it must obtain this money within the next two weeks or so.
This is what happens in practice: Banks create loans based on creditworthiness of potential borrowers. An institutionally separate department of the bank then ensures sufficient central bank money to satisfy regulations.
tl;dr: Your number of $1.1 billion is completely wrong. The number $100 million would be somewhat less wrong, but is still not correct. In reality, banks do not need any money to make loans. They do need to satisfy minimum reserve requirements, but if necessary, they can obtain the required money after the loan is made.
The main "problem" with capitalistic business is in expectations. People need to realize that every day comes with risk. And only through that risk do we see reward. But the little guy working the line, he just wants a paycheck with no risk. Unfortunately there would be very little reward if that were so.
The little guys working the lines usually don't have safety nets and credentials—inherited money, money from previously founded business, mentors, a reputation, or even supportive relatives—so their fear of failure is somewhat justified.
The days of retiring with a gold watch and pension were gone long before I ever hit the market decades ago unfortunately.
It bugs me that it's often the poor that want free markets and cheer most for it, and shun co-op stores. The system is betraying them, they should just get away from it and focus on positive systems like co-op self-sustaining communities.
This is a bit of pseudo-economics that's popular in the business community nowadays. Risk can be priced, in that it costs money to shift risk to someone else and you can charge a premium for taking on risk yourself. But statements like "only through that risk do we see reward" are just mumbo-jumbo.
Of course, you can construe any activity to have some risk. After all, there's always the possibility that your currency collapses, or something. However, ignoring that sort of possibility, risk is not necessary to make money in a capitalist system.
Or to pose another example, starting a restaurant is probably riskier than starting a B2B software company, but also probably much less financially rewarding.
Aren't you just pushing the "problem" back one step? The entrepreneur writing a $1 billion check from funds he has on hand is now the banker, not the airline guy. Of course, I guess these days you can keep pushing that back until you hit the federal reserve (or other central bank).
The key to understanding the fractional reserve system is that banks take title to your money when you deposit it, and you get in return an asset (the account) which is essentially a promise to pay you that money on demand.
A bank can't just "create" $900 million by making a $1 billion loan when it only has $100 million on hand. Rather, depending on the reserve ratios, $1 billion in notional assets can exist backed by only $100 million in central bank money. That's because those notional assets are not in fact money, but IOU's that people are willing to treat as functionally equivalent to money.
A better intro than the link you posted is this one: http://neweconomicperspectives.org/2011/09/mmp-blog-15-clear...
The crux is that there are really (at least) two types of money: Central bank money, and money used by "the public". They live in two different "monetary circuits", and while those circuits are not entirely unrelated, they are completely isolated from each other; money cannot go from one circuit to the other.
Ignoring cash for simplicity (and it is little volume anyway), central bank money is only the electronic currency on accounts at the central bank, and it only moves between banks and other financial institutions.
Money used by the public is cash in circulation as well as money on checking accounts and so on.
Banks cannot create central bank money, but they can and do create money in the other "monetary circuit". It is true that the amount of money in the public monetary circuit must be less than the amount of central bank money times a factor (the inverse of the reserve ratio).
However, in practice, this limit works the other way around: When the amount of money in public use grows "too large", central bank money is automatically created by the central bank (this has nothing to do with quantitative easing; it is part of the normal market operations that the central bank always performs to achieve its interest rate target). Because of this, the reserve ratio does not limit the creation of money by banks.
But the bank still needs to have the $1.1 billion on hand first, so that it can have that $100 million after the billion-dollar check goes out.
This is a straightforward conclusion of how monetary aggregates such as M1 are defined: Among other things, M1 includes money in checking and similar accounts. The creation of the loan involves, among other things, adding $1000 million to some checking account, without reducing the amount of money anywhere else.
Hence, $1000 million is created net.
This contradicts the story that most people are familiar with, but it is a more accurate description of reality than that other story.
Fraudulent activity by the banks should be the corporate equivalent of a capital crime.
Every major banker should be held personally accountable to the actions of the banks they lead.
The airlines were, for a long time, subsidized by air post. Fuel prices are still much lower than they could be.
These things are barely directly profitable, but they contribute immensely to the global economy. That's the interesting tradeoff in post-capitalism.
Disclosure: Former Boeing Employee.
Some R&D examples I've seen is the movement of advanced electronics and structural materials from military craft to commercial craft. Boeing and AirBus both benefitted tremendously by their military contracts.
If you look at things like the Boeing/Northrop Grumman Tanker contract, then it is hard to fathom that any of the $35B for 180 planes (that's 190M for each plane) wouldn't lead to significant development that could be shared with Boeing's commercial sector.
The Boeing 737NG line is probably their most profitable product overall. That is from Boeing Commercial Aircraft.
Some financials for your reference [1] http://boeing.mediaroom.com/index.php?s=20295&item=128736
It does give you economies of scale in the sense that any larger company gains purchasing power and for that matter visibility (and political power) by employing more people.
So at some level when you're spending millions of dollars instead of tens of dollars you're still not planning on losing it, but recognize that if you do it will be a problem. And you are working through a checklist and getting stuff done and correcting for unexpected events. Some folks find that really invigorating, others find it completely paralyzing.
Of course the airlines have issues with barriers to exit too, which come with their own problems.
The interesting thing to me is how a vendor is trying to create demand by encouraging the creation of customers. And it's not a new world tech company that's doing this.
The total startup capital, if I remember was around $3 million and then they raised double that a year later on the stock market.
They are not profitable yet but they are pretty competitive with the old/only airline in the country.
I forgot to mention that they enjoy no competition in my town (basically they revived the town small airport) but not much on the rest of the country (being sabotaged by the national airline)
If the headline figures I've seen are correct, their IPO sold nearly half the company for approx ~$15 million (or about three month's revenue according to their Q2 figures) in working capital.
They have 6 aircraft on order with Airbus which will cost them something in the region of $300 million over the next few years (which they'll probably fund with a sale/leaseback arrangement with an aircraft leasing company because another IPO wouldn't even scratch the surface...)
Those figures give you an indication of why it's easy to get the economics of a startup airline wrong. Imagine Silicon Valley working on those numbers!
The airline industry as a whole is not. It's lost about $60 billion since deregulation in 1978.
This kind of makes it difficult for the airlines to make anything, especially on the down years that don't match projections, when they end up paying out over 100% (and end up having to borrow money, or get bail outs).
That's the power of the modern age :-)
This analysis from McKinsey is worth a read: http://www.iata.org/whatwedo/Documents/economics/Profitabili...
The cost of flying and operating an airline is so expensive that airlines also optimize on costs and prices.
Virgin stands out as trying to change, that, but otherwise for everything economy class it's a race to the bottom.
Looking at prices you'd think we value things we need lower than things we want.
When United and Continental merged and began adding E+ to the Continental fleet, most aircraft were completed pretty quickly since that change can be made during overnight maintenance at the hubs.
I was looking into flights to Japan, and the Premium Economy tickets are literally double the regular economy tickets.
Many domestic flights have Premium Economy for less than double the price, but it's still expensive enough and the benefits not great enough (generally only a couple of inches of legroom--no change in seat width, no better service, etc) to generally not be worth it unless you are flying cross country.
There is, sort of. It's easy to look at the interior of, say, a 737 and conclude there are only two or three "classes" (economy and first, and possibly some sort of premium-rate economy with extra legroom), but fare-wise there's enormous variation.
On -- to take an example legacy carrier -- United, the "economy" cabin is actually made up of fourteen different fare classes. Deciding how many seats to offer in each fare class on a given instance of a given flight on a given day is a stupendously complex task which largely gets hidden from the customer (for completeness' sake, "first class" and "business class", on planes which have them, have three additional fare classes each).
A big part of it is that there's more to it than just the seat, which is obvious since all those different "economy" fare classes end up in the same or very similar physical things-to-sit-on. The number of factors, though, is frighteningly large.
For example, your origin and ultimate destination factor into the fare, as do whether it's one-way or round-trip, and how far in advance you booked, and whether you wanted a refundable ticket, and whether it was booked by a corporate travel department on your behalf, and whether it was a seat offered to third-party travel-booking and search sites, and what day of week and time of day the flight is operating, and whether it's a seasonal offer to a popular vacation destination, and... that's the tip of the iceberg.
1: http://www.dailymail.co.uk/news/article-2329405/Virgin-Ameri... 2: http://www.bizjournals.com/sanfrancisco/news/2013/08/07/eyei...
I haven't given this much thought but a lot of it isn't necessary at all.
1. Vacations abroad - vacation in your own country or take a boat
2. Business - a lot of business can now be conducted online which previously required air travel
I'm sure those two things alone make up a vast portion of the consumer air travel market.
That has been repeatedly established, and there are very strong reasons why people with very limited time still travel a lot of hours to conduct their business.
Not everyone is the same, but it is the norm rather than the exception.
http://www.iacconline.org/content/files/WhyFace-to-FaceBusin...
From the paper: "From a psychological perspective there are a number of positive features about faceto-face meetings that cannot always be achieved as well via other forms of communication.
Face-to-face meetings allow members to engage in and observe verbal and nonverbal behavioral styles not captured in most computer mediated communication devises. There are nuances associated with hand gestures, voice quality and volume, facial expressions, and so forth that are simply not captured in email discussion, chat rooms, and the like. Even videoconferencing does not capture all of the dynamics of group members (e.g. the expression of others while one member is talking, etc.).
A further advantage of face-to-face meetings is that they occur in “real time” as opposed to non-synchronized time. Computer mediated communications often are delayed because of a variety of reasons, not always received, and sometimes disrupted because of technical problems.
Another feature is simply the fact that face-to-face business meetings provide human contact among members. Human contact is a primitive need among human beings.
We are social creatures and isolation is harmful. A recent article in the New Yorker magazine8 discussed the impact of social isolation and concluded that “simply to exist as a normal human being requires interaction with other people” (p. 36). There is much psychological research affirming this proposition—that individuals need personal contact with others to satisfy deep primitive psychological needs. Face-toface business meetings help meet these needs. Emailing and even teleconferences are not as likely to meet these needs, notwithstanding the enormous popularity of Facebook which basically provides electronic connections between social “friends”. However, the popularity of this website suggests that people might be even hungrier for social friends than can be satisfied in their present day-to-day work and personal lives.
Similarly, business meetings allow participants opportunities to develop important exchange relationships among themselves. These exchanges can be in the form of business negotiations, personal favors, promises, understandings, etc. that cannot often be achieved via other forms of communication because of their personal and informal nature. One psychological theory that emphasizes this notion is “social exchange theory” where human relations are viewed as an exchange of rewards among individuals or achieving equity between “what you put in” compared to “what you get out” of relationships."
http://www.forbes.com/forbesinsights/Business_Meetings_FaceT...
It would be interesting to do an experiment:isolate someone for a period of time, but let him have full contact with family and friends via the best electronic means we have , and measure the impact of his mood and well-being.
No amount of telephone calls, chats, Facebook or Skyping can compare to in-person interaction. I have a photo of a recent Christmas, with 3 screens with Skype calls to family in Canada and Europe on each screen, and while it helps to "be" there more than just a phone call, it's still nowhere near the same.
It is of course anecdotal, but that was my experience.
I didn't have a full-wall videoscreen with HD, maybe for a limited environment like a meeting it can be a very reasonable simulation... but at least in Latin countries like mine, "real" negotiations and bonding/trust building occur over a shared meal or other shared experiences, which cannot be currently simulated.
Going back to the original topic: business air travel isn't dying soon.
Maybe some inmersive 3-d environment will finally kill it (and we'll see Second Life as an innovation before its time, much like the Apple Newton?)
And we know from the "uncanny valley" that humans are very very sensitive to little things in human/human communication.
So it might just be that telepresence offers a altogether different quality of experience.
And regarding the topic - currently , maybe business air travel isn't dying(thought in 2009 there was a lot of talk about disruption from telepresence). But assuming we'll find the formula for remote face to face communications, and assuming there's enough bandwidth, the pace of change could be rapid(unless people will keep sticking with tradition, which might be the thing now that slows the process).
Anyway, i would be really interested to see major deployment of telepresence quality systems deployed in homes, and how that would affect culture.
I don't want to move from Uruguay, but a person with similar qualifications in the U.S. makes at least twice as I do.
If telepresence makes it easier for me to work remotely, it would be huge for me.
The telepresence robots are cute and maybe a step in the right direction.
Even if we take 150 as our guiding figure, if we assume direct fiber optic connection between sites, the maximum distance would be 45000 kilometers, which can basically connect any 2 points on earth.
So theoretically at least, it's possible. Achieving good latencies in real life is much harder though :)
[1]http://www.cisco.com/en/US/docs/solutions/Enterprise/Video/t...
As an example consider the trouble for businesses if they could not mail legal documents or critical parts overnight. Consider Disney World vacations if everyone had to drive across the country to get there. Consider all the cities in the country that would wilt because no one wants to drive all the way there. Consider people not wanting to drive 18 hours to attend the Super Bowl.
A lot of money moves around the country on those planes one way or another.
[1] http://www.nytimes.com/2013/09/08/business/at-virgin-america...
Further to that, their profits are always being affected by fuel prices. If you read an airline's annual financial report it will talk about buying fuel futures to minimise the risk but they are still vulerable: http://www.transtats.bts.gov/fuel.asp?pn=0&display=chart1
Just look at the posted chart: http://centreforaviation.com/images/stories/2013/jul/05/ROIC....
What's at the bottom? Airlines, electrical utilities, paper, metals, construction materials, and trucking. These are all products that are highly standardized and fungible. You're never going to sell trucking services for 10x cost by making it a "lifestyle brand" the way Ralph Lauren sells jeans for huge margins.
You can also use branding-slash-marketing to make your fungible product seem less fungible. Witness, for instance, how cattle ranchers used marketing campaigns to turn "Angus beef" into a premium, name-brand product (http://bbq.about.com/od/beef/a/Angus-Beef.htm) that customers don't believe is directly substitutable with unbranded beef.
Except when it is not. Soft red, soft white, hard red, etc. Grading, protein content, etc. All can change who is willing to buy the product, and more importantly, how much they are willing to pay.
Emirates gets huge subsidies because its a goal of Dubai to become a world air hub. It certainly makes sense for them given their geographical position but I don't see how US carriers are supposed to compete with that.
Perhaps the UAE(/European/applicable foreign) governments should start charging US carriers an extra fee to combat the subsidies when they land abroad.
I'm sure no-one would complain about that or attempt to use the US government's muscle to fight it...
at least they give a handy price list.
http://www.boeing.com/assets/pdf/commercial/startup/pdf/busi...
These planes aren't cheap. More than a AWS, digital ocean and a linnode combined!
http://www.flightglobal.com/news/articles/sales-drought-take...
What is fails to show is fuel usage, operating costs, maintenance and all the other things that will bankrupt you if you aren't careful.
edit: typo
It's someone with a product for sale to a category of businesses, helping people start more of those businesses. Similar approach could be taken by more entrepreneurs, especially those looking for good blog content.
It's an incredibly crowded field now, and even many of the LCCs themselves collapsed.
[1] It seems a little counterintuitive, but in the airline business, there is almost a reverse economies-of-scale effect. This is because routes can't be flown on demand, but must be scheduled, and so you're maintaining a fixed supply while dealing with variable demand. You don't have a lot of fantastic levers to pull to deal with fluctuations in real time, because you can't redirect inventory (planes, crews, etc.) on demand, and canceling flights causes chain reactions across hubs and spokes.
This is why a lot of the big carriers have been cutting flights and routes like crazy in recent years. Faced with undersupplying or oversupplying the market -- and faced with all their other enormous costs -- they'd rather bet on undersupply. Passengers these days aren't incredibly loyal to any given airline, and they're very price conscious. They won't give you credit for having a bigger network; all they care about is getting from A to B right now, and finding the best price in so doing. So having a bigger network can often be a liability.
The key issue is that you don't just need to be certified to fly a 737, you need to be certified to fly a 737 for a specific airline. This makes strikes extremely powerful because you can't easily hire replacements.
In fact, starting with a fraction of a plane / plane-on-demand would be even less risk.