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Matt Stoller: How To Fix The Airline Industry’s Structural Problems | Breaking Points

Matt Stoller breaks down the structural problems in the airline industry creating the current dysfunction and how to fix them

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  1. The current Secretary of Transportation is merely a diversity hire for the current administration who has no actual experience regulating anything beyond a small midwestern city, let alone a national transportation infrastructure, a fact evidenced by the fact he was on two months of family leave during the height of the supply chain crisis, and NO ONE NOTICED.

    I know the left leaning part of Breaking Points is simultaneously enamored of the idea that more government regulation can solve all our problems while pointing out the myriad failures of government regulation, but the reality is that executing Mr Stoller's ideas of reregulating the industry will merely mean less supply (as Capital will flee to more profitable industries) at higher prices (because with less supply, why not?).

    As to his contentions about the "physics of flight" or whatever, I just spent the better part of the last decade flying regional jets out of a large southeastern city, and I can count at least a dozen cities that we served that one could merely drive to in 3-5 hours, or even less. He's not entirely wrong on his cost contentions, but we didn't serve GSP-CLT because of all the people in upstate SC that wanted to go to Charlotte (there's I-85 for that), we did it because of all the OTHER places that people wanted to travel do, be it HNL, LHR, or anywhere in between.

    Lastly, he totally ignores the other major segment of the industry that exists (LCCs and ULCCs) and their role in filling in some of the gaps that exist in our airline market. To be sure, they're not the end all solution, but it is an example of upstart airlines filling a niche role in certain markets and have largely been more profitable than the larger network carriers doing it.

    I get that air travel has been very frustrating lately, and from my view it's obvious that the various C-suites at the airlines didn't anticipate airline travel coming back this quickly. It is absolutely true that in 2020 airlines were incentivizing as much early retirement as they could, but I think it's worth taking a step back and realizing that in 2020 no one knew what the future was going to look like. I think one of the things that Mr Stoller gets absolutely correct is that airlines have been planning schedules assuming nothing will go wrong in their execution, and one of the things that should have been obvious is that that's not reality.

  2. It's been downhill since 9-11. I won't fly as an autistic person with multiple disabilities and a wheelchair and medical Cannabis. No way! Airlines break wheelchairs and I need my cannabis as my medication

  3. You sound like you want even more of a pilot shortage lol. When someone that doesn’t know anything about flying and talks about flying you get this. As a pilot the one thing that needs to be done is the cost of training and the 1500 hours requirement . Why can some woke kid that identifies as a horse get a student loan to get a degree about nothing but an aspiring pilot has to go pay $150 an hour until he gets to like 300 hours and then get a 4 year degree after that. Lol

  4. Nice work Matt, but not a single word about curtailing unnecessary flights because of the horrendous impact on the environment? Typical bourgeois wanting to have its cake and eat it too. Take the damned war machines out of the air too for crying out loud!

  5. The problem with some of this narrative is that before deregulation, most routes had two options at best and most were outright monopolies. So having more airlines doesn't matter, duopolies route by route are actually more the norm than not. The old deal was denser networks for the equivalent of business class fares. Competition could help, but choosing between Southwest and Frontier really isn't a huge choice. We need regulation, but not what we had before 1979. Those regulations were slowly killing the industry like the railroads even though it was working well for a long time.

  6. You know how we could somewhat fix the Airlines? By building and upgrading our trains and train lines. We need high speed bullet trains ASAP. Until Airlines have competition, they won't care. We are so behind in train tech it's embarrassing that even third world countries and even less developed countries have better trains than we do. If we had a system like Europe at least we would have other options to travel besides driving. Also, the Government needs to stop letting Airlines merge, less Airlines equal less competition which is why we're in this mess.

  7. it isn't a structural problem it's a legal one. ceo's and directors make company policy, the company makes great profit – in the short term – so they all make bank and don't care what happens after that. if any fines are levied they don't care because they're levied against the company itself not the people at the company who made the decisions, and if the company goes bankrupt they don7t care because they already took their stock options and bonuses, and if they get bailed out well even better because then they get a second dip at public expense.

  8. Great piece! I lost money on a flight when covid first hit. It was financially a difficult year for me already. That experience made me realize how disgusting and greedy their business practices are. I'm glad I don't need to take flights for business right now, it'd be awful giving them more of my hard earned cash when they still owe me for my ticket. I truly hope they get regulated and maybe even some lawsuits/fines coming their way.

  9. As a working pilot.. the 1500 rule has been, is, and will be the common denominator of all the fu—ery.
    Arbitrary rule by the FAA to ‘quell the fears of the flying public’

  10. Matt Stoller, WOW! You spend the first half of the video explaining how the Government regulators of the airline industry where corrupted by big corporations and led to a market with fewer and fewer competitors and how that is awful for us, only to suggest the solution is to create a department of Government regulators with the power to mandate who gets the most profitable airline routes. HOW COULD THAT GO WRONG!?

  11. The airlines lose money on the flights, but gain money on selling "miles" to credit card programs, so it's better for them if they fly less. There's some good videos on this.

  12. smart guy who presents interesting topics but he has to work on presenting the information. He's got to take a breathe and be more casual. His anxiety seeps through and I feel anxious just listening to him.

  13. The airlines took the covid bailout money on the condition that they don't "fire" people, that they keep them on the payroll. Instead of "firing", they paid a huge part of their staff to retire early or permanently furloughed them. Now they're predictably massively short staffed after using most of the bailout for stock buybacks and other management level pay. They looted us and now they're looting us again while hitting us in the face with their unethical practices. In a decent country they'd be going to jail.

  14. I am glad they stopped keeping us on the runway for multiple hours so they can say their flight was on-time. It is pretty sad that we are requesting the government has to regulate them. They should be able to do this themselves but they have proven they cannot. The government influence should be coming in the form of preventing all of these mergers. The printing industry in this country is pretty much 1 company. This company is dominate across the world but especially here in North America. Great job Matt. I learn much from you.

  15. Love Matt’s breakdowns. Content is fantastic, however, I don’t think the single-take videos is the right format for him. He would thrive much more in a video that’s edited and cuts out a lot of the wording fumbles, uhs and uhms. It would make for a much better listen and put him in a format to see him succeed.

  16. Libertarians: The invisible hand of the market will do everything!!! If the invisible hand doesn't work, make it TWO!!! invisible hands, one hand to hold up the falling debris, the other hand writing a one star yelp review.

  17. Very good coverage for such a short segment. Do more of them, especially covering the dual economy of low wage regional carriers and faked bankruptcies to weaken unions. How could American be bragging about new 777 300ERs that cost over 300M USD each while in bankruptcy?

  18. If we had a rational transportation system that was truly intermodal, we would use rail and bus to effectively fill-in and cover those smaller markets to move people to the large trunk air hubs without the need to waste a lot of fuel on small plane short-hops. But we don't, and you take your life in your hands if you have to ride "The Hound" between cities in the U. S., and outside of the Northeast Amtrak does not contribute to the network in any significant way.

  19. Matt you do a great job breaking down complicated issues.
    My only problem with your assessment is bringing in the government to fix this problem. The government is not lead by brilliant people that could put together a workable plan. It’s lead by incompetent people like Pete. Putting more control into the hands of a bunch of kooks is not the fix.
    As always keep up the great work.

  20. I'm going from new york to florida for 95$. In total 198$ for my fiance and i with baggage. Finally the fuck up system worked in my favor. I've been worried about flying and almost pissed myself when i saw how cheap the flight was going to be. Now it all makes sense. Being a single mom struggling to pay rent I still feel a sense of guilt that this happens at the expense of so many other people. I would even be willing to pay more if it helped balance the economic system of flight. I think most people care more than our own politicians smh

  21. I worked in software backend for airlines for 15 years, structural issues are threefold:
    1) legacy software, sometimes 50 year old mainframes. Seating kids with family for free means implementing a new feature in a lot of legacies (not always possible) or dropping all seat fees – a major income source for companies which for the past 20 years broke their travel experience into package of ancillaries priced separately. It's a business model, which leads to a second point.
    2) legacy operation model. Changing schedule and fares structure is done rarely and centrally because it's very expensive and complicated. For schedule you need to update data on multiple types of mainframes AND coordinate with airport across the world. Fares should also go to multiple systems and it's a complicated data structure to manage it anywhere realtime you need to use ATPCO feeds with millions at annual subscription cost. All your online booking experience relies on multiple sites backed by various data sources which myst have data in sync across the board.
    3) it's international travel, affected by domestic laws everywhere. It's already fractured due to sanctions. Stiff regulations in the US alone affecting business and operation process will kill off international travel. London Heathrow with gate slots assigned to airlines doesn't give a damn about American laws and will demand filling those gate slots.

  22. All your points are valid, but they affect only US domestic market, which won't solve current crisis with people flying on vacations abroad. To change industry for international flights, you need to push them through IATA. Remember that actual airports must also be included into solutions, and I mean London, Paris, Tokyo and such.
    There's another oligopoly affecting all this – over online booking experience, controlled roughly by 3 companies in the world – American, European and Chinese. Infrastructure and operational model affect how schedule and fares are prepared and distributed and kept in sync, it's not easy to change that.
    Online booking caused dismantling of old infrastructure of airline call centers and travel agent network – so we cannot go back from these booking oligopolies.

  23. One of the best synopses out there of the fuckery that happens when corporations and our government meet. Not much out there left that works in the direction of the working person or paying customer. Whether we are paying for goods and services or our government. Not much bang for the buck.

  24. Capitalist approaches work great when you want to have a super efficient market and get rid of redundancies. But, just like an airplane with one engine, you sacrifice RESILIENCY for EFFICIENCY. In a nationally critical industry like airline industry, resiliency is critical and of national importance. Hence, it is important to make sure there are social good mechanisms to ensure that people within the country can move about comfortably within the country and that when it comes to international business, we are easy to do business with.

    The standards for this type of analysis is so low that it is easy to dismiss the problems with Matt's take. The biggest is to make sure the problem is identified as clearly as possible and as objectively as possible. The best way to show that the problem is objectively what it is, is to share data. for example, Matt points to several issues without data backing it up. Flights to smaller cities and midsize cities have reduced. What is the data backing this up? (you can show how many flights went to a city in 2000 vs now). What is the data on revenue? Can we get some charts and engage the audience like a CEO making decisions? How many times have the airline industry been saved by the government – i.e., taxes of the people?

    The airline industry is a socialist industry that pretends to be a capitalist industry. The main reason is that the people value the resiliency of the airline industry more than its efficiency. We need to be more open about that in order to have a national airline system that benefits the nation's interests.

  25. before pandemic started we had bought a round trip to Mexico for my wife. with a small cheaper airline Volaris. well the pandemic hit. and her flight was supposed to be in april. Volaris canceled.

    after calling and calling for over a week i finally got a human on the phone, and they offered me half a refund and the other half voucher which would expire in 6 months. i complained that there might not be any flights to use it on. but ended up taking it as i thought it would be the best i could get for a refund.

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