poVoqSpirit 2.0 — The Airline Owned by the People, for the People
innerwarIs this viable as a concept? Like say he builds enough money, and those people that bought own a part of it.
Depends on what you mean by viability.
Spirit collapsed because they did not make enough money.
Most airlines don’t make money on flights, but on extras and credit cards.
How does this new spirit not have to raise its prices to be a premium airline with expensive pricing? I think people would pay for it if they got premium features, but the issue is, those features take money to implement.
Maybe they can cut enough costs to make them profitable? A lot of airlines don’t own their planes but lease them… budget airlines tend to buy “leftover” planes from after the United’s, American Airlines, etc of the world are done with them, so they have higher maintenance costs and their planes are less efficient.
I don’t really see a proposal above “let’s buy it”.
Buying it and giving everyone 1 voting share is pretty much how publicly traded companies work (except you can have more than 1 share).
Crowdfunding this is a risky proposition for a failed business.
good tidbit about high maintenance planes.
If it can’t exist without being premium prices and offering, does that mean this is now a new thing the lower class cannot have? Ability to fly,
Digression, This feels like a disease of costs. They always have to climb, somebody has to be sacrificed to reach these new ever higher luxuries. I see the same in my industry. And I want to slam on the brakes and yell “not that fast”
Perhaps this gave me a glimmer of hope, can a company operate without all the overhead of middle men. As I believe you’re correctly pointing out, it can operate on marginally profits, but the risks are too high. When mistakes are made there’s no room in the books
Spirit failed because, given current fuel prices, they could not afford to fly with their low ticket prices. Every time they took off, they were losing money.
This leaves 2 options:
1) Raise ticket prices.
2) Find cheaper fuel.
#1 is possible, #2 is not.
If that means that the “lower class” can’t afford to fly, I’m honestly OK with that. Not everyone should be flying. Airlines have incredibly high carbon footprints. If the “lower class” (aka most people) can’t fly, that’s a net positive for the environment.
A simple round trip flight from NYC to Miami produces half a metric ton of CO2. You shouldn’t be able to get on that plane for $77.
Folks want to fight climate change, until fighting climate change impacts their own comfort.
Personally, I only fly if there is no land route to my destination. If I want to go from my home state of Pennsylvania to see my brother in California, I’m taking a train. Sure, the trip takes 3 days, but I can afford a nice comfy sleeper car (can we please do high speed rail?!? Pretty please?). But if I’m going to Scotland to see my grandma, I need to get on a plane.
The current economic situation certainly is not good for all sorts of airlines, but at least here in Europe the low cost airlines, especially Ryanair, have been more profitable than higher cost airlines (that often only survive with state subsidies because they are seen as national carriers).
They achive that by cherry picking routes and packing the planes more efficiently with customers (well, and exploiting their workers). Fuel price is a factor but not the main one.
The OP text claims that Spirit was burdened down by debt. I don’t know the exact circumstances, but these days aquisitions often happen by putting the debt on the company purchased, so even otherwise profitable businesses can be made unviable because the new owner leveraged the purchase too heavily.
So if those debts got a haircut in the insolvency process, or the sellers agree to cut them as part of a rescue purchase, that might make Spirit economically viable again.
Also, a normal shareholder company gives votes according to the number of shares owned. The proposed model in the OP text is explicitly only one vote per owner, which is a legal requirement for coops in the US afaik (the profit sharing is more flexible).
Last but not least, research shows that worker owned coops are significantly more resilient to economic down-turns and other shocks. This is partially because of the higher willingness of the workers to go without or lower pay for a while, so it can be seen as a form of self-exploitation, but regardless of that, a Spirit cooperative might be viable when Spirit Inc. was not.
Captain AggravatedIt always strikes me as odd that the entire airline industry seems to be operated out of force of habit, because it’s not what any of the businesses that do that job make their money doing. There’s an old “survival of the fittest, if a business can’t work, it deserves to die” streak in me that…if we let that happen, we’d probably have more of a country under us right now.