Don't have an answer for you Jet. BUT, look at how well received Continental is after their 2 trips to BK last decade. If UAL can figure a way out of this, they'll be viewed as heros, imho. (and the fact that they destroyed the unions will be considered fantastic too)
Ual For Sale
- Thread starter skyflyr69
- Start date
And if that were truly what happened in bankruptcy, it would be perverse. It's not, though. Yes, the debt is reduced, and not all dollars owed are paid, but that's a far cry from "wiping out" all debts.JetClipper said:
You see it in the astronomical rates that UA will be forced to pay for cash in the near to mid future. It took years before CO was able to inspire enough confidence among investors to be able to pay something more akin to market rates for cash.
B6Busdriver
Advanced
- Jan 27, 2003
- 194
- 0
JFK777 said:
So United is getting the same subsidy then.
mweiss said:
I've heard the estimate of 6 billion in post BK debt (vs north of 20 at AMR and DAL).
As to investors, I think the nobel prize in economics went to a guy lat year who remarked on emotional stock picks (buying your own company ala Enron) when the numbers don't support it. smart money goes to the best deal, period. do you invest in a company who isn't BK YET but is holding 3 times UAL's debt, or do you go with a "new' UAL with a clean balance sheet and industry leading performance?
mweiss said:
OK. First, most Airports charge a flat fee per 1000K of landing weight (based on Max landing weight). In DEN, UAL spends more in landing fee's than on fuel. A UAL 747, pays 5 times the landing fee of a FRNT A319, while only carrying 2.5 times the people. which Jet brings the biggest economic boon to the city? During regulation, cities used the airfields as cash cows and got quite good at siphoning off some of the Airlines Ricardian rent. It's time they realize that Airports, like roads, are infrastructure. A hub BENEFITS a city by much more than it's 'cost'. How we get foolish taxpayers to subsidize Stadiums but not hub airports is beyond me.
The FAA taxes airlines based on ticket price, not services used. Again, a UAL 747-400 pays the government considerably more for a trip from LAX to DEN than a FRNT A319. Yet they use the same level of services. FEE PER DEPARTURE!!. charge airlines for the services they use. If a SWA 737 does a 27 hope across the country, the should pay more than a 747-400 going nonstop. Likewise, Richy Rich in his G-V should pay that same fee.
Another area is oversight. Having the FAA breath over your shoulder 24/7 has a cost. the FAA spends considerably more time watching qualified Union mechanics at the airlines, while ignoring the fly by night off shore shops. that needs to change.
When the DOT demands that UAL and AMR cut capacity at ORD or face the wrath of the government, then allow Flyi to add 10 flights a day on 50 seat RJ's at a 50% LF, they are subsidizing the little guy.
Ticket taxes for airlines are holdovers from the past. Taxes serve two purposes. they raise revenue, or encourage a desired behavior. in the past, the bigs paid because the could, and the fee structures were devised to benefit the little guy. now the little guy is the one with the money, and the bahavior the FAA is encouraging is smaller jets, and more gridlock
Busdriver,
UA get the A320 subsidy too from the European tax payors.
JFK being Underutilized,
JFK is (or was) during the early parts of the day, but lets remember what JFK's market is? International, mostly Atlantic, from Europe. It doesn't arrive until after lunch. From 3:00PM to 5:00PM JFK is very busy, After 6PM all those 777, 744, 767, A340 & A330 go back across the pond. Having waited dozens of time in the JFK Konga line at 7PM, I can say it makes O'Hare look tame at most times. This airport has it skin, it confortable in it, it just happens to be late in the day. JB is good for JFK, I just want to see if it will ever fly east for 7 hours.
UA get the A320 subsidy too from the European tax payors.
JFK being Underutilized,
JFK is (or was) during the early parts of the day, but lets remember what JFK's market is? International, mostly Atlantic, from Europe. It doesn't arrive until after lunch. From 3:00PM to 5:00PM JFK is very busy, After 6PM all those 777, 744, 767, A340 & A330 go back across the pond. Having waited dozens of time in the JFK Konga line at 7PM, I can say it makes O'Hare look tame at most times. This airport has it skin, it confortable in it, it just happens to be late in the day. JB is good for JFK, I just want to see if it will ever fly east for 7 hours.
Dizel8 said:
To a point. they do pay more for the segment tax since it's limited to a two hop (after intense lobbying on SWA's part...), but considering the out of the way outposts they stop at on the way, and the vast weight differance between the two jets, I'd bet the 747 would still be king, or in the more realistic case, the 767. but agian think of the services utilized. not much in the way of action at 390. It's the multiple approaches and landings that suck up the services.
Where the 737 lands is not germane to this discussion, since no one says UAL cannot land in BFE if they so chose.
I do not think 737s and A-319 are the problem, the bigger problem is the RJ's that take up as much space as a 74, airport and ATC wise.
As for the taxation issue, since it is a bunch of flat fees mostly, at least as the tickets are concerned, it hits the lower fare more than the higher fares. Landing fees varies with size and perhaps with good reason, since a 74 puts bigger stress on rwy's and taxiways. Further, the 74 landing fees can be spread over a larger number of passengers.
However, there is no doubt in my mind, as you mentioned, that airlines are seen as a cash cow for the airports.
I do not think 737s and A-319 are the problem, the bigger problem is the RJ's that take up as much space as a 74, airport and ATC wise.
As for the taxation issue, since it is a bunch of flat fees mostly, at least as the tickets are concerned, it hits the lower fare more than the higher fares. Landing fees varies with size and perhaps with good reason, since a 74 puts bigger stress on rwy's and taxiways. Further, the 74 landing fees can be spread over a larger number of passengers.
However, there is no doubt in my mind, as you mentioned, that airlines are seen as a cash cow for the airports.
"Landing fees varies with size and perhaps with good reason, since a 74 puts bigger stress on rwy's and taxiways."
No necessarily. Gear configuration make a BIG differance. the 747 spreads it's weight across 18 wheels vs 6 for a guppy
"Further, the 74 landing fees can be spread over a larger number of passengers."
Yes, but to whom does that efficiency or " Ricardian Rent" belong? Does it belong to the Airline that spent the money to buy a larger more efficient Jet, that carriers with it a much larger downside risk in lean times? Or does it belong to Mr Higgenlooper and the City of Den? You are making the ability to pay argument and if that's the case the landing fee's should be based on an airlines profit.
Where the 737 lands is not germane to this discussion, since no one says UAL cannot land in BFE if they so chose.
It's germane in establishing the costs the airline incurs between the two major airports at he beginnig and end of the trip. You made the point that all those fee's would end up costing them more, I say maybe not.
No necessarily. Gear configuration make a BIG differance. the 747 spreads it's weight across 18 wheels vs 6 for a guppy
"Further, the 74 landing fees can be spread over a larger number of passengers."
Yes, but to whom does that efficiency or " Ricardian Rent" belong? Does it belong to the Airline that spent the money to buy a larger more efficient Jet, that carriers with it a much larger downside risk in lean times? Or does it belong to Mr Higgenlooper and the City of Den? You are making the ability to pay argument and if that's the case the landing fee's should be based on an airlines profit.
Where the 737 lands is not germane to this discussion, since no one says UAL cannot land in BFE if they so chose.
It's germane in establishing the costs the airline incurs between the two major airports at he beginnig and end of the trip. You made the point that all those fee's would end up costing them more, I say maybe not.
Me? I wouldn't buy either stock. If it were bonds/corporate paper I were buying, it'd depend on the rate. Regardless of rate, I wouldn't put more than a small amount into either airline, but would spread over lots of different businesses in order to reduce the risk.Busdrvr said:
It's somewhat similar to Milken's investment strategy...one of the few positive contributions he made to the world.
Because, of course, the 319 has more passenger density. But this is hardly a subsidy. It's a case where UA has chosen to run the business in a way that uses resources less efficiently. UA could choose to have the same passenger density on the 744s as F9 has in the A319s.Busdrvr said:
Depends on who you ask.
Believe me, they have historically subsidized the hub airports as well, in the form of higher ticket costs.
That's generally how taxes work. Fees tend to be flat, and taxes tend to be graduated.
But that means that the FAA is subsidizing UA every time UA charges less than F9 for a ticket. Outrage!
No, they don't. They use the same level of ATC services, in general (though that depends on a few factors as well). They don't use the same level of landside services.
Those two sentences are not synonymous. A flight from LAX to LAS uses fewer ATC resources than a flight from LAX to JFK. Yet you would have them both pay the same?
Ahh, yes...those fly-by-night offshore shops that WN uses. Huge subsidy there. Funny how there seems to be more legacy airline use of these offshore shops. Yet another subsidy for the legacies. Outrage!
Really? A subsidy, per Merriam-Webster, is "a grant or gift of money." This isn't money.
Does it hurt UA and AA at ORD to have ten additional flights from a competitor? Sure. Did the government step in to create this condition? Absolutely. Does it overcome the other advantages handed to UA and AA in the past? Depends on your perspective.
No, actually the fee structures were devised to be applied progressively, like other taxes in this country. They happened to result in more dollars paid per ticket by legacy carriers, but that wasn't the goal.
The behavior the FAA is encouraging (if you can call it that; these ticket taxes aren't what is pushing people to the LCCs) is lower fares. What pushes for less gridlock is the segment fee, which was designed in such a fashion as to benefit the legacy carriers. Oh, did you forget about that?
Look, there's no such thing as a "fair" tax. There's no such thing as a "fair" restriction on airport access. Some behaviors benefit the legacies, and others benefit the LCCs, simply because the two have different business models that fit the tax structures differently. It's a stretch to call them protections of either class of carrier.
"No necessarily. Gear configuration make a BIG differance. the 747 spreads it's weight across 18 wheels vs 6 for a guppy."
That is certainly correct, that gear configuration makes a difference. The guppy is about 28K per wheel, the 747 about 45K. How much that increase wear and tear, I could not tell you.
"Yes, but to whom does that efficiency or " Ricardian Rent" belong? Does it belong to the Airline that spent the money to buy a larger more efficient Jet, that carriers with it a much larger downside risk in lean times? Or does it belong to Mr Higgenlooper and the City of Den? You are making the ability to pay argument and if that's the case the landing fee's should be based on an airlines profit."
Well, I crunched some number using JFK landing fees. JFK is one of the only airports using max takeoff weight and not landing weights. Certainly in that case, the 74 pays almost twice what the guppy pays per passenger and yes, that seem unreasonable. Hopefully DEN derives it from max landing weight.
Obviously, some cost for operating at an airport must be borne by the operator, of course they should be reasonable. So what do you suggest is the formula for deriving the fees?
We could take a certain percentage of the ticket cost, but that would make a lower fare pax pay less. We could take a fixed amount, but that makes the low fare ticket more heavily taxed. Due to the fact, that there are so diverse operations, I am not sure, that there is a fair, equitable way to do it.
Perhaps what we need to do, is have the airports collect the fees from the passenger directly. That would certainly be a wake up call to the passenger and they would perhaps get in touch with their representative. Certainly there is no doubt in my mind, that airports should fall under infrastructure and should be supported by the Federal goverment, much like roads.
That is certainly correct, that gear configuration makes a difference. The guppy is about 28K per wheel, the 747 about 45K. How much that increase wear and tear, I could not tell you.
"Yes, but to whom does that efficiency or " Ricardian Rent" belong? Does it belong to the Airline that spent the money to buy a larger more efficient Jet, that carriers with it a much larger downside risk in lean times? Or does it belong to Mr Higgenlooper and the City of Den? You are making the ability to pay argument and if that's the case the landing fee's should be based on an airlines profit."
Well, I crunched some number using JFK landing fees. JFK is one of the only airports using max takeoff weight and not landing weights. Certainly in that case, the 74 pays almost twice what the guppy pays per passenger and yes, that seem unreasonable. Hopefully DEN derives it from max landing weight.
Obviously, some cost for operating at an airport must be borne by the operator, of course they should be reasonable. So what do you suggest is the formula for deriving the fees?
We could take a certain percentage of the ticket cost, but that would make a lower fare pax pay less. We could take a fixed amount, but that makes the low fare ticket more heavily taxed. Due to the fact, that there are so diverse operations, I am not sure, that there is a fair, equitable way to do it.
Perhaps what we need to do, is have the airports collect the fees from the passenger directly. That would certainly be a wake up call to the passenger and they would perhaps get in touch with their representative. Certainly there is no doubt in my mind, that airports should fall under infrastructure and should be supported by the Federal goverment, much like roads.
"When the DOT demands that UAL and AMR cut capacity at ORD or face the wrath of the government, then allow Flyi to add 10 flights a day on 50 seat RJ's at a 50% LF, they are subsidizing the little guy".
While I see your point, I do not think it is unfair, that FlyI was awarded slots. The problem with ORD, was that it created ripple effects throughout the ATC system. As we saw from Air21 at LGA, the airlines are unable to regulate themselves and so many flights were added, that LGA became a parking lot.
UAL through UAX and AA through Eagle are using small jets at ORD. Jets which hauls few passengers, yet from an ATC and airport view, uses these facilities very inefficiently. Between UAL and AA, I think they control about 80% of the slots at ORD, so letting FlyI operate ten flights seems reasonable.
If anybody should be upset, it is the airlines who operate larger airplanes, who is unable to gain access to ORD. These operators would utilize the airport assets more efficiently, however, would UAL prefer FlyI or SWA getting slots? In this case, and in most slot controlled airports, the system favours the incumbent carrier by stiffling competetion.
While I see your point, I do not think it is unfair, that FlyI was awarded slots. The problem with ORD, was that it created ripple effects throughout the ATC system. As we saw from Air21 at LGA, the airlines are unable to regulate themselves and so many flights were added, that LGA became a parking lot.
UAL through UAX and AA through Eagle are using small jets at ORD. Jets which hauls few passengers, yet from an ATC and airport view, uses these facilities very inefficiently. Between UAL and AA, I think they control about 80% of the slots at ORD, so letting FlyI operate ten flights seems reasonable.
If anybody should be upset, it is the airlines who operate larger airplanes, who is unable to gain access to ORD. These operators would utilize the airport assets more efficiently, however, would UAL prefer FlyI or SWA getting slots? In this case, and in most slot controlled airports, the system favours the incumbent carrier by stiffling competetion.
