anshabhi
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Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 4:39 am

US is a huge market, with deteriorating customer service standards, owing to lack of competition and maybe an informal agreement between US3 for "calculated miseries". Could foreign owned airlines revive the competition in US skies, and do something good for passengers?

India & Switzerland are the 2 countries which allow 100% foreign ownership. I don't know much about Switzerland but in India 2 new airlines have started, one of which is Vistara, a full service carrier which is setting new comfort standards in Indian skies.
Also, Qatar wants to establish an airline in India.
 
ikramerica
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 4:50 am

No.
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LAX772LR
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 4:53 am

No.
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YIMBY
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 5:00 am

All restrictions for ownership is just protectionism for the companies instead of citizens. There is no justified reason for artificial restrictions of ownership or cabotage, neither related to safety, security, military, environment, health or economy. It is enough to require that foreign companies operate with the same standards as the local ones.

This concerns also my country and EU.
 
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PatrickZ80
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 5:44 am

YIMBY wrote:
All restrictions for ownership is just protectionism for the companies instead of citizens. There is no justified reason for artificial restrictions of ownership or cabotage, neither related to safety, security, military, environment, health or economy. It is enough to require that foreign companies operate with the same standards as the local ones.

This concerns also my country and EU.


I agree. By the way, Brazil has recently announced it will allow 100 percent foreign ownership for airlines.

I think too many people tend to say no here without any proper motivation. They're just too overprotective over the US-based airlines and banning out the competition. However, competition is a good thing and if it can come from foreign owned airlines I'm not opposed to that.
 
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TWA772LR
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 5:52 am

US law currently allows for up to 25% foreign ownership. If any foreign airline really wanted to own a US airline, wouldn't they already own the max they can on one? The US airlines are strong enough without foreign ownership and show no signs of needing it.
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slinky09
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 6:09 am

YIMBY wrote:
All restrictions for ownership is just protectionism for the companies instead of citizens. There is no justified reason for artificial restrictions of ownership or cabotage, neither related to safety, security, military, environment, health or economy. It is enough to require that foreign companies operate with the same standards as the local ones.

This concerns also my country and EU.


Couldn't put it better.
 
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scbriml
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 6:10 am

Yes, of course it should be allowed. But, who wants the customer to win?

TWA772LR wrote:
US law currently allows for up to 25% foreign ownership. If any foreign airline really wanted to own a US airline, wouldn't they already own the max they can on one?


I read the question more as allowing non-US airlines to operate domestic flights rather than take ownership of an existing US airline.
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anshabhi
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 6:11 am

scbriml wrote:
Yes, of course it should be allowed. But, who wants the customer to win?

:checkmark: If US administration really takes such a decision, it will have to fight very heavy lobbies.


TWA772LR wrote:
US law currently allows for up to 25% foreign ownership. If any foreign airline really wanted to own a US airline, wouldn't they already own the max they can on one? The US airlines are strong enough without foreign ownership and show no signs of needing it.


Existing US airlines serve on the motto of "pay more to avoid hell". A new foreign owned airline can change that.
US airlines are strong because of no competition. That can also change.
 
mmo
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 6:15 am

YIMBY wrote:
All restrictions for ownership is just protectionism for the companies instead of citizens. There is no justified reason for artificial restrictions of ownership or cabotage, neither related to safety, security, military, environment, health or economy. It is enough to require that foreign companies operate with the same standards as the local ones.

This concerns also my country and EU.

I disagree. The simple fact is the ownership restriction is due to the airlines commitment to CRAF (Civil Reserve Air Fleet). That commitment allows the government to utilize the commercial aircraft in time of crisis for additional airlift capacity. Having a airline owned by a 100% foreign entity would/could jeopardize that potential.

As far as safety standards go, again I disagree. Having flown for 2 US carriers and worked for a foreign carrier and been an instructor for Boeing/Airbus, there is a massive discrepancy between safety standards in various parts of the world.
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B777LRF
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 6:15 am

Owning 25% of a company buys you all the trouble with none of the benefits.

Of course the US should be open to foreign competition on domestic routes, same as e.g. the EU should allow it.

But it's not going to happen, the lobbyism of EU and US airlines will prevent that from happening - regardless of which administration is at the helm.
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Pe@rson
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 6:24 am

Absolutely.

More chance of flying home tonight by flapping my wings than it happening.
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andrej
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 6:41 am

Yes, if US owned airlines can fly domestic routes elsewhere. That's fair.
 
grbauc
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 7:01 am

anshabhi wrote:
US is a huge market, with deteriorating customer service standards, owing to lack of competition and maybe an informal agreement between US3 for "calculated miseries". Could foreign owned airlines revive the competition in US skies, and do something good for passengers?

India & Switzerland are the 2 countries which allow 100% foreign ownership. I don't know much about Switzerland but in India 2 new airlines have started, one of which is Vistara, a full service carrier which is setting new comfort standards in Indian skies.
Also, Qatar wants to establish an airline in India.


1. Calculated misery- it's what consumers want. It's not just a US thing look at all the bare bones economy only flights in Europe. Heck I'm flying BA intra Europe and it's a economy seat with the middle blocked. I'm on a international first class ticket.

2. Lack of competition- really? we have 4 national airlines (AA,DL,UA,WN) that have a balanced national domestic route map. We also have two large regional airlines (AS,B6) west and east coast centric route maps. ULCC Spirit airlines, allegiant airlines and maybe another I'm forgetting.
Lack of competition I don't think so. We just have a very well-balanced airline route map in the country and airfares are as low as they were 15 to 20 years ago.

3. Informal agreements- there are plenty of fare wars!!! do you follow the treads here on A-net. Chicago is heating AA vs UA or Seattle DL vs AS and AA vs DL in LAX. There are so many it would be fun to list them. Those are three hub battles there are many many little city pairs that are constantly flaring up with retaliatory fares Wars. See flyertalk mileage run treads

If you want to better customer experience maybe try flying JetBlue or Alaska Airlines they're smaller operations and can give more of a personal service versus maybe the four mega large for domestic airlines. Or pay more for first class maybe that will give a better customer experience.

Look the old business model of flying planes half empty with wildly fluctuating prices with 7-8 large regional airlines is a bust model. Employees and stock holders and tax payers were subsidizing the broken model and all were losing. Employee pension and stocks disappearing in BK's US tax payers bailing them out. We have a fairly equal and balanced system right now that should be good for employees the businesses and consumers.

Airlines are adding e+ seating PE on international flights if consumers really want these things the airlines will for sure give them to them.
 
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LAX772LR
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 7:10 am

TWA772LR wrote:
US law currently allows for up to 25% foreign ownership.

IINM, US law allows up to 49% foreign ownership... but it's limited to 25% voting stock.

Thus, in an industry generally plagued by perpetual losses, it makes little sense to own the former when you're restricted to the latter.


YIMBY wrote:
There is no justified reason for artificial restrictions of ownership or cabotage, neither related to safety, security, military, environment, health or economy.

Not only is that opinion and not fact, but it flies in the face of the ACTUAL and (at this point, still) justified reason for such.

Civil Reserve, was an remains the purview of the government over the domestic carriers, with the concern that foreign carriers could influence military readiness.

Then there's the protection of small-community air service. Even the most ridiculously ardent fanboy isn't stupid enough to believe that the likes of SQ/CX/VS/etc would opp anything but the most cherry-picked routings between high population centers, or set up a subsidiary that does anything but. Smaller communities would face the dual-edged sword of either losing out on service, as the domestic airlines retrench, or see the cost of their service ratcheted to the stratosphere, as domestic carriers attempt to subsidize their competitive strategy on larger routes by raising fares in markets where there's no such competition.


grbauc wrote:
ULCC Spirit airlines, allegiant airlines and maybe another I'm forgetting.

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panamair
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 7:21 am

anshabhi wrote:
US is a huge market, with deteriorating customer service standards, owing to lack of competition and maybe an informal agreement between US3 for "calculated miseries". .


Simply not true. We have rehashed many of these similar themes over and over on a.net already. Many aspects of 'customer service' have improved considerably over the years...the US carriers are reporting some of the best operational numbers ever in history, the US carriers' products (even more so for international) now mostly match or even exceed many other competitors around the world.

People erroneously think that having a carrier like Emirates own and operate a US domestic carrier will suddenly mean champagne and caviar...get a grip folks....market reality will hit at some point, and guess what? you will all be back here whining and whingeing about lack of legroom, having to pay for food.... And if you think that a foreign-owned domestic carrier is going to come in and serve Peoria or Pensacola, you're in for another disappointment....they will end up on the usual 'prestige' routes such as NY-LAX/SFO, where there is already tons of competition, and which offer some of the best products available.
 
anshabhi
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 7:45 am

grbauc wrote:
1. Calculated misery- it's what consumers want. It's not just a US thing look at all the bare bones economy only flights in Europe. Heck I'm flying BA intra Europe and it's a economy seat with the middle blocked. I'm on a international first class ticket.

2. Lack of competition- really? we have 4 national airlines (AA,DL,UA,WN) that have a balanced national domestic route map. We also have two large regional airlines (AS,B6) west and east coast centric route maps. ULCC Spirit airlines, allegiant airlines and maybe another I'm forgetting.
Lack of competition I don't think so. We just have a very well-balanced airline route map in the country and airfares are as low as they were 15 to 20 years ago.

3. Informal agreements- there are plenty of fare wars!!! do you follow the treads here on A-net. Chicago is heating AA vs UA or Seattle DL vs AS and AA vs DL in LAX. There are so many it would be fun to list them. Those are three hub battles there are many many little city pairs that are constantly flaring up with retaliatory fares Wars. See flyertalk mileage run treads

If you want to better customer experience maybe try flying JetBlue or Alaska Airlines they're smaller operations and can give more of a personal service versus maybe the four mega large for domestic airlines. Or pay more for first class maybe that will give a better customer experience.

Look the old business model of flying planes half empty with wildly fluctuating prices with 7-8 large regional airlines is a bust model. Employees and stock holders and tax payers were subsidizing the broken model and all were losing. Employee pension and stocks disappearing in BK's US tax payers bailing them out. We have a fairly equal and balanced system right now that should be good for employees the businesses and consumers.

Airlines are adding e+ seating PE on international flights if consumers really want these things the airlines will for sure give them to them.


1. Really customers want this? Or are they simply out of choice? E+ of 2017 is the same as Economy of 2000.

2. Yeah! Different provider, similar service, same product. Air fares might not be the best thing to compare a market's condition. Service levels have also reduced a lot since then.
Here in India, fares have decreased by upto 50% compared to 15-20 years earlier, because of LCCs.

3. Once again, different provider for the same service.

Any foreign owned airline will survive only if it's able to earn money, which will ensure the health of entire market. I am not saying shut down the existing carriers. Only increase the competition​.

Civil Reserve and maintenance practices... Airlines are very tangible commodities. They can't disappear with their planes over night, only because they won't serve the military....
FAA & other regulatory authorities will allow it to function only if it fulfills all the existing safety criterion.
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seat38a
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 8:01 am

HELL NO
 
USAirKid
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 8:08 am

One of the unanswered things here is would the foreign owned airline be employing people under US labor law? Transportation is a bit of a sticky wicket because employees are moving between different countries, but its generally considered that an employee is legally employed in one spot. So the BA crew is paid under British Laws, but that is only for flights that go between different countries. If a flight (and thus the work) is wholly within one country then there is existing precedent in other other industries. Foreign owned banks and retailers employ mostly US workers. (A few examples: Bank of the West, First Hawaiian, Union Bank, and HSBC are all US banks owned by foreign companies. Trader Joe’s is owned by a German family.)

That'll put the new airlines labor costs near the price of a startup airline, like VX or B6 back in the day. Fuel, airport access, routine minor maintenance, etc all have to be purchased nearby the actual operation of the airplane so there aren't many cost benefits that come from being a foreign airline operating solely within the US.

It's an interesting question if a foreign airline could come in with their product and make money. I think the answer is no. If they charge enough to make money on the more expensive product, they won't fill enough seats and won't make enough money. If they charge a lower rate to fill seats, they won't not bring in enough revenue to cover their higher costs for their amenities.

This all being said, the experiments in the US providing high style have all failed. The first Braniff, although quite a long time ago, tried to go high style/service during deregulation and they imploded. Trump Shuttle was a disastrous attempt at providing style in market where it didn't matter. And even VX with its foreign roots in Virgin Group couldn't really gain enough traction to be a going concern on their own.

Airlines have given Americans what they want: cheap flights. And they're also working on allowing people to buy up to a better product.
 
YIMBY
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 9:34 am

LAX772LR wrote:

YIMBY wrote:
There is no justified reason for artificial restrictions of ownership or cabotage, neither related to safety, security, military, environment, health or economy.

Not only is that opinion and not fact, but it flies in the face of the ACTUAL and (at this point, still) justified reason for such.

Civil Reserve, was an remains the purview of the government over the domestic carriers, with the concern that foreign carriers could influence military readiness.


Civil Reserve is an obsolete and flawed excuse. First, it is not needed for any reasonable case, as most civil airliners are not suitable for military use and the US military particularly has a huge supply of military transport planes. They could even make their own reserve from outdated airliners converted to reserve transport planes. Second, in case of a total war the US government can equally confiscate any airliner in the US territory independently of its ownership structure. For the transport needs in a minor crisis they can use standard charter flights or wet lease the necessary aircraft.

Your argument could be equally used to support government run airlines.

LAX772LR wrote:
Then there's the protection of small-community air service. Even the most ridiculously ardent fanboy isn't stupid enough to believe that the likes of SQ/CX/VS/etc would opp anything but the most cherry-picked routings between high population centers, or set up a subsidiary that does anything but. Smaller communities would face the dual-edged sword of either losing out on service, as the domestic airlines retrench, or see the cost of their service ratcheted to the stratosphere, as domestic carriers attempt to subsidize their competitive strategy on larger routes by raising fares in markets where there's no such competition.


No capitalist run airliner will do small-community air service unless it is profitable for them. If it is not profitable, then the local authorities may subsidize that and whoever can bid for that. I am generally against supporting airlines by taxpayer money - it has happened in my countries also, and many of the airlines winning the contracts are foreign companies.
 
Balaguru
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 9:59 am

Remember in 2007, DOT wanted Fred Reid out of Virgin American but then relented ...... Call it what you will, protectionism, lobbying success or anything else, but each country has a right regulate such matters for national interest. Hypothetically ME3 have enough resources to buy airline operations in many countries, but is it in the interest of that country? Personally, from a service point of view.. a) "Calculated Miseries" .. really? can you imagine having to deal with someone who paid $60 and acts like he or she owns the plane? or in my case having to sit next to them. b) For this reason, I buy business or Premium Economy, when I can and I am treated just fine.
 
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zeke
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 10:02 am

mmo wrote:
The simple fact is the ownership restriction is due to the airlines commitment to CRAF (Civil Reserve Air Fleet).


The history goes back to ICAO and how each state defines what carriers should be entitled to different traffic rights. The original ICAO thinking was ownership as the basis.

In the 1990s ICAO recognised that this does not work as many airlines have ownership structures which on paper meet the requirements but in practice don't, it comes back to 2nd and 3 level ownership. For example shares in a US airline could be owned by US hedge fund but the majority of the headgear fund could be foreign owned.

ICAO then adopted the new test, called the principle place of business, where is the airline managed and controlled from.
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b747400erf
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 11:20 am

ikramerica wrote:
No.

American Libertarians in a nutshell. "Just enough rules and regulations for my liking"
 
Newbiepilot
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 11:21 am

In the last three years or so service standards have been improving in the United States. I think the original poster makes an assumption without evidence. Given how many enthusiastic or complimenting posts he has made about Vistara, he sounds like part of their marketing team.

The US airlines get a terrible reputation in this website, but I think much of it is not substantiated. The big 3 US airlines each have over 1000 planes flying their colors when including the regional operations. No foreign airline comes close to that in size. These are huge companies and when there is a problem, they get magnified.

One thing that may make people think there is deteriorated service standards is that load factors are high. The latest capacity planning and revenue management tools are resulting in load factors above 80%. And It is worth noting that the average flight is over 90%. Flights with under 60% load factors on off week times drag that number down so including no revs most flights gets are going with 95% of the seats filled.

Foreign ownership isn't going to change the cost structure. It isn't going to make it profitable to spend an extra $12 on catering per flight to give economy passengers meals. It isn't going to solve crowded airspace in New York. It isn't going to solve the rise of ultra low cost carriers adding fees. US airlines in some ways are better than their European counterparts. Seat assignments are still mostly free (although that may be ending with basic fares), most fares earn miles, and first class actual has a better seat instead of a blocked middle seat.

Flying is a commodity and the US is the biggest market in the world. It is rather naive to think that a foreign entity can come in and shake things so much that service standards will improve.
 
dtw2hyd
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 11:56 am

Newbiepilot wrote:
...The latest capacity planning and revenue management tools are resulting in load factors above 80%. And It is worth noting that the average flight is over 90%. Flights with under 60% load factors on off week times drag that number down so including no revs most flights gets are going with 95% of the seats filled...


While I admire US3 capacity planning skills it is now

Capacity planning -> capacity discipline -> capacity rationing -> capacity nazism

US3411 is perfect example. One pax on 6PM flight cannot be re-booked until next day 3PM.

Same hyperactive capacity planning spoiled US3-ME3 relationship. You get down from a whale jet and board a smelly pencil jet run by a regional partner, and ME3 are expected to pay $400 pass thru. No wonder EK dumped US3 for B6.

I know few cases of DTW-ORD-India passengers vacation plans went haywire because DTW-ORD flight was cancelled, and regional partners of US3 just book on next available two days later.
 
Newbiepilot
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 12:08 pm

dtw2hyd wrote:
Newbiepilot wrote:
...The latest capacity planning and revenue management tools are resulting in load factors above 80%. And It is worth noting that the average flight is over 90%. Flights with under 60% load factors on off week times drag that number down so including no revs most flights gets are going with 95% of the seats filled...


While I admire US3 capacity planning skills it is now

Capacity planning -> capacity discipline -> capacity rationing -> capacity nazism

US3411 is perfect example. One pax on 6PM flight cannot be re-booked until next day 3PM.

Same hyperactive capacity planning spoiled US3-ME3 relationship. You get down from a whale jet and board a smelly pencil jet run by a regional partner, and ME3 are expected to pay $400 pass thru. No wonder EK dumped US3 for B6.

I know few cases of DTW-ORD-India passengers vacation plans went haywire because DTW-ORD flight was cancelled, and regional partners of US3 just book on next available two days later.


Capacity Nazism???? Umm, what? Airlines are businesses that can use capacity and revenue tools to maximize profit. Are you implying that in India there aren't overbooking situations where people get delayed 24 hours? The maximum compensation required in India is about $300 for denied boarding and it is up to $1200 in the United States. The aviation standards in other countries aren't necessarily always better. India averages 1,000 - 2,000 involuntary denied boarding events in a month, which statistically isn't all that different than the United States.

If denied boarding compensation is the example of why US standards are deteriorating, then that will take the US congress and government to intervene. Foreign ownership won't change that and neither will competition. I am imagining how ridiculous a marketing campaign from an airline would be if they advertised that they pay you more money that their competitor when they don't have a seat available and kick you off the plane.
Last edited by Newbiepilot on Thu Apr 20, 2017 12:12 pm, edited 1 time in total.
 
commavia
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 12:10 pm

panamair wrote:
Simply not true. We have rehashed many of these similar themes over and over on a.net already. Many aspects of 'customer service' have improved considerably over the years...the US carriers are reporting some of the best operational numbers ever in history, the US carriers' products (even more so for international) now mostly match or even exceed many other competitors around the world.


Completely agree.

panamair wrote:
People erroneously think that having a carrier like Emirates own and operate a US domestic carrier will suddenly mean champagne and caviar...get a grip folks....market reality will hit at some point, and guess what? you will all be back here whining and whingeing about lack of legroom, having to pay for food.... And if you think that a foreign-owned domestic carrier is going to come in and serve Peoria or Pensacola, you're in for another disappointment....they will end up on the usual 'prestige' routes such as NY-LAX/SFO, where there is already tons of competition, and which offer some of the best products available.


Indeed.

I'm about as free-market as one can be, but I can understand the arguments for why it's just not necessary in the U.S. to open the domestic airline market to foreign competition. If U.S. carriers were struggling to raise capital, and needed to seek funding overseas, that would be a different story. But that isn't the case. The U.S. today enjoys a generally healthy, well-capitalized and stable airline industry. I don't think there's any question that injecting significant new competition from foreign entrants into the U.S. domestic market would likely lower airfares further - in some select markets - but it would also have other consequences and effects that, net-net, I think it could be reasonably argued outweigh the benefits. It's a subjective argument either way - but I can see both sides.

YIMBY wrote:
No capitalist run airliner will do small-community air service unless it is profitable for them. If it is not profitable, then the local authorities may subsidize that and whoever can bid for that. I am generally against supporting airlines by taxpayer money - it has happened in my countries also, and many of the airlines winning the contracts are foreign companies.


I don't want to put words in anyone's mouth, but I don't think that's the argument that was being made. I don't believe the original point about air service to small and mid-size markets related to government subsidies of such flying - which while, I agree, are often an inefficient waste of federal tax dollars, are tiny in the scheme of things. Rather, I think the point being made - which I think is quite a valid one - was about network economies of scale. It is certainly true that profit-seeking enterprises shouldn't, and wouldn't, fly unprofitable service in any market - small or otherwise. And as direct and opportunity costs of operating network-branded small aircraft have risen in the U.S., airlines have, in fact, dramatically curtailed service to small markets.

But with all that said, and to the point made above, a foreign airline that came into the U.S. market would almost certainly only be interested in service major city pairs linking big cities. It's logical - that's where most of the domestic O&D traffic is, and those big cities are also where most of the longhaul international flights begin and end. The problem is that, in many cases, service to small and mid-size cities in the U.S. relies on the economies of broader domestic networks in order to be profitable. If the economics of flying in the big cities were undermined by a wave of new foreign competition, it may well render some of the flying being done to small and mid-size cities - that is profitable today - unprofitable as a result. U.S. network airlines today are a classic example of the network effect on scale economies - each node in the network relies on all the other nodes in order to sustain itself.
 
FlyUSAir
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 12:17 pm

Of course they should allow it, it would be a win for consumers and companies of every country. However it probably will never happen due to lobbying/unions.
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exunited
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 12:38 pm

No, CRAF. End of discussion until it comes up next week.
 
commavia
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 12:41 pm

FlyUSAir wrote:
Of course they should allow it, it would be a win for consumers and companies of every country.


Well, again, I think there is a reasonable (and fairly persuasive) argument to be made that it would, indeed, be a "win" for consumers specifically flying between the 30-40 largest U.S. metro areas. For consumers in smaller markets who may lose all air access to a global network because deteriorating network economics undermine the financial performance of their station, the "win" may be less clear-cut. Additionally, it may well be a "win" for companies from other countries that enter the market - although then again, with a flood of new capacity, it may not be a "win" even for them. It almost certainly would not be a win for U.S. airlines - which collectively employ hundreds of thousands of U.S. citizens, largely keep their profits in the U.S. and contribute significantly (both directly and indirectly) to the U.S. tax system.

As said, the whole issue is complex and complicated - the public policy of permitting foreign entrants into the U.S. domestic airline market would necessarily have "winners" and "losers," just like virtually all public policy at the federal level. It's highly subjective, but I think there are reasonable arguments to be made either way about whether the net-net effect for society would be better or worse.

All that said, though, I agree that in practical reality this has virtually zero chance of happening anytime soon for a variety of political reasons.
 
dtw2hyd
Posts: 4897
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 12:47 pm

Newbiepilot wrote:
Are you implying that in <country> there aren't overbooking situations where people get delayed 24 hours?


There are over booking situations on every route. Free market supposed to address the issue.

With legacies stiffing regionals and own employees , there is no scope to address capacity situation.

ORD-SDF daily frequencies.
UA - 3x Trans State 2x Republic 1x SkyWest 1x ExpressJet(SkyWest)??
AA - 2x Envoy 2 x SkyWest

Let Trans State/Republic/SkyWest operate consolidated flights and both UA/AA can place their codes. If they see increase in demand they will up-gauge to a B737/A320.

Going mainline is also a big no no because greedy legacies have to pay more to their own crew.
 
UpNAWAy
Posts: 67
Joined: Thu Aug 11, 2016 12:42 pm

Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 12:48 pm

I wouldn't be in favor of foreing ownership of any of the big 4 for competitive reasons but after that I say go for it. Even better let foreign carries compete domestically if they want to try.
 
cledaybuck
Posts: 375
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 12:51 pm

Yes. I can buy a car from a company based in Europe or Asia, why shouldn't I be able to take a flight on an airline base there?
 
cledaybuck
Posts: 375
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 12:56 pm

commavia wrote:
FlyUSAir wrote:
Of course they should allow it, it would be a win for consumers and companies of every country.


Well, again, I think there is a reasonable (and fairly persuasive) argument to be made that it would, indeed, be a "win" for consumers specifically flying between the 30-40 largest U.S. metro areas. For consumers in smaller markets who may lose all air access to a global network because deteriorating network economics undermine the financial performance of their station, the "win" may be less clear-cut. Additionally, it may well be a "win" for companies from other countries that enter the market - although then again, with a flood of new capacity, it may not be a "win" even for them. It almost certainly would not be a win for U.S. airlines - which collectively employ hundreds of thousands of U.S. citizens, largely keep their profits in the U.S. and contribute significantly (both directly and indirectly) to the U.S. tax system.

As said, the whole issue is complex and complicated - the public policy of permitting foreign entrants into the U.S. domestic airline market would necessarily have "winners" and "losers," just like virtually all public policy at the federal level. It's highly subjective, but I think there are reasonable arguments to be made either way about whether the net-net effect for society would be better or worse.

All that said, though, I agree that in practical reality this has virtually zero chance of happening anytime soon for a variety of political reasons.
What makes airlines are their employees more special than say Ford or GM and their employees? I bet those companies would have done much better without companies like Honda and Toyota coming into the US market in the 70's. Of course the automobiles we get now are much better in almost every way because of that competition.
 
flyingcat
Posts: 466
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 1:03 pm

CRAF is another political lever. I can't get into too much detail but there was an incident where a small carrier was denied their CRAF certification because someone senior was not an American citizen. The issue is that they used to work at a massive network airline, in a more central role, and there was never any issue there, when the authorities were asked for an explanation there was nothing but silence.

If there was ever a large war necessitating the use of passenger aircraft for troop movements there would be a large drop in travel demand which would easily free up frames. The other fear is that a foreign airline would smuggle all of its fleet out of the country, as if an American airline would not try to do the same thing if they wanted to protect their assets.
 
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hispanola
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 1:15 pm

No, and we shouldn't have this in Europe either. I'm surprised that the US hasn't already done this, however. It would be taking capitalism to a ridiculous extreme, which is something many American politicians support. Competition needs regulation in order to benefit the customer. An entirely free market would eventually lead to a country (and much of the world if it were to be adopted elsewhere) being served by a small number of airlines. The US has already seen a decline in airline companies in recent years, which can all be blamed on deregulation. Europe has mirrored the United States, just look at IAG, LH Group, AFR-KLM. This is just the beginning for us. In a few years we will be in the same situation that the Americans are in right now. This can be applied to other industries as well. Think of all the smaller brands that have disappeared because of abusive foreign companies.

I believe that allowing unrestricted competition would inevitably end in a monopoly (or something close to it). If it is the customer you want to win, bring back a lot of the regulation that was lost in '78. Total protectionism is indeed a negative policy, but some laws and governing bodies should be restored.
From Co. Down living in PNA.
 
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aemoreira1981
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 1:58 pm

I will say no. You already have 4 national airlines along with 2 airlines in the regional category that are good full service airlines (considering JetBlue to really blur that line as they have seat dimensions larger than legacies; even Southwest blurs that line on its 737-800s), and 3 ultra low cost carriers. The real problem is where you have major slot restrictions, particularly around NYC (meaning that one needs bigger planes and fewer frequencies) and airports that are fortress hubs (such as Atlanta, Detroit, Dallas-Fort Worth, Houston, Philadelphia, and San Francisco) where there can be predatory pricing to protect the legacy.
 
YIMBY
Posts: 279
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 2:03 pm

commavia wrote:
But with all that said, and to the point made above, a foreign airline that came into the U.S. market would almost certainly only be interested in service major city pairs linking big cities. It's logical - that's where most of the domestic O&D traffic is, and those big cities are also where most of the longhaul international flights begin and end. The problem is that, in many cases, service to small and mid-size cities in the U.S. relies on the economies of broader domestic networks in order to be profitable. If the economics of flying in the big cities were undermined by a wave of new foreign competition, it may well render some of the flying being done to small and mid-size cities - that is profitable today - unprofitable as a result. U.S. network airlines today are a classic example of the network effect on scale economies - each node in the network relies on all the other nodes in order to sustain itself.


I do not want to be interpreted as bashing the US airlines. I consider them extremely competitive and I do not see any urgent need to bring foreign competition because they would have failed to give good service. I am talking rather in principle, that there is no need and no reason to have artificial restrictions that only protect airlines and their owners, not their consumers.

If the US (or EU) air business were liberalized tomorrow, I would not expect rapid changes. It may, however, prevent future problems and may prevent any US (EU) airline to become "too big to fail" unless messed otherwise, which is always possible, at least in the older side of the Atlantic.

If some small community flight will be unprofitable due to increased competition, it means that they are already run ineffectively, probably by some hidden subsidies or semi-discreet obligations set by government (local or federal) that lead to internal cross-subsidies that make other flights more expensive. So some one else pays for it.
 
cledaybuck
Posts: 375
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 2:22 pm

exunited wrote:
No, CRAF. End of discussion until it comes up next week.
Is there any reason that CRAF couldn't apply to any plane that flies a US domestic route no matter the owner?
 
aviatorcraig
Posts: 481
Joined: Sun Mar 21, 2010 12:14 pm

Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 3:57 pm

mmo wrote:
As far as safety standards go, again I disagree. Having flown for 2 US carriers and worked for a foreign carrier and been an instructor for Boeing/Airbus, there is a massive discrepancy between safety standards in various parts of the world.


Maybe this is a way the US could catch up? :rotfl:
707 727 Caravelle Comet Concorde Dash-7 DC-9 DC-10 One-Eleven Trident Tristar Tu-134 VC-10 Viscount plus boring stuff!
 
Mir
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 4:04 pm

anshabhi wrote:

1. Really customers want this? Or are they simply out of choice? E+ of 2017 is the same as Economy of 2000.



The success of Spirit and Frontier are clear indications that yes, customers want it.
7 billion, one nation, imagination...it's a beautiful day
 
kimimm19
Posts: 135
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 4:09 pm

Yes it should be allowed.

But protectionism and 'captialism' state otherwise. The customer never wins in 'captialism' as it's just about maximising profits.
 
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exunited
Posts: 219
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 4:10 pm

cledaybuck wrote:
exunited wrote:
No, CRAF. End of discussion until it comes up next week.
Is there any reason that CRAF couldn't apply to any plane that flies a US domestic route no matter the owner?



Try to tell one of the ME3 that you are taking their aircraft to transport US troops to an area that they disagree with you being there. Never going to happen, also they can just cease service to the US and then there are no planes to take for CRAF service. Having a US civilian fleet is a huge strategic asset and will never be given up.
 
airzona11
Posts: 769
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 4:14 pm

anshabhi wrote:
scbriml wrote:
Yes, of course it should be allowed. But, who wants the customer to win?

:checkmark: If US administration really takes such a decision, it will have to fight very heavy lobbies.


TWA772LR wrote:
US law currently allows for up to 25% foreign ownership. If any foreign airline really wanted to own a US airline, wouldn't they already own the max they can on one? The US airlines are strong enough without foreign ownership and show no signs of needing it.


Existing US airlines serve on the motto of "pay more to avoid hell". A new foreign owned airline can change that.
US airlines are strong because of no competition. That can also change.


I think the quality of foreign airlines is being over exaggerated. No foreign airline is going to come in and be serving meals in Y class, with superior leg room, etc. For the people willing to pay more on the most premium US domestic routes (LAX,SFO, SEA- NYC/BOS) where the distance makes it worth while, airlines offer a product. Then in the middle there is WN /AS, and then the ULCCs. Any airline that starts up would be competing for the Y passengers. It would probably be in the image of an EasyJet, RyanAir, Norwegian, etc.

The trend for the upper end of the domestic market is these semi-private charter airlines that are trying to skim passengers that would be paying for first class.

That being said, are more carriers like the LCC/ULCCs etc a bad thing? No, go for it. But there is not going to be a premium airline that starts up to fly the domestic skies. The last airline to try, VX, was just acquired and did they have a "better product" sure, but were people willing to for it on short haul? No. And on long domestic legs, they were far being DL AA UA B6 on the premium offering.
 
flyby519
Posts: 1336
Joined: Tue Jul 24, 2007 3:31 am

Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 4:16 pm

dtw2hyd wrote:
Newbiepilot wrote:
Are you implying that in <country> there aren't overbooking situations where people get delayed 24 hours?


There are over booking situations on every route. Free market supposed to address the issue.

With legacies stiffing regionals and own employees , there is no scope to address capacity situation.

ORD-SDF daily frequencies.
UA - 3x Trans State 2x Republic 1x SkyWest 1x ExpressJet(SkyWest)??
AA - 2x Envoy 2 x SkyWest

Let Trans State/Republic/SkyWest operate consolidated flights and both UA/AA can place their codes. If they see increase in demand they will up-gauge to a B737/A320.

Going mainline is also a big no no because greedy legacies have to pay more to their own crew.


This would be an excellent solution. I'd like to see "regionals" go back to being truly regional service providers as independent entities able to codeshare with multiple carriers on a given route. This would offer much needed stability in the regional industry, and eliminate the need for subsidies by mainline legacies. The industry needs more rational capacity usage at this level.
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Revelation
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 4:55 pm

YIMBY wrote:
All restrictions for ownership is just protectionism for the companies instead of citizens. There is no justified reason for artificial restrictions of ownership or cabotage, neither related to safety, security, military, environment, health or economy. It is enough to require that foreign companies operate with the same standards as the local ones.

This concerns also my country and EU.

Indeed. The CRAF excuse is CRAP. The reason this protectionism is in place is because it currently makes the corporations the most money. It will change when dropping such protectionism makes more money for the corporations than the status quo. Since it restricts competition, and since restricted competition benefits corporations, chances are it will be in place a very long time, even as US corporations gain more non-US shareholders.
The gun is NOT a precious symbol of freedom
It is a deadly cancer on American society
Those who believe otherwise are consumed by an ideology
That is impervious to evidence
 
Varsity1
Posts: 1149
Joined: Mon May 02, 2016 4:55 am

Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 4:59 pm

No.

Foreign airlines have worse safety records, worse working conditions and are less profitable.

Why should we destroy one of the lone successful airline markets in the world to let XYZ Air from tiny country Z capacity dump in it? You need to consider more than a ticket price.
"PPRuNe will no longer allow discussions regarding Etihad Airlines, its employees, executives, agents, or other representatives. Such threads will be deleted." - ME3 thug airlines suing anyone who brings negative information public..
 
Varsity1
Posts: 1149
Joined: Mon May 02, 2016 4:55 am

Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 5:02 pm

kimimm19 wrote:
Yes it should be allowed.

But protectionism and 'captialism' state otherwise. The customer never wins in 'captialism' as it's just about maximising profits.


Who owns the corporations? Mostly individual Americans 401k accounts.

The naivety of this board is outstanding today.
"PPRuNe will no longer allow discussions regarding Etihad Airlines, its employees, executives, agents, or other representatives. Such threads will be deleted." - ME3 thug airlines suing anyone who brings negative information public..
 
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ZyreaxPlayz
Posts: 18
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 5:13 pm

cledaybuck wrote:
exunited wrote:
No, CRAF. End of discussion until it comes up next week.
Is there any reason that CRAF couldn't apply to any plane that flies a US domestic route no matter the owner?

Are you nuts? Seriously, are you joking? Do some research on CRAF and tell me what you find! An airline would be supporting a nations, not of it's origins, government and military.
My own opinion on this subject: No, there are plenty of fresh, new airlines that could get into the competition, we don't need a Deutsche BA or such in the USA.
 
Indy
Posts: 4358
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Re: Should US allow foreign owned domestic airlines?

Thu Apr 20, 2017 5:20 pm

They should absolutely be allowed. As long as they comply with all U.S. rules and regulations I really don't care who owns them. Of course competition means legacy carriers cannot get away with treating their customers like crap. Competition is good for consumers and will hopefully weed out the poorly run airlines.
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