Further to yesterday’s rant about governmental regulation of certain out-of-control industries:  I’d like to deal with airlines today. Power companies and insurers at a later date.

First – are airlines credit worthy?  Making the admittedly ridiculous assumption that the $50-$70 Billion that airlines are requesting due to Corona virus revenue loss is a loan and not a gift, would any banker in his or her right mind consider a major U.S. airline a good credit risk given past performances and losses.

Most loans in the commercial world are collateralized with hard assets, of which airlines have precious few. Wait a minute! – How about all those planes that they own- you ask? Aren’t they worth something? Simple answer is very little. Most airlines lease the majority (40%-80%) of their planes from three large leasing companies: (AerCap – 1,193 planes, GE – 961 planes, and SMBC Aviation Corp. – 450 planes). That is roughly 3,000 airplanes out of the 6,800 airliners currently in service in the U.S.(according to Flightracker24).  And. . . those owned outright are already depreciated significantly.

So, what happens if Congress provides the requested $50 billion to the airlines and their managements continue with: ludicrous flight schedules and pricing policies, continue to lose money and default on the loans? Answer: They’ll be back at the trough asking for more. . . again and again. Airline managements are ill-equipped to deal with an industry that has spiraled out of control.

An example: I recently had to fly between Raleigh/Durham and New York. I checked and found fourteen (14) flights per day between that city pair.  Each flight needs to be controlled by Air Traffic Control, scheduled to land and assigned a separate gate at the destination, and maintained by numerous ground personnel. Most of those flights are regional carriers carrying 50 or fewer passengers. It’s ludicrous and all in the name of a marketing campaign offering several flights per day. It’s not even a good way to run a railroad. Don’t even get me started on fares and surcharges. It is an industry where the lunatics are running the asylum. And we, the harried traveler, brought it upon ourselves by patronizing only the carrier offering the cheapest seats.

Commercial airlines should be government regulated and their flight patterns controlled by the Dept. of Transportation – which, by the way, is also severely hampered by a lack of experience and knowledgeable employees. Private aircraft flights of more than 10 passengers should also be regulated. They occupy the same airspace and the full attention of ATC personnel but carry a miniscule portion of total passengers. If this means fewer airline companies – so be it.

Fewer airline companies will mean fewer planes, flying safer in less crowded skies, higher load factors and passengers paying significantly more for the convenience.  If we, the flying public can’t handle that – there is always Trailways (800) 858-8555 or Greyhound (800) 234-2222.

Sorry, Virginia – We lied. There is no Santa Claus. At least one wearing red, white and blue. There should be no gifts if you’ve been naughty.

You are welcome.

For more go to: jameshpyle.com