> The only thing missing is ownership that answers to the people — not to shareholders.
Noble, but this will fail. Why would anyone do this? No incentive.
These sorts of initiatives forget the toil of actually operating a business. You might as well get more pledges given that you'd have more control and the same profit share. It will regress to the same as the status quo.
I pledged $1,000. I have been daydreaming about a customer-owned airline for years now, just about every time I walk through an airport. This might not have much chance of succeeding in its purchase of Spirit’s assets, but I’d love to watch things unfold if it did.
> These sorts of initiatives forget the toil of actually operating a business.
For most businesses the size of Spirit Airlines, the owners typically do not operate the business. They pay people to do that. I don’t operate REI, even though I’m one of its many owners.
Thank you. There's a lot of criticism and skepticism here, and it's nice to see an optimistic comment.
I've no idea if the proponents of this plan are reputable, but the concept reminds me of the early years of WestJet, when they made a big fuss about being employee owned and had (back then) a markedly better customer experience. For US residents reading this, I'm told they were a bit like Southwest Airlines.
Even if the naysayers are correct and the probability of this panning out is low, you'll never hit the pitches you don't swing at, right?
aren't there plenty of state owned airlines?
https://en.wikipedia.org/wiki/List_of_government-owned_airli...
Not in the USA. Also, the state’s interests often aren’t super well-aligned with the customers’ interests. Too many conflicts of interest for my taste.
Evidence? Isn't the state the expression of the people's will? That's the theory of democracy, isn't it?
Also, any evidence or reason to believe that an extraction-based capitalist model is more aligned with customer interests (where the customer is the thing value is extracted from, and where corporate leadership salaries are directly tied to how much they can grift from the customers) than a government where the incentive is to get the maximum number of happy fliers to vote for you?
“citizens”, “customers” and “politicians” are three different groups. The government might want to use the airline as tax revenue, artificially increasing prices on customers to support non-customers.
Or the government may want to give their airline unfair advantages, which would decrease real competition and create a brittle industry. Or the government might want to strangle their own company, in order to declare that it is “bad and dumb” in order to manufacture popular support to privatize the public company.
Very limited knowledge, but Air India (a full-fat govt owned airline till recently) didn't really have any of this. Yeah it was losing money, but the customer facing aspects were mostly standard - if anything, more standardized than other private players.
One could make an argument that "Well look, it was costing the government taxpayer money!", and that's a valid point. But given how little the variation in prices are across airlines in India, it's similar to saying "The govt shouldn't do public transport if it loses money, even if society gains".
I can give you an example based on two failed national airlines I experienced for years: Italy's Alitalia and Hungary's Malév.
Customers hated them. They were top examples of when public management fails. They were expensive for the customers and costed the tax payers billions to be kept alive, and basically everyone rejoiced when they were let go (Alitalia being reborn as ITA Airways and effectively operated by Lufthansa, Malev just disappeared).
The problem with state run enterprises is that the accountability to voters is very removed. You elect parliament and government which chooses some administrator at random times which chooses some managers etc..
It's not impossible to do well (many state run companies are fine!) but it's hardly a guarantee.
> Isn't the state the expression of the people's will?
Just recently HN discussed the „ban anonymity on the internet“ initiatives of various governments and who was behind it because nobody wants that. Certainly not the citizens.
The issue is that citizens issue ambiguous wills. They don't want kids to be able to look at porn, they don't want hate speech online, they don't want to be IDed online. Politicians try to square those competing wills.
This is not even remotely how most democracies work. Even California didn’t have a majority for gay marriage, yet it became law. Immigration is unpopular everywhere, yet politicians ignore voters wishes, often for decades.
The masses are mostly inert, elites and counter elites move the needle. Those who can manufacture consent win.
wow, it's almost like you will become... a shareholder?
I'm not sure that's even noble as by buying you would be a shareholder...
Yes. Reminds me of the “anarchists” that don’t realise that they just want to recreate the government but with their people in charge.
Some of them want to create a monarchy with them in charge... Remember to be on the lookout for that trend too.
co-op: one member, one vote. members elect leadership with standard term limits. emphasis on services, price and patron returns. dividend according to use not capital investment. members have direct engagement in financials. public companies: votes scale with shares. large institutional investors and other large share holders have most say in leadership. emphasis on "shareholder value" (eg extractive value). dividends according to shares. shareholders have only limited visibility into finances. they're very different, concluding otherwise is misguided
“The only thing missing is ownership that answers to the people — not to shareholders.”
Like, all people in the world?
Customers? Employees?
What does this mean?
EDIT: It’s shareholders, but each person has one vote regardless of share count.
IMHO this should have been written “to the customers and employees”. To me, those are the people who compose a business enterprise.
I’ve never seen that work. There is a fundamental tension between those groups. Hence, member-owned co-ops and employee-owned co-ops.
> I’ve never seen that work. There is a fundamental tension between those groups. Hence, member-owned co-ops and employee-owned co-ops.
Focusing strictly on shareholders (value) has been en vogue since the 1970s:
* https://en.wikipedia.org/wiki/Friedman_doctrine
Before that the general thinking was along the lines of:
* https://en.wikipedia.org/wiki/Stakeholder_theory
Somehow companies managed to survive and grow before the 1970s.
> Focusing strictly on shareholders (value) has been en vogue since the 1970s
It's been in vogue, in circles, since the 17th century. We're not talking about for-profit structures here.
One needs to ask which "shareholder" are we talking about? The pension fund that wants steady cash flow for decades? The retirement-saver, who wants to grow a big bucket for retirement? The already-retired, who wants less growth and more wealth preservation? The hedge fund who wants a couple of quarters good numbers to raise their take of the 2-and-20? The options or day trader?
"Investor heterogeneity" is a thing.
There is no Platonic "shareholder" with one set of needs.
But the customers and employees don’t actually put up the money for the enterprise.
If you assume there is an airplane — great, run the airline for the customers and employees. But the cost of the airplane can’t be handwaved away.
Co-ops don't exist at all, right?
Few people know this, but Desjardins, a Canadian financial service cooperative, is hugely popular in the province of Quebec (and also Ontario), and has close to CAD $400 billions in total assets.
The largest exporter of pork and poultry from Canada ($9B in revenue!) is also a 100 year old co-op from Quebec.
I wouldn't say they are common.
MEC was the only co-op I have ever been part of. I'm pretty sure they stopped being a co-op and sold it to private equity.
For the Americans in the audience: MEC ~ Canadian REI.
See perhaps: https://en.wikipedia.org/wiki/Consumers%27_co-operative
Vanguard is "kind of" like a co-op, in that it is owned by its mutual funds which are owned by its customers.
Fidelity is still better in some metrics, however.
This really doesn't feel like a Co-op to me.
It sounds more like a credit union. (first $5 goes to your ownership share / vote, and the rest of your money goes to your account).
I dont know of any with such high capex
This is a really interesting thing, both from an ownership structure perspective and from a "there is nuance in the details" perspective. I did a bit of a deep dive into this a few years ago when there was a local refinery strike. The refinery is a co-op and is also part of a larger co-op system.
I'll lay out the specifics here from what I learned. I'm not convinced either way, yet, that it could work for an airline.
So here's the ownership structure:
- Co-op Refinery Complex (CRC) - produces fuel
- Federated Co-operatives (FCL) - owns the refinery, also owns food and agriculture distribution warehouses, negotiates bulk pricing
- 200-ish independent regional Co-ops jointly own FCL
The CRC is highly profitable. FCL is profitable. The independent regional co-ops are not, on their own, all individually profitable. Some of these exist in small rural centres, some of them exist in larger cities. The urban ones are generally profitable, the smaller ones not so much. The rural ones, though, are largely the lifebloods of their communities; it's not unusual for the Co-op Grocery Store and Co-op Gas Station to be the only sources of food and fuel for miles and miles. While these do sometimes run at a loss, they make up for it with their annual Patronage cheques from FCL: when the CRC makes a profit and when FCL makes a profit (from the CRC and from their distribution network), those profits get returned back to the member co-ops on a pro rata basis: buy more from FCL, get more at the end of the year.
At the far tail end, each of these independent co-ops is a member-owned co-op. At the end of the year I end up getting a patronage cheque based on how much fuel, food, and building supplies I bought that year. It's not large, but getting a $100 cheque in the mail is always nice :).
In this situation, though, it all works because the not-so-profitable pieces own both their upstream wholesalers and a crazy-profitable refinery. (The refinery sells to other customers outside of FCL as well).
One of the other critical pieces that the strike/lockout/overall "labour dispute" really made clear to everyone: the independent Co-ops, FCL, and the upstream CRC are all member-owned co-ops, not worker-owned co-ops.
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So let's look at how an airline co-op might be structured. The first parallel that I could see would be flipping the regional airline model on its head; currently the big players like Delta and United run a bunch of their smaller routes through regionals (SkyWest, Republic, etc). If a bunch of them got together, they could in theory jointly one one of the majors. The wrinkle there, as others have pointed out, the majors aren't profitable as airlines, but rather through their credit cards and loyalty programs. Alternative, then? Do a bunch of regionals get together and buy a bank? Let the bank be profitable, let the major airline handle traffic between the regional hubs?
I know quite a bit less about worker-owned co-ops, but generally speaking aviation is incredibly capital intensive. Starting a worker-owned co-op airline is probably not possible. A single, say, 737 Max 8 costs $121M. That capital's gotta come from somewhere.
Starting one from scratch, sure, but Spirit already has the airplanes, no?