Could the airline industry survive if the FAA and TSA were eliminated?

[her209]

If we look at the SEC filings for the largest airline companies in the US (not in order of size)...

American Airlines 10-K filing
"The Company recorded a net loss of $471 million in 2010".

United Continental 10-K Filings
"UAL recorded net income of $253 million for the year ended December 31, 2010".

Delta Airlines 10-K Filings
"We reported net income of $593 million for 2010".

Southwest Airlines 10-K Filings
"For the 38th consecutive year, the Company was profitable, earning $459 million ($.61 per share, diluted) in 2010".

JetBlue 10-K Filings
"In 2010, we reported net income of $97 million".

US Airways 10-K Filings
"US Airways Group's net income for the year ended December 31, 2010 was $502 million".

Obviously, there's more US airline companies and I'm not going to list them all, but a list can be found at Wikipedia. Also, I didn't include the cargo shipping companies (FedEx/UPS/DHL/etc.) because its harder to separate out the profitability of just the airline portion of the business but they should be included when talking about "the airline industry".

The FAA's budget for FY2010 is approximately $16.77B of which Operations+Facilities and Equipment accounts for approximately $11.98B. Also in the FAA budget is money for grants and low interest loans to airports for improvements and expansions.

The TSA's budget for FY2010 is approximately $7.79B of which Aviation Security+Federal Air Marshals account for approximately $3.94B.

Granted, the government isn't the model of efficiency, but could the airline industry survive if the companies had to pay directly or indirectly a third-party for airport security/screening (TSA) and operation (FAA) or handle it themselves? An example of indrectly paying is that the airport would provide the services currently handled by the FAA and TSA and roll those costs into what it charges the airlines to operate at their facility.

 

[Anarchist420]

Yes. They'd be better off.

 

[Thump553]

Two Warren Buffett quotations on the airline industry that sum it up:

"... despite putting in billions and billions and billions of dollars, the net return to owners from being in the entire airline industry, if you owned it all, and if you put up all this money, is less than zero."
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The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.

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My thoughts:
Airlines (inside and outside the US) have been heavily subsidized since their inception and would collapse without the government dole, pure and simple. For too many countries it is a matter of national prestige to have a national airlines. In the US the real question is does the airline industry throw off more economic benefit to society as a whole than the amount of subsidies we give it. Personally it's not something I've studied and I don't know the answer.

 

[PokerGuy]

The cost of those services are being spread among all taxpayers at this point. If that changes and the costs go directly to consumers, the cost of flying would become much much higher than it is today, which would likely hurt both the airlines and the country as a whole.

 

[rudder]

the FAA is notoriously slow in rolling out technological upgrades. It was not too long ago the FAA had to go to Poland to buy vacuum tubes to keep the radar sites operational.

 

[wwswimming]

the TSA is not about making flying safer.

it's about Travel Restrictions and a command economy - where the gov. provides jobs.

i'd like to see the free markets allowed to solve this.

let an airline opt out of the travel hassles - and give passengers the right to open carry (guns, that is.)


or just give stewardesses & stewards the right to open carry.

or, hire retired Bikers as Stewards, and give them each a baseball bat.

then see what happens if someone tries to light their shoe on fire.

like i said, the free market.

 

[Genx87]

Two Warren Buffett quotations on the airline industry that sum it up:

"... despite putting in billions and billions and billions of dollars, the net return to owners from being in the entire airline industry, if you owned it all, and if you put up all this money, is less than zero."
-----------------
The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.

-----------------
My thoughts:
Airlines (inside and outside the US) have been heavily subsidized since their inception and would collapse without the government dole, pure and simple. For too many countries it is a matter of national prestige to have a national airlines. In the US the real question is does the airline industry throw off more economic benefit to society as a whole than the amount of subsidies we give it. Personally it's not something I've studied and I don't know the answer.

His quote can easily be applied to the auto industry as well. The airlines industry is a tough market to survive. Lots of regional competitors and any money they earn is spent expanding the fleet. I would never invest in a car or airline business.

On a per passenger basis airlines are one the lowest subsidized mass transist systems in the United States. Train's being the highest subsidized.

 

[sunzt]

FAA manages national airspace traffic as well. That alone is a whole field of study which requires integrated, big picture oversight with unbiased decisions. To have airliners pay for that service themselves is #1 impossible due to budget and #2 open to all kinds of Conflict of Interest issues.

 

[CycloWizard]

FAA and TSA take $25 billion per year from the pot. In return, they contribute a ton of absolutely useless security, air traffic controllers that fall asleep on the job, and a bunch of nonsensical regulations that make flying a huge pain for a lot of people. That's $25 billion that taxpayers could be spending on flying themselves. There are private major airports, but they're not allowed to provide their own security or ATC, so who knows how that would work out? I'm not sure, but I'm positive it wouldn't end up with a building like this in DC full of people disconnected from the actual flying part of the process:

 

[rudder]

My thoughts:
Airlines (inside and outside the US) have been heavily subsidized since their inception and would collapse without the government dole, pure and simple. For too many countries it is a matter of national prestige to have a national airlines. In the US the real question is does the airline industry throw off more economic benefit to society as a whole than the amount of subsidies we give it. Personally it's not something I've studied and I don't know the answer.

Just as with GM the federal government has made sure that poorly run airlines stay in business.

 

[MotF Bane]

the TSA is not about making flying safer.

it's about Travel Restrictions and a command economy - where the gov. provides jobs.

i'd like to see the free markets allowed to solve this.

let an airline opt out of the travel hassles - and give passengers the right to open carry (guns, that is.)


or just give stewardesses & stewards the right to open carry.

or, hire retired Bikers as Stewards, and give them each a baseball bat.

then see what happens if someone tries to light their shoe on fire.

like i said, the free market.

In a pressurized space, NO. Tasers for the staff, fine, but a definite no for firearms. The retired bikers with bats is fine too.

 

[sunzt]

FAA and TSA take $25 billion per year from the pot. In return, they contribute a ton of absolutely useless security, air traffic controllers that fall asleep on the job, and a bunch of nonsensical regulations that make flying a huge pain for a lot of people. That's $25 billion that taxpayers could be spending on flying themselves. There are private major airports, but they're not allowed to provide their own security or ATC, so who knows how that would work out? I'm not sure, but I'm positive it wouldn't end up with a building like this in DC full of people disconnected from the actual flying part of the process:

So... how did flying become the safest means of transportation?

 

[a777pilot]

I doubt if any of you are in the commercial aviation business.

The airlines are the most regulated, deregulated business in history.

Here are a few ideas to improve the airline industry in the United States.

1. Get rid of the TSA.

2. Keep but streamline the FAA and the NTSB.

3. Change the regulations to allow failing airlines to actually fail.

4. Privatize airports and the Air Traffic Control system.

 

[matt0611]

In a pressurized space, NO. Tasers for the staff, fine, but a definite no for firearms. The retired bikers with bats is fine too.

Theres special ammunition created that they can use that severely reduces the risk of damaging the aircraft.
I probably wouldn't want the stewardess to have it though, the pilots, yes.

 

[Schadenfroh]

Eliminate them, let the airports handle them and regulate those airports.

 

[nobodyknows]

The cost of those services are being spread among all taxpayers at this point. If that changes and the costs go directly to consumers, the cost of flying would become much much higher than it is today, which would likely hurt both the airlines and the country as a whole.

Then flying is nothing but socialism for the richer people of our society, the "frequent flyers".

 

[classy]

FAA and the TSA while at times are annoying and controversial, have made flying safer. If the majority of the companies are profitable then obviously the system is not broken.

 

[sunzt]

Eliminate them, let the airports handle them and regulate those airports.

How can airports manage the national airspace system where you have thousands of airplanes in the sky going any which way at any given time? Which airport has the capability to handle that national level of traffic management? Who would be responsible for that? Airliners? yeah right.

 

[a777pilot]

FAA and the TSA while at times are annoying and controversial, have made flying safer. If the majority of the companies are profitable then obviously the system is not broken.

The FAA has improved safety via the NTSB. The TSA has added nothing to the safety of the flying public. Oh, yes, there is only one airline that has made a profit, Southwest. Southwest does NOT constitute a majority.

 

[QuantumPion]

the TSA is not about making flying safer.

it's about Travel Restrictions and a command economy - where the gov. provides jobs.

i'd like to see the free markets allowed to solve this.

let an airline opt out of the travel hassles - and give passengers the right to open carry (guns, that is.)


or just give stewardesses & stewards the right to open carry.

or, hire retired Bikers as Stewards, and give them each a baseball bat.

then see what happens if someone tries to light their shoe on fire.

like i said, the free market.

Wow...Someone better let wwswimming know that someone hacked his account :awe:

 

[QuantumPion]

In a pressurized space, NO. Tasers for the staff, fine, but a definite no for firearms. The retired bikers with bats is fine too.

Bullet holes do not cause the whole plane to explode like in hollywood movies. However, a taser would still be a good idea since being in a crowded and confined space makes the likelihood of bullets hitting unintended targets highly likely.

 

[her209]

The cost of those services are being spread among all taxpayers at this point. If that changes and the costs go directly to consumers, the cost of flying would become much much higher than it is today, which would likely hurt both the airlines and the country as a whole.

That was my point. The "true" cost of flying isn't reflected in the ticket price because a huge chunk of it is being paid for by the taxpayers by way of the government paying for and operating the FAA and TSA. I've flown only 3 times in my life so I'm subsidizing the frequent fliers.

 

[QuantumPion]

So... how did flying become the safest means of transportation?

Flying is safe because the planes are operated and maintained by highly experienced, trained, licensed professionals. If driving your car required a professionally trained driver and co-driver to drive, a mechanical engineer to fully inspect your vehicle for every trip, and a "ground traffic controller" to handle every turn and maneuver, driving would be just as safe I think.

 

[sunzt]

That was my point. The "true" cost of flying isn't reflected in the ticket price because a huge chunk of it is being paid for by the taxpayers by way of the government paying for and operating the FAA and TSA. I've flown only 3 times in my life so I'm subsidizing the frequent fliers.

It's not really the benefit to the casual flyer that's the biggest issue. The national airspace system facilitates business on all levels (local, regional, national, international, small, large). It's similar to how government funded roads facilitates business. You may not drive those roads at all, but your local economy and businesses benefit vastly from safe roads.

 

[QuantumPion]

How can airports manage the national airspace system where you have thousands of airplanes in the sky going any which way at any given time? Which airport has the capability to handle that national level of traffic management? Who would be responsible for that? Airliners? yeah right.

Why not? Private companies handle the distribution of electricity over a regional and national scale. And that is far more complicated, involving balancing millions of customers as opposed to a directing few hundred airplanes.