Let Spirit die
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Why is the government getting inolved with this specific airline? Quite a few airlines have gone bankrupt over the past years, probably some of them bigger than Spirit.
Why is the government getting inolved with this specific airline? Quite a few airlines have gone bankrupt over the past years, probably some of them bigger than Spirit.
Because Trump believes in partially nationalizing companies when the opportunity arises. No other presidents have. Even on the rare occasions when the government bailed out strategically important industries they got Congress involved and had the companies issue preferred debt to pay us back.
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Privatisation of companies to serve the greater good.
Isn't there a word for that?
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For a time, Spirit's business strategy of ultra low ticket prices — while replicating the feeling of riding on a crowded city bus in the air — was working. Despite consumer complaints about the airline, Spirit seemed to be jetting ahead of the legacy airlines.
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Seeing budget-conscious customers fly away from their nicer passenger experiences, legacy airlines were forced by the budget airlines to change course. And so they too started throwing creature comforts out the window for passengers not willing to pay for them. This way they could charge a lower headline ticket price on online search engines and compete with the scrappy airlines for price-sensitive customers. During the 2010s, Delta and other legacy carriers began taking unbundling to the next level, and they introduced " basic economy fares that allowed the airlines to compete even more aggressively with budget carriers on price," Harteveldt says.
Basic economy mimics the bare-bones experience of budget airlines for their cheapest fares — offering joys like less legroom, no seat selection, no free food or beverages, and overall travel experience that could be described as "character building."
But the legacy airlines did more than just copy the strategy of budget airlines to appeal to budget-conscious travelers.
Severin Borenstein, an economist at the UC Berkeley Haas School of Business, says the large legacy carriers have leveraged their market dominance to soar above the smaller budget carriers. With bigger fleets and a sprawling network of flights around the globe, the big legacy carriers were able to devise more desirable loyalty programs. Think like co-branded credit cards, corporate partnerships, and enhanced frequent flyer programs.
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In recent years, richer Americans, benefiting from surging stock and other asset markets, have been spending freely — including on travel — while more price-sensitive travelers have pulled back.
High inflation, higher interest rates, a cooling labor market, and growing inequality have been reshaping American spending patterns, and it's been hurting all sorts of businesses that cater to low- and middle-income Americans. For example, Dollar General has struggled as their core consumers spend less.
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