Airline Bankruptcies: It's Getting Ridiculous

Wednesday, September 14, 2005
Both Delta and Northwest filed for bankruptcy protection yesterday. It's getting a little silly.

Count it now. That is four of the major airlines in the last several years with US Air and United being the other two.

Now I'm no bankruptcy expert, but in my view it is absolutely ludicrous that these huge corporations are allowed to declare bankruptcy, eliminate their debts, and then come back and operate and compete against the other airlines.

If they are going to go out of business, fine, go out of business. In the short term, lots of people will lose jobs, ticket prices will probably go up, and fewer flights will be offered. But in the long term, the overall health of the industry will be a lot better than if we continually prop up failing companies. How is it fair that four of the largest airlines get to continue to operate under bankruptcy protection while the other three get no such privilege. How is it fair that United can default on its Pension obligations, have YOU pick up the tab, and continue to compete against the likes of American and Southwest whose only crime is that they are actually profitable.

Since when is it good to essentialy punish and put at a disadvantage companies that are actually good and can actually turn a profit? If such a system is allowed to continue, it eventually will cause the entire system to come crashing down. It's a simple fact of reality. You can't operate at a loss. It is next to impossible to compete against a competitor who gets subsidized by the government, especially your own government. While this is not a direct subsidy, it is nevertheless a subsidy. Throwing good money at bad business just makes no sense.


Kat said...

i read that 4 of the 7 largest u.s. airlines are currently operating in bankruptcy. i think when they file for bankruptcy, they should be forced to stop operation.

Anonymous said...

I agree that the bankruptcy laws are wacked beyond belief, but IF I recall correctly, these backruptcy laws are a'changing real soon. I remember hearing that some of the things that have made bankruptcy an attractive option in the past are going away. Now, I am not a lawyer, so this might just be for personal bankruptcy, but I don't think so.

Let's hear it for failure! Wahoo!
-Mike A.